Due to a growing GDP and an increase in both purchasing power and household consumption,
confidence in the French economy is at its highest since 2008. During the 1st quarter of 2017 the FMCG sector started off well following a poor 2016. Although consumer goods purchases have dropped by -0,1 % in volume, they have remained stable in value, on average purchases have grown by +0,7% year on year for last 10 years.
The volume of most FMCG goods has evened out during the first quarter of 2017, however the HPC ranges remain down -1,5% in volume. The drinks market has seen positive growth due to the fast growing beer and cider markets which have shown a 10 % increase in volume while the sweets and dry groceries goods market remains stable.
Hypermarkets, which make up 41% of networks in the French market, are battling. Drive distribution is growing representing 5% of the market, while proximity distribution has sky rocketed and is estimated to be 10% of the market.
On average prices have been decreasing by 1.3% per annum since 2014. Premium brands were down -1.7% in 2016 and have continued to under-perform compared to private labels of retail chains which were only down -0.2% in 2016. The decrease in prices have partly sustained the market. The volume of product sold has compensated for the price decrease. Interestingly private labels of retailer chains are now decreasing because they are no longer seen to be synonymous with quality.
Growth trends in this sector are:
- Bio-products or home-made products have increased their market shares in every category (liquid, fresh products etc). Brands face increase scrutiny to provide details of all ingredients in their products.
- Products of French Origin: There is a growing affinity for local produce because consumers associate value and quality with local ingredients and this is perceived as a general trend to sustain the French economy.
- Ingredient Free: Products free of “something” whether this is lactose, gluten or sugar free, is a strong health trend that is here to stay.
- Product Innovation: As we should expect, major brands continue to innovate, such as May Tea and Nutella B Ready.
Interestingly, 61% of consumer’s state that their primary goal is to find quality products and to gain time when shopping. They rate pleasure and savings as minor concerns.
On the whole products need to be of a good quality, with ingredients that are traceable, ideally from local producers. Shops need to adapt to the types of customers they serve through offering a variety of products and detailed product advice, and they should offer an opportunity for consumers to experience brands and products.