The Ultimate FMCG Guide: All about the Fast Moving Consumer Goods products
Appinio Research · 16.08.2021 · 32min read
Content
Do you remember the last time you purchased an FMCG product like a carton of milk, a tube of toothpaste, or a bottle of mineral water? Chances are, it wasn't more than a week ago. These products are an essential part of our daily lives, and they belong to the Fast Moving Consumer Goods (FMCG) industry.
The FMCG industry is a multi-billion dollar market that caters to millions of people worldwide. With numerous brands competing against each other, this industry strives to win the hearts and minds of consumers by introducing new and innovative FMCG products.
In this guide, we'll provide answers to some of the most pressing questions about the FMCG industry. What sets it apart from other markets? Which companies are involved? We'll also share the latest research findings from Appinio on the UK FMCG market, including unique insights into British consumer behavior regarding FMCG products in the areas of food and hygiene.
🔑 Get free access to insights in our comprehensive FMCG Personal Care Study!
The UK FMCG Report
What is FMCG? Understanding the FMCG abbreviation
FMCG products are everyday items that people regularly buy, use up, and then purchase again. The FMCG abbreviation stands for Fast Moving Consumer Goods, a term that refers to goods with a high turnover rate.
There is a simple scheme behind the FMCG abbreviation. In a store, limited retail space is a decisive factor in calculating revenues. To increase productivity and turnover, either price can be increased or the existing sales area can be better used, by rotating goods, for example.
Categories of FMCG products are:
- Food & beverages
- Home & personal care
- Alcohol & cigarettes
- Over-the-counter drugs and medicine (non-prescription)
Fun fact: There are slow-moving consumer goods too. These include goods such as cars, pieces of furniture or technical products that have a longer lifespan. Slow-moving consumer goods generally require longer considerations and have been on display for more than a year before they are bought.
The industries that make the FMCG world
Fast Moving Consumer Goods (FMCG) covers a huge and diverse range, but many still wonder what exactly that range consists of. Popular goods are personal care products, toothpaste, laundry detergents, and just about any food. There are also goods for upscale needs, such as (non-) alcoholic beverages. Even fuels such as gasoline or natural gas are included.
In order not to be carried away by the abundance of the product world, market segments are often categorised into:
- Food
- Tobacco
- Personal care
- Detergents and cleaning agents
The household names of FMCG
Many industries are hotly contested, but the balance of power in the FMCG market is completely different. Several national and international players are venturing into FMCG. One of the most valuable companies in the food segment with an enormous global buyer reach has been Coca-Cola for many years. But Nestlé, Unilever and Mondelēz also have a firm grip on the market with their iconic products and many sub-brands.
In the tobacco sector, companies like British American Tobacco and Philip Morris claim huge market shares for themselves. The personal care and cleaning product segments are dominated by large corporations such as L'Oreal, Beiersdorf and Procter & taGamble. Some of the best-known British companies and brands include Warburtons, Diageo, the Reckitt Benckiser Group, and Avon Products.
Sustainability is not just a Generation Z topic
Sustainability naturally means something different for all age groups. For respondents between the ages of 55 and 65, environmentally-friendly and resource-efficient manufacturing plays a significantly greater role when it comes to sustainable products than is the case for the other age groups (43% vs. 40% on average).
What makes the FMCG industry so special?
Every industrial sector has its own anomalies, and Fast Moving Consumer Goods (FMCG) are no different. Nestlé, an industry leader, had sales of over £2.2 billion in the UK alone in 2020, with global sales amounting to almost £67 billion. The online market has been growing for years. In the UK alone, online retail sales amount to £99 billion, and is therefore fiercely competitive like hardly any other industry. Newcomers to the market must therefore be prepared for a number of challenges:
- Saturated market
A number of large corporations are claiming FMCG market shares for themselves, and there is great competitive pressure in every segment. Now smaller and young companies are pushing their products onto the market. This makes entering the market extremely difficult, as there are so many competing products and the market seems oversaturated. As a result, new brands and products have little chance of asserting themselves in the dynamic market and establishing themselves in the long term.
- Brand Traction
Brand strength and brand preference are decisive success factors in every industry. In FMCG, they play an even more important role. Consumers prefer certain products and brands; such purchase decisions are sometimes made subconsciously. The challenge for new brands is to tear consumers out of their usual behaviour and to familiarise them with new products.
- Private label competition
Manufacturers are not the only ones who want to position their products in supermarkets as prominently as possible and sell them in large quantities. Private labels are also entering the market with their own brands; supermarkets such as Tesco and online shopping platforms such as Amazon to name a few.
This increases the pressure on already established brands to innovate, but also on new players. A clear positioning strategy can therefore make the difference between success and failure. A good way to stand out from the competition is to focus on sustainability.
However, if you are aware of these challenges, new products can be established and brands can be built into love brands — all thanks to the spirit of innovation and creative sales.
FMCG trends: e-commerce and sustainability
The FMCG industry is complex, the market and the constantly changing needs of consumers are too global and fragmented. Companies have to create new products with high pressure to innovate in order to meet needs and demands.
As already mentioned, the topic of e-commerce is also taking up more and more space in the FMCG industry. Digitisation harbours many opportunities for FMCG, but also numerous risks. The constantly changing customer preferences and needs can be recorded more precisely and satisfied more quickly in the digital age. Through market research, new products are examined intensively from the customer's perspective in a short time. Data-driven insights open up opportunities to define the target group more closely and to adapt marketing campaigns more quickly.
But the sales figures of the past decade show another important trend: the tide is turning towards more sustainability among consumers. The corona pandemic has shown us the problems of the time and mercilessly underscored the urgency of the climate crisis. More people are critically evaluating their consumption and attaching more importance to organic produce and regional products as well as a vegetarian or vegan diet. Similar criteria are also becoming more and more important for body and hygiene articles as well as cleaning and cleaning agents.
The market is reacting to this: Not only are organic products booming, but the range of meat substitute products is getting wider, too. An increasing number of brands with sustainable and environmentally friendly cleaning agents are conquering the market. As a result, conventional products are gradually being pushed out of shelves and stores. Brands have the opportunity to develop sustainable products with a positive impact and successfully bring them to the market.
This is how the FMCG food segment ticks
In order to support brands and manufacturers in meeting the requirements of the FMCG market with figures and data on consumer behaviour in the food sector, Appinio carried out a UK-wide representative study (by age and gender) with 1,500 consumers in September 2020. The numerous questions and answers about personal preferences relating to the purchase and consumption of food result in a number of exciting insights that can be used by new as well as established brands:
- Many consumers are open to new ideas
Even if the market is highly competitive, many consumers are open to new products: Nearly 5 out of ten people (47%) had bought a new product in the last four weeks (at the time of the survey). Young people, in particular, are keen to experiment: 75 percent of 16- to 24-year-olds and four out of every five students (78%) bought a new product while shopping in the past four weeks.
- Food great, cosmetics not so much
When it comes to trying out new products, the conditions are not the same in every segment. Many consumers are particularly looking for variety when it comes to food: Respondents who bought something new in the past month most often bought food (37%), confectionery or snacks (27%) and frozen products (26%).
Among those surveyed, there was less desire for new hygiene products (14%), cosmetics (15%) and hair/body care products (16%).
- Personal recommendations are king
Why do people give new products a chance? Grocery brands are omnipresent with their product advertising in public spaces, social media and various other advertising channels. However, the study has shown that personal recommendations from acquaintances (25%) come only second to in-store product displays (30%). Another way that bears little risk for customers and often invites them to try out new products is trial campaigns and coupons (23%).
- Online boom, but not in the food segments
Even though many people and companies are switching to digital shopping channels and generally ordering more online (not least because of the corona pandemic), the food sector seems to have little impact at first.
Not even a third of respondents (28%) can imagine ordering their food online. In fact, all the age groups show a similar purchasing pattern in this regard.
- Classic distribution of roles
In the midst of the corona pandemic, the Appinio study asked: Who is responsible for purchasing? Women are more likely than men to do the shopping (81 vs. 72%). Regardless of whether it's dairy products, spreads, fruit & vegetables or snacks & sweets: the favourite place to shop is always the supermarket. Only when it comes to meat do Brits trust the expert advice offered by a specialty retailer, such as a butcher, more often.
- Go's and No-Go's
Where people shop depends on many factors. Most important to the respondents are cleanliness (91% named this as a criterion), variety in product selection (91%) and its proximity to work or home (86%). Less relevant for the decision, but still important, are loyalty programs (63%), the availability of a fresh food counter (63%) and organic product selection (47%).
🔑 We have summarised the results of our FMCG Personal Care Study in a 40-page report. Access it for free below.
The UK FMCG Report
This is how consumers think of personal care and hygiene products
In addition to food, the area of ​​body and hygiene products is another large segment in the FMCG area, which achieves comparatively high sales every year. When it comes to choosing and consuming such products, however, consumers think differently. The representative study Appinio carried out across the UK in June 2021 (by age and gender) with 1,000 consumers paints a different picture than the food preferences:
- Supermarkets and beauty retailers as a temple of care
When it comes to personal care products, supermarkets and health & beauty retailers are the most preferred shopping locations for Brits. The majority of respondents go to supermarkets to buy everyday care products such as oral and dental care products (55%), deodorants (53%), shower products (52%) or hair care products (48%).
Not even a tenth of those surveyed buy these products in online shops, because the majority want immediate access to the products (47%) and to be able to test/smell/see them before making a purchase (47%).
- Price-sensitivity
For every second person (57%), the price is the most important criterion when buying a care or hygiene product. Only then do personal experience (33%) and skin compatibility (27%) play a role. The brand is considered by every fifth respondent (23%).
On the other hand, diverse offerings (5%), the fact that a product is vegan (4%), and labels or certificates (3%) are less important.
- Information on ingredients, yes or no?
Nearly three in five (58%) think that the care and hygiene products sector is transparent when it comes to the use, listing and explanation of ingredients. The majority (77%) also find that the industry takes into account the different needs and diversity of people.
- Personal recommendations win
Similar to food, recommendations from friends play a central role when trying out new products - 30 percent of those surveyed stated this as the main reason for testing a new product.
Furthermore, TV spots and direct in-store advertising (30 and 31 percent, respectively) work well to get consumers excited about a new product. Advertising with posters and billboards (5%), on the radio (6%) or in print media (7%) have the least influence.
- Sustainable products are on trend
Eight out of ten people (80%) care about sustainability, and for a similar number, it is no different when buying care and hygiene products (79%). Consumers pay particular attention to whether a product is cruelty-free and was manufactured in an environmentally friendly and resource-efficient manner (40% each).
The sourcing of recyclable packaging materials and the use of organic ingredients are also popular (32 and 29%, respectively). On the other hand, vegan ingredients (10%), the use of local ingredients (15%) and the fact that the product contains as few ingredients as possible (16%) are not as widely considered by consumers.
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