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Copyright © 2017 The Nielsen Company

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

QUARTER BY

NUMBERS Q4 2018

EUROPE

2


CONTENTS –EUROPE WEST

SECTION 1

THE BIG PICTURE: EUROPE WEST Message from Olivier Lamare ………………………………………………………………………..….

EUROPE AT A GLANCE Key economic drivers……………………………………………………………………………………..

Looking through West Europe FMCG Lens………………………………………………………......

COUNTRY SNAPSHOT Austria……….………………………….…………………………………………………………………..

Belgium………………………………………………………………………………………….......……..

Denmark………………………………………………………………………………………..................

Finland………………………………………………………………………………………………….......

France………………………………………………………………………………………………………

Germany……………………………………………………………………………………………………

Ireland…………………………………………………………………………….…………….......….......

Italy……………………………………………………………………………………....……………........

Netherlands………………………………………………………………………………....……………..

Norway………………………………………………………………………………………..………........

Portugal…………………………………………………………………....………………….……….......

Spain……………………………………………………………………………………………..…………

Sweden……………………………………………………………………………………………….........

Switzerland………...………………………………………………………………………………………

United Kingdom…………………………………………………………………………….……………...

IN THE INDUSTRY Changing Consumer Propensity : How consumer spending is evolving…………………………..

1

T 4

E 5

7

T 8

11

14

17

20

23

26

29

32

35

38

41

44

47

50

Y 111

3


CONTENTS – EUROPE CENTRAL & EAST

SECTION 2

THE BIG PICTURE: EUROPE CENTRAL & EAST Message from Roberto Pedretti and Daniel Chorbadjian…………………………...........................

EUROPE AT A GLANCE Key economic drivers…………..…………………………………………………….…………..........

Looking through Europe Central & East FMCG Lens…………………………………………….......

COUNTRY SNAPSHOT Belarus……….………………………….………………………………………………………………….

Bulgaria……….………………………………………….…………………….......................................

Croatia……….………………………………………….…………………….......................................

Czech Republic……………………………………………………………………………………………

Estonia…………………………………………………………………………………………....………..

Greece………………………………………………………………………………………………….......

Hungary…………………………………………………………………………………………………….

Kazakhstan…………………………………………………………………………………………...……

Latvia……………………………………………………………………………………....……………….

Lithuania……………………………………………………………………………………………………

Poland………………………………………………………………………………………………………

Romania…………………………………………………………………....………………………………

Russia………………………………………………………………………………………………………

Serbia………………………………………………………………………………………………………

Slovakia…………………………………………………………………………………………………….

Slovenia……………………………………………………………………………………………………

Turkey………………………………………………………………………………………………………

Ukraine……………………………………………………………………………………………………..

IN THE INDUSTRY Changing Consumer Propensity : How consumer spending is evolving…………………………..

1

T 53

E 54

56

T 57

60

63

66

69

72

75

78

81

84

87

90

93

96

99

102

105

108

Y

111

4


THE BIG PICTURE:

EUROPE WEST

Olivier Lamare

Retail Services

Developed Markets

As everyone holds their collective breath for the approaching BREXIT and its potential

impacts, it may be a good time to consider that moving forward there will be plenty more

“external” factors to our industries that will present challenges and opportunities. One of these

is changing consumer prosperity.

Over recent years, we have seen observations from market leaders in Western Europe that

highlight growth coming from both budget and premium offerings. Often, at the same time and

in the same market. The success of private label has come with examples of premium, niche

and craft products while the popularity of hard discounters has been accompanied by growth

in specialty stores and convenience.

The expanding fragmentation of the financial and spending capability of consumers across

Europe, is evident in these observations and the widening gap is something that will become

an increasingly important factor in FMCG. On February 21st, Nielsen released a report on

Changing Consumer Prosperity around the globe and it drew into focus some of the European

mentality that we ought to consider.

In Europe, 37% of consumers feel they are better off financially than they were five years ago,

32% say they are about the same and 31% are worse off versus five years prior. The

proportion of respondents who are worse off is the highest region in the world. There are some

noticeable variances across markets and in Western Europe the likes of France (36%)

Finland, Italy and Norway (all 35%) have the highest percentage of people saying they are

worse off. There are a handful of Eastern European markets who are among the top “better

off” consumer groups globally.

The dynamic economic conditions we are experiencing including various social and political

uncertainties across Europe, is creating a sensitive consumer market where the attitudes and

approach to spending stretches across a spectrum that retailers, manufacturers and industry

players have to navigate in smarter ways to continue winning.

Part of a winning formula is to understand what European consumers are willing and not

willing to pay a bit more money for and this again differs across markets. Looking at Europe

on a regional level, consumers report they are more likely to spend a premium on clothes,

shoes, electronics, meat/seafood and tea or coffee and least likely to pay a premium for

tobacco, carbonated beverage, frozen meals, salty snacks and cereal. They are also seeking

certain benefits that will often lead to higher price points like organic ingredients and this has

been seen in healthy options with 28% of Europeans saying they will pay more for these

qualities. Even with these variances at a market level, the challenge is complicated by

consumers switching approach to premium or budget by occasion and options at different

quality and price tier may become increasingly critical.

Looking forward, economic growth and associated levels of discretionary spending ability may

be more subdued in Western Europe when compared to some buoyant forecasts in areas like

Asia or even Eastern Europe. This will not dampen prospects across the board in Western

Europe but continue to fragment the consumer landscape and increase the need for more

targeted, thoughtful and precise approaches to the consumer where consideration of spending

capability and financial situation will be key.

You can access the Changing Consumer Prosperity report here or you can email

regan.leggett@nielsen for questions.

https://www.nielsen.com/us/en/insights/reports/2019/changing-consumer-prosperity.html

mailto:[email protected]

5


Q4 2018Q4 2018 vs

Q3 2018

GDP

(annual %

growth)

Inflation

France 64 -13 0.9 1.9

Finland 83 -7 2.8 1.3

Netherlands 105 -7 1.8 2.0

Switzerland 99 -7 1.8 1.3

Portugal 87 -6 1.7 0.8

Norway 89 -5 1.8 3.4

Sweden 95 -4 2.4 2.1

Ireland 106 -4 2.8 0.9

UK 98 -3 1.3 2.2

Spain 94 -3 2.4 1.7

Germany 104 -2 0.6 2.0

Denmark 120 -2 2.3 0.8

EUROPE WEST AT A GLANCE

ECONOMIC PULSE OF CONSUMERS

AROUND EUROPE

The Conference Board® Global Consumer Confidence Survey is conducted in

collaboration with Nielsen measures perceptions of local job prospects,

personal finances and immediate spending intentions. Consumer confidence

levels above and below a baseline of 100 indicate degrees of optimism and

pessimism, respectively

Economic uncertainty has impacted consumer confidence across

many Western European markets in the last quarter

CONSUMER CONFIDENCE INDEX


GDP and Inflation reflect % change per annum to Q4 2018 or (-) indicates not available at time of publication

Source: Economist Intelligence Unit (EIU) * estimate/OECD/local government sources

The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen.

GDP

(annual %

growth)

Inflation Q4 2018Q4 2018 vs

Q3 2018

2.0 2.1 Austria 103 3

0.1 1.4 Italy 70 1

1.2 2.6 Belgium 94 1

6


22

11 1214

11

20

30

1815

27

19

25

7

22

14

2321

15

24

10

19

8

22 23

33

1820

12

1715

20

14

0

5

10

15

20

25

30

35

EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SEThe economy Increasing utility bills (electricity, gas, heating, etc)

Although positive sentiment prevails across Western Europe there is still

caution in consumers minds with many indicating they prefer to save rather

than spend.

WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS?

WHO’S SPENDING, SAVING AND INVESTING?

Type of concern

After living expenses, how is spare money spent

Bars reflect Q4 2018. Table shows comparison to Q3 2018

EUROPE WEST AT A GLANCE


CONSUMER SENTIMENTS IN

EUROPE


4036

39

29 28

4652

37 39

46 44 45

5350 49 51

38 37

26

34

48

27

48

21

32 33

26

47

34 33

2327

0

10

20

30

40

50

60

EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

Putting into savings New clothes


Putting into savings 2 2 -2 -1 0 -3 2 7 0 1 5 -5 -2 -2 4 5

New clothes 0 1 -4 0 3 -2 4 -2 -7 -2 -1 0 6 -5 2 1


The economy 0 -1 2 2 -2 1 1 -3 4 6 6 2 1 0 2 2

Increas ing uti l i ty bi l l s (electrici ty, gas , heating, etc)3 0 -5 0 7 0 6 1 11 -2 2 -4 1 0 1 6

7


0.4% 1.6%1.2% 1.2%

0.4%

2.4%1.9%

1.1% 1.1%

0.5%0.3%

2.3%

3.2%

1.6% 1.5%

-0.1%

-1.3%-1.6%

-1.2%

0.3%

-0.2% -0.2% -0.6%-0.3%

0.8% 1.2%

-0.5% -0.5%

0.2%0.9%

0.3% 0.2%

-0.4%

0.0%

0.7%

2.2%

1.7%

0.5%

0.8%

1.3%1.4%

1.7%

2.7%

1.8%

2.5%

AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

Unit value change Volume change Nominal growth

IRELAND (+1.7%)UK (+0.8%)

FRANCE (-0.2%)

LOOKING THROUGH EUROPE WEST FMCG LENS

FAST MOVING CONSUMER GOODS MARKET DYNAMICS – Q4 2018

Weighted average – WEST EUROPE – 15 countries

WHERE ARE THE FMCG GROWTH OPPORTUNITIES?

Average volume growth Q3 2018 & Q4 2018

Avg. volume growth decreasing versus last period

Avg. volume growth increasing versus last period

ITALY (+0.5%)

BELGIUM (-0.9%)

NETHERLANDS (+0.6%)

SPAIN (+0.4%)

Colour coding indicates growth or declining trend

compared to same 6 month period year ago

Average volume growth of Q3’18 & Q4’18 vs Q3’17 & Q4’17.

AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

SWITZERLAND (-1%)

AUSTRIA (0%)

FINLAND (+2.5%)

DENMARK (+0.9%)

NORWAY (+0.1%)

SWEDEN (+1.6%)

GERMANY (-0.2%)

PORTUGAL (+0.4%)

8


AUSTRIA SNAPSHOT

While the Austrian economy experienced a strong upswing throughout the year, GDP slowed

toward the end of 2018, with growth at 2% in Q4 2018. However, strong exports, price

stability and high investment activity are great indicators for another strong economic

performance in 2019. Consumer confidence hit a significant high, climbing to 103 points.

Almost half of Austrians (49%) feel that now is a good time to buy the products they want and

need (up 7 points from Q3), with their confidence in personal finances also growing by two

points to 61. Optimism regarding job prospects, on the other hand, contracted four points to

63, but was still much stronger compared to previous years.

Despite strong economic indicators, the FMCG market couldn’t quite keep the pace in 2018.

After a bit of headway in Q3 due to the warm weather (up 0.8%), growth slowed again in Q4

with volume sales declining -0.1% and prices increasing slightly by 0.4%. The total market

ended Q4 with a 0.3% for the quarter and 1.1% for the year.

While mid-sized Hypermarkets (1000-2499m2) and Supermarkets (400-999m2) remain

positive growth drivers, large food stores (250-399m2) showed the greatest decline (-5.3%).

The long-term slowdown of Discounter sales also continues in Q4, decreasing by -0.3%,

What’s behind this development? Aggressive promotion strategies by other retailers —

challenging Discounter’s price positioning. To try to counter this, Discounters are

transforming themselves increasingly into regular supermarkets, addressing consumer trends

and providing similar shopping experiences as other retailers do.

Looking at the 12 month trends, alcoholic beverages (3.5%) and non-alcoholic beverages

(4.0%) recorded the biggest gains due to the extended summer. Baby and personal care

segments performed the weakest, as consumers increasingly purchase these categories

online. The top five manufacturers of food and drug assortment combined grew by 4.5% and

outperformed all other manufacturers.

As retailers and manufacturers strategize for 2019, focusing on conscious consumer trends

will be a key trend to capitalize on for growth. With a strong economic outlook and consumer

confidence at its record high, we anticipate FMCG sales to lift during the course of the year.

COUNTRY HIGHLIGHTS

CONSUMER CONFIDENCE INDEX ECONOMY WATCH

Source Economist Intelligence Unit (EIU) Q4 18 OECD

The Conference Board® Global Consumer Confidence

Survey is conducted in collaboration with Nielsen.

Jens Olig

Managing Director

Austria, Germany,

Switzerland

87 87 86 87 87 8494

102 100 101 101 103

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU AT

3.02.8

3.2

2.82.6

2.02.2 2.3

1.92.2 2.2 2.1

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018

GDP growth (% change pa)

Inflation, consumer prices (% change pa)

9


1.1%

3.5%

0.4%

1.8%

-5.3%

0.7%

-0.3%

1.6%

Total FMCG Hypermarkets 1000 - 2499 m² Hypermarkets > 2500 m²

Supermarkets 400 - 999 m² Large Food 250 - 399 m² Small Food Up To 250 m²

Discounters Drug Stores

TOTAL AUSTRIA – CHANNEL PERFORMANCE

FMCG growth outpaced by GDP growth: FMCG market slows again in Q4 with

volume sales declining -0.1% and prices increasing slightly by 0.4%.

Long-term slowdown of Discounters continues in Q4, fuelled by aggressive

promotion strategies by other retailers — challenging Discounter’s price USP.

FMCG MARKET DYNAMICS

(weighted average)

VALUE CONTRIBUTION AND GROWTH – MAT Q4-2018

15%

8%

40%

3%2%

24%

8%

1.5%1.0% 0.5% 1.1% 1.4%

2.6%1.5%

0.9%

0.8%

0.4%

2.9%0.2%

3.1%

5.2%

2.4%

1.1%

1.8%

-0.7%0.0%

-0.1%

4.3%

1.1%

3.6%

6.3%

3.9% 3.7%3.3%

0.2%0.8%

0.3%

MAT YA MAT TY Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Austria

Unit Value Growth Volume Growth Nominal Value Growth

10


Baby and Personal care segments show weakest growth, as consumers

increasingly purchase these categories online.

TOTAL AUSTRIA – SUPER CATEGORIES PERFORMANCE

TOTAL AUSTRIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Top 5 manufacturers outperform all others, fuelled by warm weather sales

from Beverage manufacturers.

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0%

Top 1-5 8.5%

Top 6-10 4.8%

Top 11-30 9.8%

Top 31-100 11.3%

100+ 44.9%

Private Label 20.8%

1.1%

4.5%

-0.5%

2.8%

1.0%

0.6%

0.6%

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0%

Fresh Food Perishable 32.7%

Culinary Shelf-Stable & Other 17.0%

Dairy 11.4%

Alcoholic Beverages 8.4%

Non-Alcoholic Beverages 7.3%

Homecare/Pet Care 7.0%

Confectionery 7.0%

Personal Care 6.1%

Hot Beverages 2.4%

Baby Care 0.7%

1.1%

0.0%

1.6%

1.2%

3.5%

4.0%

1.2%

1.1%

-0.2%

0.5%

-1.5%

11


BELGIUM SNAPSHOT

While economic growth remains steady in Belgium, consumers remain cautious. With

Brexit imminent, Belgian consumer confidence has grown slightly by one point to 94, but

optimism on job prospects has receded four points to 47. Amidst the relatively sizeable

legal wage increase that took place in January this year, optimism on personal finances

grew one point to 46%. 42% of people believe that now is the right time to buy the

things they want and need, up two points from Q3 2018.

As price and inflation are dominating topics within the Belgian FMCG world, Q4

developments were relatively in line with the preceding quarters — as volume sales

dropped 1.3% and prices jumped 1.6%, leading to a (rounded) 0.2% total FMCG market

growth.

Looking at the trends by channel across the year, Superettes (5.8%) and Large

Supermarkets (1.7%) continued to drive the growth, with Small Supermarkets declining

by 0.6%. This is in part due to coverage changes with the closure of some Small

Supermarkets this year.

Due to the unseasonably warm and protracted summer, we saw a jump in non-Alcoholic

Beverages (6.8%). Alcoholic Beverages showed a contraction of -0.1% due to the tax

on alcohol, which has increasingly driven consumers to purchase their alcohol across

the border.

Salted Snacks (2.3%), Fresh (2.3%) and Bakery and Toast (3.7%) were the big winners

of 2018, not only due to the prolonged summer — but also due to price increase on

bread and meat and growing popularity of nuts due to the health trend. The Top 5

manufacturers benefited the most from the warm weather boosts due to increased sales

on soft drinks and ice cream.

Heading into the late Easter period, retailers and manufacturers have a great

opportunity to build longer sales cycles for their seasonal Easter products — which can

result in significant additional sales, particularly if the weather isn’t too hot. Given the

rising importance of bio products, we expect to see a growing number of manufacturers

marketing these trends during this holiday season.

COUNTRY HIGHLIGHTS CONSUMER CONFIDENCE INDEX ECONOMY WATCH

Source Economist Intelligence Unit (EIU) ) Q4 18 OECD

Pedro Lima



Pedro Lima

Managing Director

Belgium,

Netherlands

87 8786

87 87

84

95

85

88

91

93 94

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU BE

1.5

1.9

1.5 1.4

1.7

1.2

1.9 2.0

1.5

2.22.3

2.6

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



12


TOTAL BELGIUM – CHANNEL PERFORMANCE

Given that price and inflation are dominating topics within the Belgian

FMCG world, Q4 was in line with preceding quarters — as volume sales

dropped 1.3% and prices jumped 1.6%.

Superettes are capitalizing on consumers’ focus on convenience, enjoying

5.8% growth.

FMCG MARKET DYNAMICS - BELGIUM

(weighted average)


1.0%

-0.9%

1.7%

-0.6%

1.3%

5.8%

Total FMCG Hypermarkets Large Supermarkets

Small Supermarkets Discounters Superettes

11%

50%

18%

17%

3%

1.3%

2.3%

0.8%

1.3%

1.0%

2.2% 2.3%

2.2%

2.9%

1.6%

-0.2%-1.3%

-0.8%

1.4%

-0.8% -0.4% -0.8%

-2.3%

-0.5%-1.3%

1.2% 1.0%

-0.1%

2.7%

0.2%

1.8%1.5%

-0.1%

2.4%

0.2%


Belgium


13


TOTAL BELGIUM – SUPER CATEGORIES PERFORMANCE

MAT Q4-2018 MAT Q4-2018

TOTAL BELGIUM – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

The Top 5 manufacturers benefited the most from the warm weather boosts due to

increased sales on soft drinks and ice cream.

Prolonged summer, price increases, health trends, and the holiday season

positively impacted Salted Snacks, Fresh, and Bakery & Toast


Total FMCG 100.0%


Dairy 13.5%

Fresh Products 12.2%

Non Alcoholic Beverages 12.0%

Grocery 11.6%

Health & Beauty 8.2%

Housekeeping 5.8%

Frozen 5.0%

Confectionery 4.6%

Sweet Snacks 3.6%

Hot Beverages 2.8%

Salted Snacks 2.4%

Pet Product 1.9%

Bakery & Toast 1.8%

1.0%

-0.1%

2.4%

2.3%

6.8%

-1.6%

-1.7%

0.2%

0.1%

-1.6%

-0.9%

-1.6%

2.3%

0.2%

3.7%


Total FMCG 100.0%

Top 1-5 15.0%

Top 6-10 8.2%

Top 11-30 13.9%

31-100 10.5%

100+ 15.3%

Private Label 37.1%

1.0%

3.1%

-0.1%

0.2%

0.3%

0.7%

1.0%

14


0.9 0.9

-0.8

0.5

2.12.3

1.51.3

0.71.0 0.9 0.8

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



DENMARK SNAPSHOT

The Danish economy showed strong performance through the last two quarters of

2018, seen in a low unemployment rate and in the highest Consumer Confidence

Index in Europe.

FMCG sales increased by 0.9% during 2018 vs. 2017, which is at the same level of

growth as the year before. The growth was purely driven by price increases, while

the volume sales in 2018 ended at the same level as in 2017.

The footprint from the warm and sunny summer had a minimal impact towards the

total grocery trade but substantially influenced categories within. Beverages and ice

cream responded positively, while the confectionery super category suffered from

lower demand due to the heatwave.

Our shopper research shows for the first time, that the demand for shopping in

Discount stores is decreasing leading to fewer store visits while the visits in

supermarkets are increasing. Meeting the local shopper demand for value, service,

convenience and proximity at store and category level is critical for both

manufactures and retailers to succeed.

The winners in this intense battle between brands, retailers and channels are those

that focus on meeting changing shoppers demand in the best and increasingly

personal way. Danish shoppers are looking for the best promotions either before

they shop or when they browse the shelves online or offline so retailers and

manufacturers must ensure consistency in their branding and pricing strategies - no

matter the channel.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) ) Q4 18 OECD



Cecilie Westh

Managing Director

Nordics

87 87 86 87 87 84

115 116 114 118 122 120

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU DK

15


TOTAL DENMARK– CHANNEL PERFORMANCE

The growth in Q4 is mainly driven by continued growth within Beverages and

Frozen food while Household products and Personal care continue to decline.

The convenience channel continues to grow due to increased on the go

consumption and demand for proximity


(weighted average)


0.9%

0.6%

4.6%

Total FMCG Grocery Trade Convenience

93%

7%

1.9%

0.9%0.8%

1.2% 2.3%

2.6%

1.7%

0.7%

-0.5%

0.4%

-1.0% 0.0%

-1.5%

-0.1%

-1.4%

-0.5%-1.1%

0.1%

1.6%

0.3%

0.9% 0.9%

-0.7%

1.2%1.0%

2.1%

0.5%0.9%

1.2%

0.7%


Denmark


16


Beverages and Frozen food performance driven by increased demand for

specific categories like water, soft drinks, juice, rose wine, energy drinks, multi-

pack ice cream, ice lollies. Price increases are driving value sales within milk

products and butter.

The decline in Personal care and Household products are mainly due to

challenging new channels like Normal and E-commerce

TOTAL DENMARK – SUPER CATEGORIES PERFORMANCE

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Packed Food 27.6%

Beverages 22.3%

Dairy Products 15.7%

Fresh Food 12.2%

Confectionery 6.4%

Frozen Food 6.2%

Household Products 5.8%


0.9%

-0.7%

4.3%

3.0%

-0.1%

-3.1%

5.0%

-4.2%

-3.6%

17


FINLAND SNAPSHOT

In Q3 2018, Finland witnessed a record ten year high in consumer confidence but it

flattened back to below the EU average in Q4 driven mostly by declining spending

intentions and diminished foreseeable job prospects. Consumer prices are slowly on the

rise and GDP growth rate declining. Still FMCG value grew at a good pace versus year

ago at 3.7 % driven mostly by price increases accounting for two thirds of the growth

and moderate volume growth at 1.0 %.

Smaller store formats led the value change at the cost of hypermarkets’ slowdown,

partly driven by legislation change in the beginning of 2018 allowing stronger alcohol

(5.5 %) content products to be sold in grocery stores than the year before. Before the

stronger alcohol products were only available in the government stores often situated

close to hypermarkets or larger supermarkets.

E-commerce has taken foothold with strong growth of 28% in 2018 – driven by shoppers

trialling purchasing FMCG goods online. E-commerce FMCG penetration increased 2%

points to nearly 18% meaning 50,000+ new online FMCG shoppers. The structure of the

online FMCG basket is changing and now contains more basic food items than it did a

couple of years ago. However, the online share is still below 1.0%.

2018 was a year of positivity among consumers as well as the FMCG industry with

unprecedented hot weather in the summer pampering the Finns even further. Towards

the end of the year a rise in news coverage on slowing rate of general growth and

economists warning on diminishing outlook for the future reflected in the last quarter

results. Finnish shoppers visit more stores within a month than the average for the

European shopper. They are looking for the best promotions at the right price,

increasing the number of trips they make but shopping for smaller baskets. This is more

evident among shoppers aged under 50 years as older shoppers (50+ years), with

stronger purchasing power have a larger basket. For the future, connecting e-commerce

and 50+ year old shoppers, controlling 58% of the FMCG spend, by removing barriers to

purchase FMCG online will be the key to future growth of e-commerce.





Cecilie Westh

Managing Director

Nordics

87 8786

87 87

84

8180

8283

90

83

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU FI

2.3

2.72.5

2.3 2.3

2.8

0.70.6

0.8

1.1

1.41.3

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



18


TOTAL FINLAND – CHANNEL PERFORMANCE

FMCG market growth in 2018 was strongest for some years. Exceptional Q3

growth was affected by the summer heat wave and increase in Beverages,

but Q4 returned to normal levels.

Smaller store formats led the growth at the cost of hypermarkets with stronger

alcohol content products (max.5.5%) more easily available in neighbourhood

stores. Previously these products were available in government run stores

often located near hypermarkets and larger supermarkets.


(weighted average)


37%

28%

10%

11%

6% 8%

3.7%

0.7%

6.9%

4.0%

5.9%

7.5%

0.7%

Total FMCG Hypermarket Supermarket Superettes Hard Discounter Variety Stores Other Shop Types

0.7%

2.7%

-0.7% -1.1% -0.7%

1.0%

1.8%

2.0%

2.3%

1.9%1.0%

1.0%

2.1%

3.2%2.5% 0.5%

-1.0%0.0%

5.3%

-0.2%

1.7%

3.7%

1.4%2.1% 1.9% 1.6%

0.8%

2.0%

7.6%

1.7%


Finland


19


Beverages and Frozen food lead the growth with increase in both value and

volume. Largest super categories; fresh food and dairy grew slightly in value,

but saw a decline in volume.

TOTAL FINLAND – SUPER CATEGORIES PERFORMANCE

TOTAL FINLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Hot summer and government legislation change for alcohol beverages with a

max 5.5% alcohol led to breweries being the fastest growing manufacturers.

Largest brewery in Finland falls in the top 6-10 largest manufacturers group

growing fastest.


Total FMCG 100.0%

Top 1-5 15.5%

Top 6-10 6.9%

Top 11-30 14.9%

Top 31-100 12.6%

100+ 26.4%

Private Label 23.7%

3.7%

3.7%

6.2%

5.6%

3.9%

2.2%

3.1%


Total FMCG 100.0%

Fresh Foods 35.4%

Dairy 15.3%

Shelf Stable Foods 13.9%

Beverage (Excl.Wines&Spirits >5.5% Alc.) 11.2%

Others 10.2%


Hygiene 4.8%

Frozen Foods 4.0%

3.7%

2.4%

1.3%

2.0%

14.1%

5.0%

-0.2%

2.3%

7.4%

20


2.72.8

2.2

1.61.5

0.91.0

1.2

1.5

2.1 2.2

1.9

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



FRANCE SNAPSHOT The FMCG industry in France had a difficult finish in 2018 reporting a 0.5% growth in

value and -0.6% drop in volume during the last quarter, along with a low consumer

confidence.

Since mid-November, the yellow vests movement has been a newsworthy event,

with people protesting in the streets against the government and blocking streets

every Saturday. Despite significant fears from retailers and brands, the impact was

limited over the whole period. Although many stores faced record-high losses on

Saturdays, French shoppers quickly adapted and shifted their purchases to other

days in the week, and other preferred channels such as ecommerce and

convenience stores instead of large hypermarkets, which were more difficult to

reach.

The last quarter confirmed the momentum of e-commerce (mostly click & drive in

France) with 7.5% growth as well as consumers’ appetite for small and medium

FMCG companies. The growing force within FMCG has been the Sweet Frozen and

fresh market industries (both Dairy and Non-dairy). We also observe the continuing

trend of “premiumisation” that has been evident over the past five years. Likewise,

healthy food is on the rise. Organic food has seen significant growth in 2018, up

23% in grocery stores while specialized organic stores continue their expansion. The

Christmas period added a positive touch despite a calendar effect (December 31st

not included in our 2018 data); December 23rd and 24th appeared to be the number

one Sunday and Monday for more than two years!

We anticipate FMCG will grow 1.2% in 2019 on the back of stable volumes and

slight increases in prices. A new legislation (‘EGAlim law’) has just been introduced

which caps promotional levels for retailers as well as guaranteeing a fair price to

producers. This might create a slight inflationary trend for food products in the

following months, redefining the retail landscape, which could be more favourable to

Private Labels.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q4 OECD

Anne Haine

Managing Director

France



87 87 86 87 87 84

7179 79 78 77

64

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU FR

21


TOTAL FRANCE – CHANNEL PERFORMANCE

Uncertainty and yellow vests movement have undermined consumers confidence.

FMCG resisted more than other industries but still felt the impact in Q4.


(weighted average)


E-commerce over performs compared to other channels, with click & drive

meeting shoppers expectations and retailers testing new concepts

(e.g. “pedestrian click & collect”)

1.5%

-0.2%

1.4%

2.7%

7.5%

4.6%

Total FMCG Hypermarkets Supermarkets

Convenience Drive (E-Commerce) Smpl / Discounters

41%

34%

9%

5%

12%

1.4% 1.7%1.3%

-2.0%

1.1% 1.6% 1.3%

1.8%

2.3%1.1%

0.3%

-0.2%

-2.0%

5.1%

0.2%

1.5%

0.2%

-0.5%

0.1%

-0.6%

1.7%1.5%

-0.7%

3.1%

1.3%

3.1%

1.5% 1.3%

2.4%

0.5%


France


22


Fresh categories answer consumers needs for better, healthy food with a

strong focus on organics, many innovations and appetite for ready meals.

TOTAL FRANCE – SUPER CATEGORIES PERFORMANCE

TOTAL FRANCE – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Small players continue positive performance while major players face more

difficulties. Private Label return to green and should register positive trends in 2019.


Total FMCG 100.0%

Sweet Grocery 17.7%

Fresh Non-Dairy 17.4%

Dairy 16.2%

Savoury Grocery 12.1%

Alcoholic Drinks 9.7%

Soft Drinks 7.1%

Homecare 5.9%

Personal Care 5.7%

Paper Products 3.6%

Savoury Frozen Food 3.3%

Sweet Frozen Food 1.2%

1.5%

0.4%

2.9%

2.6%

1.1%

1.6%

1.7%

2.3%

-1.8%

0.2%

-1.2%

7.3%


Total FMCG 100.0%

Top 1-5 11.5%

Top 6-10 7.2%

Top 11-30 16.5%

31-100 16.7%

100+ 15.7%

Private Label 32.5%

1.5%

0.2%

-0.1%

2.4%

2.4%

3.4%

0.5%

23


GERMANY SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD GDP for Q4 2018



Germany’s economy has slowed over 2018 with GDP growth at 1.1% in Q3 and 0.6%

in Q4. Supply-side developments such as labour and capacity bottlenecks have been

cited as some of the causes behind the slowdown and expected price increases for

goods and services and a renewed willingness to save are curbing consumer

spending in Germany. However, experts predict that private consumption will pick up

again in 2019 with GDP growth predicted to be around 1.5% for 2019.

In FMCG, slightly higher prices (1.2%) and lower sales volumes (-1.2%) balanced

each other out in Q4. Overall growth for the year 2018 was with 2,0% the same level

as the year before and mainly driven by price increases. Summer weather until

October continued to drive sales in the "heat wave" product groups such as non-

alcoholic beverages (3.9%), beer & beer mix (4.6%) and ice cream (5.5%).

Winter seasonal product groups are posting losses. The decline in nuts and almonds

for baking (-11.0%), Christmas Cake (Stollen -5.4%) and biscuits (-3.6%) testifies that

pre-Christmas period was not as strong as previous years. However, Halloween

festivities helped special confectionery with growth at 33.4%, with significant range

expansion in certain Discounters. Hypermarkets performance is really being bolstered

by smaller format stores rather than larger scale, as these stores become an

alternative to declining city center supermarkets that are closing down.

Private label is falling behind market growth as Discounters focus on brand listings in

the near-food sector which includes products in health, beauty and homecare. The

Drugstores, whose growth is lower than in the previous year, are also feeling the

effects of Discounters focusing on branded listings. Additionally, less new Drugstore-

openings push the market growth.

Year 2019 starts with an unprecedented brand promotion strategy of Aldi which drives

the market immediately into a new “price war” for main food brands. If nobody counter

steers with innovative solutions, this war could end in losses for retailers and

manufacturers - consumers could be the benefiting third party.

87 87 86 87 87 84

102 103108 107 106 104

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU DE

2.72.8

2.01.9

1.2

0.6

1.7 1.6

1.3

1.92.1

2.0

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



Jens Olig

Managing Director

Austria, Germany,

Switzerland

24


TOTAL GERMANY – CHANNEL PERFORMANCE

FMCG sales flattened in Q4 with a weaker Christmas season - increased

prices levelled consumption declines

Small Hypers are the main growth drivers due to store expansion as city-

centre small supermarkets decline. Drug Stores growth comes from

strong assortment offering and strength of private label.


(weighted average)


2.0%

2.9%

0.7%

1.4%

2.5%

Total FMCG Hypermarkets Supermarkets Discounters Drug Stores

41%

8%

41%

10%

2.7% 2.2%

1.3%

2.9%

3.1%

3.2% 3.6%

2.1%

1.8%1.2%

-0.6% -0.2%

-2.0%

0.0%

-1.1%

0.9%1.0%

-0.8%

0.7%

-1.2%

2.1% 2.0%

-0.7%

2.9%

2.0%

4.1%4.6%

1.3%

2.5%

0.0%


Germany


25


TOTAL GERMANY – SUPER CATEGORIES PERFORMANCE

TOTAL GERMANY – MANUFACTURER PERFORMANCE - FMCG

Private Label share declines are driven by increased branded listings and

branded promotions in Discounters. In other channels PL is making small

improvements (0.6 %).

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Beverages profit from sunny weather conditions, additional Beer from soccer

world cup, while confectionery is suffering.


Total FMCG 100.0%

Food Ambient 17.3%

Dairy 12.0%



Confectionery 9.9%

Fresh Food Selfservice 9.1%

Personal Care 6.8%

Household Care 6.8%

Tobacco 6.1%

Frozen Food 5.6%

Pet Food 1.6%

Baby 1.5%

Health Care 1.0%

2.0%

1.8%

4.4%

3.6%

3.9%

-1.0%

-0.1%

2.1%

1.0%

2.8%

3.4%

-0.7%

-5.0%

2.6%


Total FMCG 100.0%

Top 1-5 7.7%

Top 6-10 5.5%

Top 11-30 9.7%

Top 31-100 14.3%

100+ 22.6%

Private Label 40.2%

2.0%

0.7%

2.2%

3.3%

2.4%

3.8%

0.9%

26


IRELAND SNAPSHOT

Ireland enjoyed strong economic performance throughout 2018 with unemployment

hitting an 11 year low of 5.3% in December and the FMCG market posting an annual

value growth of 2.5%, up from 1.9% in 2017.

However, despite the strong annual performance, the months from October to

December, ring a note of warning. Although consumer confidence remains high, it

fell five points to 106 in the final quarter of the year. Retail volume, the key driver of

growth throughout the first three quarters, fell sharply from a high of 2.7% to 0.8% at

the end of the year. With prices remaining static, retail value growth was below the

full year average at only 1.3%.

As we begin 2019, the uncertainty around Brexit has already begun to impact

consumer confidence as well as consumption and spending levels. Spend levels for

Christmas 2018 were subdued indicating a new cautiousness in consumer spending

behaviour. There is much attention on the potential impact of Brexit on the supply

chain and to pricing in the retail and grocery sector, and with no clarity as to what

this impact will be it is likely to continue to dampen consumer sentiment and

spending levels for the foreseeable future.

The outlook for the Irish economy and retail sector remains positive. However, given

the uncertainty surrounding Brexit, businesses, retailers and brand owners need to

be ready for all eventualities. Planning for supply chain, pricing and potential range

impacts is key to enable navigation of the market in the months ahead. Repeating

the growth seen in 2018 is going to be a challenge. Retailers and brands will need

to remain focused on addressing changing consumer needs, particularly around

sustainability and health, in order to differentiate and stay ahead. With health

remaining the top consumer concern, this area offers an opportunity for growth,

particularly in the first part of the year when shoppers are more focused on eating

and living more healthily.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) GDP Q4 forecast



87 87 86 87 87 84

103 103 103108 111

106

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU IE

13.1

5.4

10.0

8.7

5.0

2.80.1 0.5 0.5 0.4 0.8 0.9

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



Paul Walker

Managing Director

United Kingdom & Ireland

27


TOTAL IRELAND – CHANNEL PERFORMANCE

2018 full year performance was strong but the prolonged uncertainty

surrounding Brexit has seen consumer confidence and consumption levels fall

sharply in Q4.

All channels remain in value growth but with Discounters ahead of Multiples

thanks to price inflation and volume growth.


(weighted average)


*Multiples = Multiples & Dunnes

47%

33%

20%2.5%

2.2%

2.4%

3.5%

Total FMCG Multiples Convenience Discounters

0.1%

0.9%

-1.5%

0.2%1.4%

0.1%

1.8%0.8% 0.4% 0.5%

1.9%

1.6%

1.2%

3.5%

0.4%

2.4%

2.3%

1.0%

2.7%0.8%

1.9%

2.5%

-0.3%

3.7%

1.9%

2.5%

4.1%

1.8%

3.1%

1.3%


Ireland


28


Confectionery remains the category with the strongest growth buoyed by the

2018 Christmas season, with soft drinks remaining the key driver within this

category.

TOTAL IRELAND – SUPER CATEGORIES PERFORMANCE

MAT Q4-2018 MAT Q4-2018

* NB. Soft drinks are included in Confectionery super category


Total FMCG 100.0%

Confectionery 22.5%

Alcohol 18.2%

Chilled 16.5%

Tobacco/Sundries 13.0%

Ambient 10.1%

Household 5.3%

Bakery 5.1%


Frozen Food 3.2%

Pet Food 1.6%

2.5%

6.1%

2.9%

1.1%

3.6%

-0.6%

-0.5%

0.6%

0.5%

1.2%

0.8%

29


ITALY SNAPSHOT In Q4 2018, Italy’s GDP growth slowed to -0.2% versus the previous quarter. The

average annual GDP growth for 2018 was just 0.1%, but consumers in Italy are

increasingly optimistic, with the Consumer Confidence Index growing from 69 to 70

points over the last two quarters and up two points compared to Q4 2017.

Nevertheless, the employment rate is stuck at 58.8%, with increasing seasonal

jobs and self-employment, while permanent contracts keep decreasing.

As far as FMCG retailers’ performance is concerned, figures are still positive: 2018

closes with a volume growth of +0.8% for the year and an increase in prices of

0.9%, leading to an overall value sales growth of 1.7% in comparison with 2017

TY, confirming the fourth year of consecutive growth. Discounters (5.0%) and Drug

Stores (6.6%) are the most dynamic formats, as they match consumers’ increasing

need for convenience.

There is still evidence that growth is driven by consumer spending in food

categories, and mainly by fresh grocery (4.7% for 2018) that accounts for 29.3% of

total FMCG spending. The news is that Home care and Personal care categories

have started to grow again. Among CPGs manufacturers, small brands and private

labels outpace market leaders and follower brands. In particular, those brands are

winning the preferences of Golden Shoppers, Italian high-income and trendsetter

consumers. 2019 will be a turning point for major companies, where they should

not chase every new trend, but rather invest more strategically in digitalization, be

it e-commerce or simply the improvement of in-store experience.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD for Q4 2018



Roberto Pedretti

Managing Director,

Central & Southern

Europe

87 87 86 87 87 84

6568 66

6269 70

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU IT

1.7

1.6

1.4

1.2

0.8

0.1

1.3

1.1

0.8

1.0

1.51.4

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



30


TOTAL ITALY – CHANNEL PERFORMANCE

Growth is driven by consumer spending in food categories, mainly by

fresh grocery. The news is that Home Care and Personal Care

categories have started to grow again.

Special mention to Discounters: beyond opening 170 new stores in 2018,

the channel is improving services to compete with supermarkets; with

fresh food now accounting for more than 50% of its performance.


(weighted average)


1.7%

1.1%

1.2%

-2.4%

5.0%

6.6%

Total FMCG Hypermarkets Supermarkets Convenience Discounters Drug Stores

27%

38%

12%

18%

5%

0.9%

0.7%

0.9%0.6%

1.3%0.7%

1.0%

1.3%0.3%

0.8%

-0.5%

3.1%

2.6%1.7%

2.4%

-0.7% 0.0%

1.2%

1.7%

0.2%

4.0%

3.1% 3.1% 3.1%

0.3%

1.3% 1.4%

MAT TY Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Italy


31


Fresh, ready-to-go and wellness-related products, as well as “self

rewarding” foods like gourmet specialties, are the best-performing products.

Evolving trends evident in wholemeal and organic products.

TOTAL ITALY – SUPER CATEGORIES PERFORMANCE

TOTAL ITALY – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Among CPGs manufacturers, small brands and private labels outpace market

leaders and follower brands, catching new trends and needs in a faster way.


Total FMCG 100.0%

Packaged Food 29.9%

All Fresh 29.3%

Beverages 14.2%

Personal Care 9.9%

Home Care 7.7%

Frozen 5.4%

Pets 2.0%

Light Bazaar 1.3%

Heavy Bazaar 0.2%

Textile 0.1%

1.7%

-0.1%

4.7%

1.4%

0.4%

0.1%

1.8%

1.6%

-2.3%

4.4%

-4.5%


Total FMCG 100.0%

Top 1-5 9.9%

Top 6-10 5.6%

Top 11-30 11.9%

Top 31-100 13.6%

100+ 32.2%

Private Label 26.8%

1.7%

0.4%

-1.3%

-0.9%

-0.1%

3.3%

2.9%

32


3.03.1

3.12.9

2.3

1.8

1.5 1.41.2

1.6

2.0 2.0

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



ECONOMY WATCH

NETHERLANDS SNAPSHOT

COUNTRY HIGHLIGHTS CONSUMER CONFIDENCE INDEX

Source Economist Intelligence Unit (EIU) OECD Q4 2018 The Conference Board® Global Consumer Confidence Survey

is conducted in collaboration with Nielsen.

After a huge jump in the previous quarter to 112 points, Dutch consumer confidence

declined in the fourth quarter to 105 points, but is still well above the European average of

84.. One of the major causes of the decline was decreasing optimism in job prospects,

which went from 68 points in Q3 to 56 points in Q4. According to the Centraal Bureau

voor de Statistiek, confidence in job prospects declined despite an increase of 49,000

jobs during the fourth quarter, with the ratio of job vacancies per unemployed (80 per 100)

at a new high.

After a spike in volume sales during the third quarter, FMCG volume sales contracted

again slightly during Q4 (-0.5%), ending the last 12 months at flat volume growth. Price

increases (2.3% for the quarter, and 2.7% for the full year) compensated for the drop in

volume, with nominal growth at 1.7% (quarter) and 2.6% (2018).

When looking at the full year results, the Food channel (including e-commerce) showed

the strongest growth — up 2.9% for 2018. This trend is in large part due to the prolonged

summer that even impacted the October month. The Petrol channel experienced a 2.4%

growth, in part due to the transformation of some petrol stations into mini “supermarkets.”

When diving deeper into categories, we’re still seeing the knock-on effects of the

prolonged summer on our MAT results: Beverages (up 3.7%) and Frozen Foods (5.8%)

show some of the most pronounced growth, due to the warm weather — with salads,

deodorant and ice cream showing a significant uplift. The top 5 manufacturers and

private label were the big winners for the year, seeing 4.2% and 3.4% growth

respectively. Private Label continues to grow because of Fresh — with “Verspakketten,”

meal packages containing all the fresh ingredients needed to make a full meal, seeing the

strongest volume growth within Vegetables.

As we head into the end of the first quarter, we expect the VAT increase that went into

effect in January (from 6 to 9%, making things like groceries more expensive) to have a

minor impact on FMCG growth. Nevertheless, manufacturers and retailers alike would be

wise to examine their pricing strategies to ensure they retain their shopper loyalty

throughout this change.

Pedro Lima

Managing Director

Belgium,

Netherlands

87 87 86 87 87 84

101 101 101106

112105

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU NL

33


2.6%

2.9%

0.8%

2.4%

Total FMCG Food Drug-Perfumery Petrol

TOTAL NETHERLANDS – CHANNEL PERFORMANCE

After a spike in volume sales during the Q3 warm weather, volumes decline again —

with price increases compensating for volumes in overall market growth.

Food channel shows strongest growth, with prolonged summer (extending into

October) having a positive impact into Q4.


(weighted average)


*Total FMCG includes e-commerce from January 2016

2.8%2.7%

5.8%

2.4%

3.3%

3.5%

3.4%

2.7%

2.0%

2.3%

-0.3% 0.0%

-1.4%

1.2%

-0.4%

0.2%

-0.8% -0.6%

1.7%

-0.5%

2.5% 2.6%

4.4%

3.5%

2.8%

3.7%

2.7%2.1%

3.8%

1.7%


NetherlandsUnit Value Growth Volume Growth Nominal Value Growth

85%

11%4%

34


TOTAL NETHERLANDS – SUPER CATEGORIES PERFORMANCE

TOTAL NETHERLANDS – MANUFACTURER PERFORMANCE - FMCG

Private Label continues to grow due to Fresh, with convenience items like

“Verspakketten” showing tremendous growth potential.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

In addition to Beverages and Frozen Foods, which grew strongly due to the

warm weather, salads and deodorant also showed a significant uplift.


Total FMCG 100.0%

Beverages 24.1%

Other Shelf Stable Food 17.9%

Personal Care 13.5%

Confectionery 11.4%

Dairy 11.3%

Tobacco 11.2%

Frozen 5.1%

Home Care 3.5%

Margarine/Butter/Fat 2.0%

2.6%

3.7%

1.2%

2.4%

1.1%

4.1%

2.0%

5.8%

1.7%

2.5%


Total FMCG 100.0%

Top 1-5 16.7%

Top 6-10 6.7%

Top 11-30 13.8%

Top 31-100 16.5%

100+ 26.7%

Private Label 19.6%

2.6%

4.2%

1.1%

2.7%

2.3%

1.7%

3.4%

35


NORWAY SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD Q4 2018



Cecilie Westh

Managing Director

Nordics

The last quarter of 2018 continued the trend we have seen during the year, value driven

growth - and where we now also see that the volume growth is slightly declining for the

first time since Q1 2017. The whole second half of 2018 has been driven by price

increases caused by tax-regulations on sugar-containing products like confectionaries,

beverages and ice cream. The influence on the total value growth is big, but the volume in

the categories are flat.

The new taxes in combination with and together with “free import of deliveries below $42 ”

gives the national brick and mortar stores high competition, and even though there are not

any available numbers for Q4 yet, it is reason to believe that it is still increasing. The

Norwegian government has now had a hearing with the industry, and will review initiatives

to reduce this border trade. At the other end of the scale - we’ll find big categories in

health and beauty, household products and other noon food products - and for the full

year bricks and mortar (B&M) grocery stores have lost more than 66 million dollars

compared to last year. We have defined these three areas as the main drivers for

expanding competition as: 1) E-commerce 2) Border trade 3) Dollar Stores

Our recent report Shopper Trends report 2019 shows that 54% of the respondents have

purchased food and groceries in a “Dollar store" over the past six months. Most of them

shopping in Europris, the largest player in this channel. Europris has had positive

development in 2018 and has grown by 7.3% compared to last year, adding eight new

stores to the chain during 2018. Other chains like Normal have also opened in many new

locations throughout 2018.

The B&M grocery stores are fighting back with EDLP strategies, and the market share for

total EDLP products is now up to 66.5%. With so much happening, it would be wise for

industry players to acknowledge that the competitive environment has changed and re-

visit their positioning given the growing influence of factors like cross border and e-

commerce. Actions in assortment, pricing and channel shifting would be worthwhile

considerations for some to define their own space on the chessboard.

87 8786

87 87

84

90

86

89

92

94

89

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU NO

3.8

2.0 1.9

1.5 1.61.8

1.51.3

2.0

2.4

3.3 3.4

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



36


TOTAL NORWAY – CHANNEL PERFORMANCE

FMCG performance driven by price increases as a result of new taxes

on sugar containing products.

EDLP is driving the performance of bricks and mortar grocery stores, but

they are under hard pressure from online, border trade and “dollar stores”.


(weighted average)


1.9%

2.6%3.5%

-0.7%

0.8%

1.8%2.0% 1.7%

2.4%3.2%

0.1%

0.1%

-1.4%

2.4%0.9%

0.7%0.8%

0.5%

0.7%

-0.5%

2.0%

2.7%

2.1%

1.6% 1.6%

2.5%2.8%

2.2%

3.2%2.7%


NorwayUnit Value Growth Volume Growth Nominal Value Growth

6%

29%

55%

11%2.7%

1.1%

2.3%

3.4%

1.4%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes

37


All super categories within food and beverages are growing, driven by confectionery and

beverages, while non-food (health & beauty and household products) are struggling.

TOTAL NORWAY – SUPER CATEGORIES PERFORMANCE

TOTAL NORWAY – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

The mid-tier manufacturers (top 11-30) and PL are driving the growth.


Total FMCG 100.0%

Fresh Food 28.9%

Beverages 16.2%

Packed Food 14.4%

Chilled Wares And Oils 13.1%

Tobacco 7.2%

Frozen Food 6.1%

Chocolate And Confectionery 4.9%

Wash And Housekeeping

Products4.0%

Health And Beauty 3.7%

Other Nonfood Products 1.0%

Pet Food / Pet Articles 0.6%

2.7%

1.5%

6.2%

3.0%

4.0%

1.1%

6.0%

5.0%

-4.2%

-3.6%

-1.8%

1.0%


Total FMCG 100.0%

Top 1-5 24.1%

Top 6-10 9.9%

Top 11-30 19.5%

Top 31-100 15.3%

100+ 3.6%

Private Label 27.6%

2.7%

2.1%

2.5%

4.1%

0.4%

0.5%

4.0%

38


PORTUGAL SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD Q4 018



Roberto Pedretti

Managing Director,

Central & Southern

Europe

FMCG in Portugal closed the year with a total growth of 2.8%. However, volume

for the year was half of that recorded in 2017, slowing down over the four quarters

of 2018.

In the last quarter of the year, FMCG registered a growth rate of 1.8%, which was

already very positive. As happened throughout the year, the dynamism of this

quarter was sustained by a positive price effect of 1.6%. In volume, this remained

stable (0.2%) in Q4 but growing slower than in the same period last year. We see

that Portuguese consumers are not buying more in quantity, but are buying higher-

priced categories or products, leading to a positive price effect.

In this quarter, the Portuguese consumer confidence index reached 87 points

(three above the European average) and the Nielsen “Changing Consumer

Prosperity” report shows that almost half of the Portuguese have improved their

financial situation in the last five years, spending more on Food and Household

Care. The purchase of premium products is growing among Portuguese

consumers, who, considering their increasingly busy lifestyles, are more

concerned with health and wellness, as well as a more balanced and happy life,

with more free time for their favourite activities.

FMCG growth (leveraged by a positive price effect) is proof that consumers are

open to buying products that offer them the benefits they seek, even with higher

prices. However, although value growth continues to be good, sustained by the

price effect, the same growth does not occur in volume. The scenario in Portugal

remains positive, but the trend is slowing down. The market should take into

account that it will be increasingly difficult to grow in volume. The population is not

increasing and consumers have more money to spend, are more confident and,

for this reason, are spending differently including an increase in out of home

consumption. It is essential to reduce the dependence on promotions (which

continued to grow in 2018, reaching 46% of sales), focus promotions on premium

products in order to encourage purchase, and invest in higher quality products.

87 87

8687 87

8485 84

90

85

92

87

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU PT

2.5 2.5

2.22.4

2.1

1.7

1.3

1.8

0.9

1.31.4

0.8

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



39


TOTAL PORTUGAL – CHANNEL PERFORMANCE

Portuguese are not buying more quantity, but are buying higher-priced

categories or products, leading to a positive price effect and growth in value.

The trend remains stable, with smaller store formats more dynamic, as

consumers look for greater convenience in their shopping experience.


(weighted average)


2.8%

1.7%

3.1%

3.9%

Total FMCG Hypermarkets Supermarkets Superettes+Traditionals

26%

66%

8%

3.0%

2.3%1.2%

2.4% 2.8%3.8%

3.0%1.6% 2.2%

1.6%

1.2%

0.6%

0.3%

3.7% 0.2%

2.9%1.1%

1.0% 0.6%

0.2%

4.3%

2.8%

1.6%

6.1%

3.0%

6.7%

4.1%

2.7% 2.8%

1.8%


Portugal


40


TOTAL PORTUGAL – SUPER CATEGORIES PERFORMANCE

TOTAL PORTUGAL – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Frozen products bring greater convenience and are growing strongly.

Consumers are more open to innovation and to try new brands, leading to the

growth of smaller manufacturers.


Total FMCG 100.0%

Grocer Products 38.6%


Personal Care 11.0%

Alcohol Drinks 10.7%

Household Care 8.1%

Non Alcohol Drinks 6.9%

Frozen Products 6.9%

2.8%

3.5%

1.8%

1.3%

3.3%

2.9%

2.0%

4.6%


Total FMCG 100.0%

Top 1-5 16.1%

Top 6-10 7.8%

Top 11-30 14.7%

Top 31-100 13.1%

100+ 15.4%

Private Label 32.9%

2.8%

2.3%

1.0%

3.8%

4.2%

4.3%

1.9%

41


SPAIN SNAPSHOT The expectations of the Spanish economy have been revised downwards due to the

slowdown centred on consumption and exports, as well as the reappearance of some

uncertainties, both external and internal. However, employment continued to increase

throughout the fourth quarter. Whilst it is anticipated by a number of economic sources

that the Spanish economy will continue to grow in the coming years it will not be at the

same levels. GDP is expected to grow by 2.4% in 2019 and, in this scenario, job

creation is expected to continue, which is good news for consumption.

Regarding FMCG, the last quarter of 2018 remained almost stable (-0.2%) in terms of

volume. The increase in prices in recent months showed nominal growth of 2.2% this

last quarter. The overall annual picture remains quite positive, with total annual value

growth of 2.9%, which is basically explained by unit value growth.

In a context of increasing competition between retailers, there has been strong

investments in new stores and the renewal of existing ones. The competition has

extended to national brands and private labels, which represent 40% of the value

market share, and growth looks to become increasingly challenging. Although volume

sales are stable, it is key to look for opportunities in those areas that are covering the

best needs and aspirations of consumers: health and wellbeing, convenience,

premiumisation - key elements that explain the positive performance of some segments

or categories.

Innovation continues to be an indispensable lever to accelerate market dynamics and

the Spanish consumer has always been willing to accept new product proposals.

Investment in innovation is key for both manufacturers and retailers and cooperation is

essential to ensure success in launching new products. Another critical opportunity (and

a must) for FMCG operators is digitalization. The digital shopper is demanding omni-

channel access as consumers no longer solely visit physical or online. They want the

best possible access depending on the occasion. Investments in the opening of new

stores will increasingly be replaced by a greater focus and resources devoted to

technology. The shopping experience should no longer be an attribute of the store, but a

multichannel priority. Finally, manufacturers and retailers will have to adapt their

offerings to an older population increasingly concentrated in large cities, where they

have access to better quality services.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD GDP Q4 2018



ECONOMY WATCH

Roberto Pedretti

Managing Director,

Central & Southern

Europe

87 8786

87 87

84

91

93

91 92

97

94

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU ES

2.93.1

2.8

2.5 2.4 2.4

1.9

1.6

0.9

2.02.2

1.7

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



42


TOTAL SPAIN – CHANNEL PERFORMANCE

Market stability in terms of volume but growth opportunities in categories /

segments better addressing consumer preferences.

Supermarkets become the fastest growing channel, supported by strong

investments in new and existing stores.


(weighted average)


15%

80%

5%

1.8%2.8%

0.6%1.1%

1.9%1.7% 2.2%

3.9%

2.0% 2.4%

2.1%

0.1%

1.8%

2.6%2.4%

3.5%

0.9%

-0.8%

1.2%

-0.2%

3.9%

2.9%2.4%

3.7%4.3%

5.2%

3.1% 3.1% 3.2%

2.2%


Spain


2.9%

-1.7%

3.8%

2.7%

Total FMCG Hypermarkets Supermarkets Drug Stores

43


Convenience and health are two key drivers behind some categories

positive performance.

TOTAL SPAIN – SUPER CATEGORIES PERFORMANCE

TOTAL SPAIN – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Due to private label upturn in 2018 second half, manufacturers continue

investing in promotion as a way to make their products more accessible to

consumers.


Total FMCG 100.0%

Packaged food 25.3%

Drinks 15.2%


Cooked meats 8.5%

Household 8.4%

Canned food 6.4%

Frozen 5.5%

Dairy 5.2%

Milk & shakes 4.8%

Cheese 4.6%

Ready meal 4.1%

2.9%

3.3%

2.2%

1.9%

4.0%

2.5%

2.8%

3.3%

1.2%

0.5%

3.6%

8.5%


Total FMCG 100.0%

Top 1-5 10.5%

Top 6-10 5.2%

Top 11-30 11.6%

Top 31-100 9.7%

100+ 21.9%

Private Label 41.1%

2.9%

-1.1%

0.7%

0.6%

1.3%

2.9%

5.3%

44


SWEDEN SNAPSHOT

Throughout October to December, Sweden showed a slowdown in FMCG with nominal

growth at 2.5%, down from 3.3% in the previous quarter. Volume growth has stabilised

after significant price increases across 2017.

The general election was not finalised until January 2019, causing uncertainty in Q4 for

the political direction of the country. In addition, the Riksbank announced interest rate

increases and inflation rose to the highest level in years. Both events caused Swedes

to increase savings and to feel less confident, as evidenced by the Consumer

Confidence index down from 100 in Q3 to 95 in Q4.

Within FMCG, volume consumption bounced back in the last quarter, but annual

performance is still suffering from last year’s price increases. The Swedish shopper

seeks value for money, reflected by the performance of Discounters - leading growth in

FMCG.

Dairy, Beverages and Frozen food are continuing to show strong growth in Q4 as in the

full year. Super categories in decline are Household products, caused by channel

switching to Bargain stores, and confectionery caused by the continued trend toward

health. Private Label is still hot in the Swedish grocery trade, growing faster than the

market together with larger brands. 32% of the Swedish shoppers say they would

change to cheaper grocery brands to save on household expenses.

Swedes increased their savings in Q4. To save on household expenses, switching to

cheaper grocery brands is in the top five actions for the Swedes. Higher promotional

pressure presents a challenge for both manufacturers and retailers to win a larger part

of the shopper’s wallet. Despite lots of e-commerce buzz, grocery online shopping is

behind other categories (like travel and books) and the physical store is not dead - the

battle remains in the store!

COUNTRY HIGHLIGHTS





Cecilie Westh

Managing Director

Nordics

87 8786 87 87

84

9897

99 99100

95

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU SE

2.62.7

3.3

2.6

1.7

2.42.2

1.8 1.71.9

2.1 2.1

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



45


TOTAL SWEDEN – CHANNEL PERFORMANCE

FMCG volume growth fell to 0.9% in Q4 due to price increases

The market is driven by the strong performance of Discounters. The

growth in Superettes is driven by new stores.


(weighted average)


37%

31%

20%

6%

6% 3.0%

3.0%

3.2%

2.3%

4.2%

4.4%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes Discounters

2.6%

1.8%0.8%

1.8%

3.1%

3.4%2.6%

1.6%0.9%

1.5%

-0.1%

1.2%

-1.2%

1.6%

-0.4%

0.7%

0.7%

1.8%2.4% 0.9%

2.5%3.0%

-0.4%

3.5%

2.7%

4.1%

3.4% 3.3% 3.3%

2.5%


Sweden


46


Strongest growth came from higher prices in Dairy and the extreme summer

driving consumption in Frozen Food and Beverages. Health & Beauty is

declining driven by channel switch to Bargain stores.

TOTAL SWEDEN – SUPER CATEGORIES PERFORMANCE

TOTAL SWEDEN – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

The biggest brands and manufacturers are challenged by Swedish shoppers

increasing demand for small local brands and Private Labels.


Total FMCG 100.0%

Packaged Food 24.5%

Fresh Food 20.7%


Beverages 10.4%

Frozen Food 9.2%


Health And Beauty 4.9%

Confectionery 3.7%

3.0%

2.9%

2.7%

3.5%

6.0%

7.1%

-1.8%

0.4%

-0.1%


Total FMCG 100.0%

Top 1-5 14.5%

Top 6-10 6.6%

Top 11-30 15.6%

Top 31-100 20.9%

100+ 16.5%

Private Label 25.8%

3.0%

1.0%

3.2%

3.0%

2.9%

2.3%

4.9%

47


SWITZERLAND SNAPSHOT

The Swiss economy had experienced growth for five consecutive quarters: GDP had

been rapidly increasing, employment was on the rise, and consumer confidence was

strong. However in Q3 2018, this strong growth pattern was suddenly interrupted.

Switzerland is currently following a significant economic downturn, seen concurrently in

other European countries like Germany.

Mirroring these trends, the Swiss FMCG market showed a slight nominal value

decrease in Q4 — impacted by a -1.6% decrease in volume sales and counteracted by

+1.2% increase in price. The fresh categories, and in particular fruit, vegetables and

meat, declined compared to last quarter. However, 2018 remains a positive year for the

Swiss FMCG market overall, showing total nominal value growth of 0.6%. Small

Supermarkets and Discounters profited the most from this growth, while Department

Stores continue to lose relevance due to the rise in e-commerce.

Due to last year’s prolonged summer, Beverages were last year’s winning categories

with a nominal value growth of 2.2% for non-alcoholic and 1.4% for alcoholic beverages.

Dairy products and shelf-stable categories also showed growth of 1.5% and 2.1%

respectively, driven by small manufacturers (Top 11-100) and Private Label. The Top 10

manufacturers in comparison are losing relevance.

From 2019, the Swiss economy is expected to continue to normalize after the strong

expansionary phase of 2017 and 2018. However, despite the situation on the labour

market, which is due to remain positive overall, recent muted wage developments and

rising inflation are reducing households’ real purchasing power. This factor and also the

rise of Discounters will put more price pressure on retailers and manufacturers. We

therefore see price as one of the hot topics in 2019.

Going forward, we see great growth potential for retailers that focus on a wide range

and high quality fresh food, enjoyable shopper experiences and convenience.

Sustainability and food intolerances will continue to influence the product offering. Last

but not least, digitalization will continue to shape today’s shopper behaviour with new

opportunities for retailers and manufacturers to connect directly with the end consumer

and influence purchasing behaviour.


Source Economist Intelligence Unit (EIU) GDP Q4 2018



1.7

2.6

3.2 3.2

2.2

1.8

0.50.8 0.7

1.01.1

1.3

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

97 99104

99106

99

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU CH

Jens Olig

Managing Director

Austria, Germany,

Switzerland

48


TOTAL SWITZERLAND – CHANNEL PERFORMANCE

Reflecting the significant economic downturn seen at the same time in other

European countries, the Swiss FMCG market shows a slight nominal value

decrease in Q4.

Supermarkets are superseding Hypermarkets as small formats such as Convenience

stores and Discounters grow quickly at the expense of Department stores.


(weighted average)


25%

33%

24%

13%

4%

0.5%1.7%

0.5% 0.5%

-0.1%

0.6%

1.2%1.8%

2.1%

1.2%

-0.3% -1.1% -2.8%

1.9%

-0.5%

0.7%

-0.7% -1.2% -0.6%

-1.6%

0.2%

0.6%

-2.3%

2.4%

-0.6%

1.3%

0.5% 0.6%

1.6%

-0.4%


SwitzerlandUnit Value Growth Volume Growth Nominal Value Growth

0.6%

-0.4%

0.8%

1.6%

1.6%

-3.7%


Small Supermarkets Supermarkets Department Store

49


Beverages are 2018’s winning categories. The prolonged summer with record

temperatures have supported this outcome.

TOTAL SWITZERLAND – SUPER CATEGORIES PERFORMANCE

TOTAL SWITZERLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Medium to small manufacturers (Top 11-100) are driving the industry by

nimbly adapting to consumer trends with agile product innovations.


Total FMCG 100.0%

Culinary Shelf-Stable & Other 18.8%

Butchery 16.3%

Dairy 13.5%

Fruits And Vegetables 12.4%


Confectionery 7.3%

Bakery 6.6%

Homecare/Pet Care 5.4%

Cosmetics 5.1%


Sanitary 2.2%

0.6%

2.1%

-0.6%

1.5%

-0.5%

1.4%

-0.7%

0.9%

-0.9%

-0.1%

2.2%

0.8%


Total FMCG 100.0%

Top 1-5 6.6%

Top 6-10 3.5%

Top 11-30 7.3%

Top 31-100 8.4%

100+ 17.9%

Private Label 56.3%

0.6%

-1.9%

-0.4%

1.6%

1.1%

-0.4%

1.1%

50


UNITED KINGDOM SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD

The months of October through December posted a significant slowdown in

FMCG with nominal growth at just 0.8%, down from 3.5% in the previous quarter,

and volume declines of -0.3%. The critical golden quarter sadly did not deliver as

the caution that crept in at the end of September continued with shoppers reigning

back their FMCG spend. Inflation also slowed across the economy and overall, it

was a slightly disappointing Christmas for the major supermarkets. However, the

full year view for FMCG is more positive, with total annual value growth of 2.1%

and volume growth of 0.4%, helped by a hot summer.

The continued uncertainty around Brexit looms large and consumer sentiment is

weakening. The worst case scenario is that we can anticipate some short term

disruption at the end of March/ early April to imported and fresh foods, with the

possibility that we may also begin to see shoppers stockpiling certain ambient

goods and a possible spike in inflation following new tariffs. However, an orderly

exit from the EU is equally possible, but regardless of the outcome, we are

entering uncharted territory.

There are two ways for manufacturers to unlock growth - maximise the frequency

of online shopping trips and drive incremental spend through key consumer

trends. The online channel grew by 8% in the last quarter of the year with one in

three households shopping online for groceries. It’s the committed online

shoppers that are driving the growth, therefore increasing the shopping frequency

of light shoppers presents a new opportunity for growth.

To help support this growth, the industry must simplify the shopping experience by

connecting the in-store experience with a mobile-first online experience to drive

greater penetration and conversion. It will also be important to leverage key

consumer trends such as health and sustainability, both in-store and online, to

unlock incremental category spend, as every little helps. 2019 presents some

unique challenges for the UK but with change comes opportunity.



Paul Walker

Managing Director

United Kingdom & Ireland

1.9

1.5

1.21.3

1.51.3

2.7 2.8

2.52.3 2.3

2.2

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

99 96 96101 102 98

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU GB

51


A slowdown in grocery spend in the final quarter was offset by the growth seen

over last year’s long, hot summer.


(weighted average)

2.1%

1.7%0.5%

3.2%

2.9%

1.8%2.0%

1.3%1.6%

1.1%

0.1%0.4%

-0.3%

0.4%

-0.9%

0.9% 1.0%0.6%

1.9%

-0.3%

2.2%2.1%

0.1%

3.7%

2.1%

2.8%3.0%

1.9%

3.5%

0.8%


UK


52


TOTAL UK – SUPER CATEGORIES PERFORMANCE

MAT Q4-2018 MAT Q4-2018

The growth in Beer, Wine & Spirits and Impulse goods such as confectionery and

snacks was helped by branded promotions

TOTAL UK – MANUFACTURER PERFORMANCE - FMCG

The UK’s medium-sized manufacturers are enjoying double digit growth.

MAT Q4-2018 MAT Q4-2018

2.0%

1.8%

0.7%

12.7%

2.4%

1.6%


FMCG Total 100.0%

Fresh Food 35.5%

Impulse 11.6%

Beer, Wine & Spirits 11.5%

Non Food 8.4%

Tobacco 8.2%

Ambient Grocery 7.8%

Health Beauty Toiletries & Baby 7.7%

Household & Pet 5.4%

Frozen 3.9%

2.1%

2.0%

5.1%

5.3%

-2.3%

1.4%

1.3%

-1.0%

1.8%

5.1%


Total FMCG 100.0%

Top 1-5 53.3%

Top 6-10 8.9%

Top 11-30 16.0%

Top 31-100 13.4%

100+ 8.4%

2.0%

1.8%

0.7%

12.7%

2.4%

1.6%

*Private labels are excluded from manufacturer breaks, explaining difference in FMCG growth

53


THE BIG PICTURE: EUROPE CENTRAL & EAST

Daniel Chorbadjian

Managing Director

Eastern Europe

Roberto Pedretti

Managing Director,

Central & Southern

Europe

East and central Europe continues to show positive signs of growth across

various markets and indicators. It may be that consumers and businesses are

cautious when it comes to speculating about the future in these markets, but

what about the last five years? Would there be consensus that things are more

positive versus five years prior?

In Eastern and Central Europe, consumers certainly have very fragmented views

on this highlighting the increasing differences between financial capabilities and

spending attitudes. Over half of consumers in Romania, Poland, Bulgaria,

Estonia, and Kazakhstan say they are better off than they were five years ago

which is much higher than the European average of 37%, and although most

East and Central markets are above this average, it is the large proportions in

these markets who are “in the same position” or worse off vs five years ago that

illustrates the gaps between consumers.

One example is Romania, which recorded the most positive response of people

saying they are better off across Europe at 61%. However there was also 24%

saying they were in the same financial position and 15% saying they were in a

worse financial position than five years ago and these high proportions of less

positive sentiment is present in all European markets. Although this is a

consumers opinion instead of a review of their actual finances its does suggest

that despite positive economic growth at a national level, increased prosperity is

not being spread evenly leading to highly fragmented consumer markets based

on spending ability.

The big differences in spending ability aligns with many of the “polar opposite”

trends that we have seen, such as the success of both hard discounters AND

specialty stores in many markets or the share increases at both a budget price

tier and a premium price tier in certain categories. Moving forward there are

many who believe that this stretching spectrum of consumer prosperity and

mindset will continue if not accelerate in Eastern and central European markets

meaning a more segmented approach to products and prices ought to be

adopted. Complicating this even further is that we know that shoppers will

sometimes shop from a constrained budget mindset one day and a “treat myself”

approach the next day depending on the occasion.

A simple response may be to provide options and alternatives across the quality,

benefit and price spectrums or to focus on one or a few segments. Regardless

of the approach, the increasingly complicated consumer landscape will

represent challenges and opportunities that need a closer, clearer and more

agile understanding of financial capability and the impacts on spending.

You can access the Changing Consumer Prosperity report here or you can

email regan.leggett@nielsen for questions.


mailto:[email protected]

54


GDP and Inflation reflect % change per annum to Q4 2018 /latest available data

Source: Economist Intelligence Unit (EIU)/OECD/ local government sources


EUROPE CENTRAL & EAST AT A GLANCE

ECONOMIC PULSE OF CONSUMERS

AROUND EUROPE

The Conference Board® Global Consumer Confidence Survey is conducted in

collaboration with Nielsen measures perceptions of local job prospects,

personal finances and immediate spending intentions. Consumer confidence

levels above and below a baseline of 100 indicate degrees of optimism and

pessimism, respectively

Overall GDP growth has been solid while consumer confidence has

fluctuated due to the complex social and political environment across

the region.



GDP

(annual %

growth)

Inflation Q4 2018Q4 2018 vs

Q3 2018

-3.0 22.4 TURKEY 87 8

3.5 2.0 SERBIA 78 4

4.1 5.3 KAZAKHSTAN 83 4

2.3 1.1 GREECE 71 3

4.1 3.6 ROMANIA 101 3

4.0 2.2 SLOVAKIA 92 2

2.3 2.6 CROATIA 80 2

5.0 2.9 LATVIA 83 1

4.6 1.4 POLAND 105 1

4.2 3.7 ESTONIA 89 1

4.1 1.9 SLOVENIA 87 1

Q4 2018Q4 2018 vs

Q3 2018

GDP

(annual %

growth)

Inflation

BULGARIA 82 -10 3.1 3.1

UKRAINE 59 -5 3.4 9.7

CZECH REP. 107 -2 2.8 2.1

RUSSIA 65 -2 2.2 3.9

LITHUANIA 82 -1 3.6 2.5

HUNGARY 75 -1 4.9 3.2

BELARUS 66 -1 3.5 5.2

55


4033

30

4338

3136

30

23

36

24

51

40

2631

4046

55

29

38 36 35

28

22

3033

16

33

22 26

4641

3432

20

33

51

35

0

10

20

30

40

50

60

EU BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

Putting into savings New clothes

22

15

28

9

2430

1720 19

15 16

9

23

1622

9 11

56

2321

2925

19 18

8

17

1013

2329

26

1812

2722 22

11

33

0

10

20

30

40

50

60


The economy Increasing utility bills (electricity, gas, heating, etc)

Putting money into savings continues to be the number one action when

consumers have spare money.

WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS?

WHO’S SPENDING, SAVING AND INVESTING?

Type of concern

After living expenses, how is spare money spent


EUROPE CENTRAL & EAST AT A GLANCE


CONSUMER SENTIMENTS IN

EUROPE



The economy 0 5 2 2 5 2 3 -1 0 4 -1 0 3 1 -1 0 2 -7 -1

Increasing utility bills (electricity, gas, heating, etc)3 -2 1 7 -2 -3 -2 0 0 8 8 8 -4 -5 3 3 11 -3 0


Putting into savings 2 0 6 7 3 2 2 -4 1 -4 4 4 -2 -1 0 2 1 12 0

New clothes 0 -1 4 0 -2 5 -1 -3 1 0 -3 3 2 7 -11 4 4 14 2

56


1.7%

6.9% 2.5%

1.8%

0.8%

1.5%

4.5%

6.3%

2.0%

3.3% 2.7% 3.7% 3.3% 3.8%2.0%

2.8%

26.9%

9.5%0.9%

5.4%

-1.8%

1.1%

-0.2%

1.6% 1.0%

-1.7%

0.4% 2.6%1.6%

4.9%0.8%

2.4%

-1.6% -1.2% -2.7%

6.6%

2.6%

12.3%

0.7%

2.9%

0.6%

3.0%

5.5%4.7%

2.4%

5.9%4.3%

8.6%

4.0%

6.2%

0.4%1.6%

24.2%

16.1%

BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

Unit value change Volume change Nominal growth

LOOKING THROUGH EUROPE CENTRAL & EAST

FMCG LENS

FAST MOVING CONSUMER GOODS MARKET DYNAMICS – Q4 2018

EUROPE EAST & CENTRAL – 18 countries

WHERE ARE THE FMCG GROWTH OPPORTUNITIES?

Average volume growth Q3 2018 & Q4 2018

Colour coding indicates growth or declining trend compared to same 6 month period year ago.

Average volume growth of Q3’18 & Q4’18 vs Q3’17 & Q4’17, except for Belarus. Belarus is compared with Average of Q1 & Q2 of 2018

Avg. volume growth decreasing versus last period

Avg. volume growth increasing versus last period

RUSSIA (+2.7%)

CZECH REP. (-2.1%)

ESTONIA (+1.3%)LATVIA (+3.5%)LITHUANIA (+1.4%)

UKRAINE (+7.5%)

ROMANIA (+4.8%)

BULGARIA (+1.1%)

TURKEY (-0.3%)

GREECE (+0.6%)

POLAND (+2.7%)

SLOVAKIA (-0.3%)

HUNGARY (+2.1%)

BELARUS (+6.1%) KAZAKHSTAN (-2.6%)

*BL = Belarus

BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

SERBIA (+1%)CROATIA (+1.3%)SLOVENIA (-0.5%)

57


BELARUS SNAPSHOT

While Belarus did not reach the forecasted GDP growth of 3.5% for 2018, World Bank

analysts still regarded the 3% growth as a recovery. However to ensure sustainable

growth, it has been suggested Belarus should increase resources efficiency, simplify

business conditions, encourage investment and strengthen trust in state institutions or

else it is unlikely that 2019 GDP growth will exceed 2.5%. The industrial sector was

the major contributor to lower than expected growth as well as low business activity

and an unfavourable investment climate.

However, retail performance was a strong contributor towards the economy driven by

significant wage growth and consumer lending. There is some concern from the

government and National Bank that as wage growth is outpacing labour productivity it

creates risk of an economic slowdown. Belarus continues to be economically

dependent on Commonwealth of Independent States (CIS) countries, especially

Russia and low growth in these neighbouring countries is hindering Belarus’ potential

economic outlook.

FMCG performance remained strong throughout 2018, driven by both strong

consumption and increased prices. There has been much activity in the FMCG retail

landscape with a number of large mergers and acquisitions which has resulted in the

strengthening of big players. This has created increased competition in FMCG

whereby retailers are enhancing their offerings to provide unique and additional value

propositions such as ready-to-cook and ready-to-eat meal options., New players that

have emerged in DIY, Drogery, e-commerce and Kids segment.

In this context, we see the opportunities for retailers and manufacturers to capitalize

on the increased spending power of consumers and to focus on solutions which add

value and help consumers satisfy their needs for fast and convenient products even if

they need to pay more. The premium segment deserves the attention of both

manufacturers and retailers in this environment and it is important to understand which

products consumers are prepared to pay a premium for if we want to unlock their

potential.

COUNTRY HIGHLIGHTS


Source: GDP and Inflation; & National Statistics Committee of Belarus

Vaios Dimoragas

Managing Director

Ukraine and Belarus



2.9

4.3

5.1

3.9 4.0

3.5

5.44.9 4.9

4.5

5.05.2

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

63 60 6067 67 66

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU BL

58


TOTAL BELARUS – CHANNEL PERFORMANCE

Convenience and proximity are the key drivers of shopping in Modern Trade

grocery channel, which is contributing most to overall growth.


(weighted average)


While FMCG volume growth has slowed in Q4, overall growth keeps pace driven

by increasing prices.

5.0%

2.4% 4.1%

5.5%

6.9%

6.2%

5.7%

8.0% 6.9%

5.4%

11.3%

8.1%

12.1% 12.3% 12.3%

MAT TY Q1 18 Q2 18 Q3 18 Q4 18

Belarus Unit Value Growth Volume Growth Nominal Value Growth

52%

29%

6%3%

10%11.3%

10.2%

15.6%

2.2%

16.8%

8.5%

Total FMCG Hyper/Supermarket (Food Categories)

Groceries Modern Trade (Food Categories) Groceries Traditional Trade (Food Cat)

Kiosks + Other Markets (Food Categories) Drug Categories

59


TOTAL BELARUS – SUPER CATEGORIES PERFORMANCE

TOTAL BELARUS – MANUFACTURER PERFORMANCE - FMCG

Private labels show significant growth supported by new launches and an

increasing number of stores for key retailers.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018

Coffee, Dairy and Snacks grow mostly due to price increases, while Home care

(Laundry detergents) increases sales value with innovative product forms.

11.3%

10.0%

18.8%

6.3%

7.5%

10.6%

6.7%

17.7%

10.2%

14.9%

9.8%


Total FMCG 100.0%

Top 1-5 29.9%

Top 6-10 11.1%

Top 11-30 26.7%

Top 31-100 19.5%

100+ 6.7%

Private Label 6.2%

11.3%

13.2%

10.0%

7.8%

12.4%

3.1%

28.4%

11.3%

13.2%

10.0%

7.8%

12.4%

3.1%

28.4%


Total FMCG 100.0%

Beer 24.6%

Beverages 20.7%

Dairy 11.7%

Chocolate 11.5%

Coffee 9.6%

Personal Care 7.8%

Snacks 5.5%

Candies 4.7%

Home Care 2.3%

Grocery 1.6%

11.3%

10.0%

18.8%

6.3%

7.5%

10.6%

6.7%

17.7%

10.2%

14.9%

9.8%

60


COUNTRY HIGHLIGHTS

BULGARIA SNAPSHOT


Source Economist Intelligence Unit (EIU) Q4 18 estimates

Svyatoslava Svyst

Managing Director

Bulgaria / RV Leader

Eastern Europe



87 8786

87 87

84

8889

81

85

92

82

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU BG

4.3

3.43.5

3.2

2.7

3.1

1.6

2.7

2.0

2.6

3.5

3.1

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



Bulgaria’s economy has remained stable with GDP growth at 3.1% in Q4 2018

and unemployment at the lowest level of the last decade (4.7%). Household

consumption continues to be the driving force of the Bulgarian economy as

wages increase above the inflation rate. However, a mild slow down in

industrial production and exports in Q4 can be attributed to the uncertainty at

the European level (e.g. Brexit, Eurozone slow-down) Bulgarians’ confidence

has declined in the last quarter, across all measures, but particularly around

their optimism towards future job prospects. Traditionally Bulgarians are more

pessimistic in the last quarter of the year as winter approaches and utility bills

increase, but increasing inflation and slower wage growth are adding to a

growing cautiousness in the foreseeable future. Consumers concerns over

increasing food and utility prices could see consumers watching their everyday

expenses.

The FMCG market grew at a slower pace in Q4 (2.6% in value), which is still

optimistic considering that the last quarter of 2017 was the strongest of the last

several years. All major channels grew robustly over the year and household

care and snack food categories outperformed due to innovation and the

introduction of healthier alternatives. . Private label growth remains behind the

market, despite innovation in areas such as premium Christmas lines and

specialized brands (e.g. bio, vegan, non food).

Looking ahead at the retail landscape, no major expansion plans have been

announced by any of the top retailers, so to achieve growth, retailers and

manufacturers should have an intricate understanding of the way consumers

shop and what is important to them to achieve a bigger piece of the FMCG

pie. In an environment of rising costs, it is critical for retailers and

manufacturers to optimize their pricing and promotional strategy, in order to

ensure promotional focus is on the most sensitive products where rewards will

be greatest.

61


TOTAL BULGARIA – CHANNEL PERFORMANCE

The FMCG market has slowed due to rising costs and unusually high growth seen in

Q4 2017.

All channels display positive trends, but wider assortment of premium products is driving

performance of Drug stores and large Food stores’ growth comes from store expansion.


(weighted average)


5.9%

5.3%

7.3%

8.1%

4.0%

8.8%

Total FMCG Supermarkets/Hypermarkets Extra Large Food Stores

Large Food Stores Traditional Trade Drug Stores

41%

13%

19%

23%

4%

2.4%2.9%

0.8%2.3%

3.2% 3.1% 3.3% 3.3%

2.4% 1.7%

4.4% 3.0%

3.1%

3.9%

4.6%6.7% 5.2%

3.7%

1.5%

0.9%

6.8%

5.9%

3.9%

6.2%

7.8%

9.8%

8.5%

7.0%

3.9%

2.6%


BulgariaUnit Value Growth Volume Growth Nominal Value Growth

62


All super categories are growing in value terms. Weather sensitive categories,

such as beer and non-alcoholic beverages saw slower growth in Q4.

TOTAL BULGARIA – SUPER CATEGORIES PERFORMANCE

TOTAL BULGARIA – MANUFACTURER PERFORMANCE - FMCG

Smaller manufacturers are performing better in this fragmented market.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Chilled Products 25.4%


Confectionery 15.1%


Personal Care 7.2%

Household 7.1%

Salty Snacks 5.4%

Hot Beverages 4.3%

Shelf Stable Food 3.0%

Petfood 1.3%

Baby Categories 1.3%

5.9%

6.3%

3.8%

6.5%

3.5%

5.7%

9.1%

11.7%

4.0%

4.8%

16.1%

4.9%


Total FMCG 100.0%

Top 1-5 16.7%

Top 6-10 10.7%

Top 11-30 20.3%

Top 31-100 23.2%

100+ 26.1%

Private Label 3.0%

5.9%

6.7%

3.3%

8.5%

11.4%

0.3%

4.4%

63


CROATIA SNAPSHOT


Source: DZS – Croatian Bureau of Statistics. The Conference Board® Global Consumer Confidence


Miroslav Tasic

Group Managing

Director Adriatic

Region

3.3

2.0

2.52.9 2.8

2.3

-0.5

0.8 0.5

1.9

1.4

2.6

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



The fourth quarter of 2018 highlighted a positive outlook for Croatia with increased

consumer spending and investments supporting the Croatian economy. However

weakness in industrial production and commodity exports caused GDP growth to slow

marginally (2.6%) versus the previous quarter (2.8%). On a less positive note, this

growth is stagnated by the continuous lack of commodity exports. Export growth is up

2.9% from 2017 however this is a considerably low figure considering that in 2017,

exports were up 12% versus the previous year. The second factor impacting Croatia's

GDP growth is the decline of industrial production mainly influenced by the 'Uljanik'

crisis (Croatian shipbuilder group). After labour strikes, loss of numerous prospective

deals and cancelation of previous contracts, Uljanik accounts have once again been

blocked and the crisis continues.

On a more positive note, personal consumption is still the main driver for growth, as the

retail trade industry shows its 52nd consecutive month of growth and we expect this

trend to continue as the average net salary of consumers increased by 2.8% versus

last year. The FMCG industry also portrays value and volume growth in the last quarter

in Croatia. This positive trend is further confirmed with the increase of consumer

confidence by two points in the last period and an optimistic sentiment with consumers

becoming more positive about job prospects and more willing to spend in the last

quarter. This was additionally strengthened by a strong Christmas spending season.

This rise in consumption also continues to strengthen the growth of Discounters in

Croatia. Once known only for their attractive prices and deep discounts, they are now

becoming specialized retailers in ‘theme’ based sales activities and in offering

shoppers’ exclusive brands. This strategy enables them to attract various consumers

from different income classes and age groups. It will be interesting to see how they will

continue to solidify their position in the Croatian market and what will occur when new

discounters enter the market.

Overall, amidst some negative trends in production and an increase in trade deficit that

has already impacted GDP growth, the continuous growth of domestic demand,

consumer spending and investment, presents a more optimistic look into what awaits

us in 2019. CPG players would do well to re-evaluate their position in a strong

consumer environment and ask themselves if they have defined themselves sufficiently

from the competition, as consumers seek offerings specific to their needs.

87 8786

87 87

84

7473

7779

7880

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU HR

64


TOTAL CROATIA – CHANNEL PERFORMANCE

FMCG growth has picked up In the last two quarters of 2018 driven by

increased seasonal consumption and personal spending.

Discounters show the greatest growth with a focus on exclusive brands and

assortment expansion increasing the buyer base of price sensitive customers.


(weighted average)

VALUE CONTRIBUTION AND GROWTH – MAT Q4 2018

**Drugstore channel is included in Large groceries (part of Traditional Trade)

. .

FMCG excludes Tobacco/Cigarettes

19%

33%

35%

1%

12% 1.9%

0.9%

2.9%

-1.0%

0.7%

10.1%

Total Croatia + Discounters Hypermarkets Supermarkets

Traditional Trade Kiosks/Tobacconists Discounters

2.9%

1.3%

2.5%

3.1%

3.5%

1.9%

0.5%

1.7%

1.2% 1.5%

0.0%

0.6%

-0.4%

1.3%

-0.3% -0.1%

0.6%

-0.9%

1.2%

1.6%

2.9%

1.9%2.1%

4.4%

3.2%

1.8%

1.1%0.8%

2.4%

3.0%


Croatia


65


Despite varying strategies such as price decreases and product downsizing,

confectionery faces changing consumer behaviour towards healthier food options.

TOTAL CROATIA – SUPER CATEGORIES PERFORMANCE

TOTAL CROATIA – MANUFACTURER PERFORMANCE - FMCG

Negative performance of Top 1-5 manufacturers is mainly driven by local

dairy producers as the growth of private label increases.

MAT Q4 2018 MAT Q4 2018

FMCG: excluding Tobacco

.

MAT Q4 2018 MAT Q4 2018


Total FMCG 100.0%

Top 1-5 20.7%

Top 6-10 12.3%

Top 11-30 21.8%

Top 31-100 15.5%

100+ 11.8%

Private Label 17.9%

1.9%

-0.6%

2.2%

-0.2%

2.6%

1.2%

6.9%

1.9%

-0.6%

2.2%

-0.2%

2.6%

1.2%

6.9%


Total FMCG 100.0%

Beverages 27.0%

Meat and meat products 16.5%


Confectionery 10.5%

Packed Food 8.6%

Personal Care 8.3%

Household Care 5.9%

Frozen Food 4.4%

Salted Snacks 3.0%

Baby Food 0.8%

1.9%

3.6%

0.9%

0.4%

-0.3%

2.4%

0.1%

3.0%

5.2%

4.7%

0.9%

66


CZECH REPUBLIC SNAPSHOT

COUNTRY HIGHLIGHTS



Karel Tyra Managing Director,

Czech Republic



87 87 86 87 87 84

101 104108 108 109 107

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU CZ

5.1 5.0

4.1

2.4 2.3

2.82.5 2.6

1.92.3 2.4

2.1

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



Czech Republic finished another solid year with GDP growth at 2.8% for the

quarter but slower than 2017. Unemployment at 3%, has been one of the lowest

across the EU bolstering consumer optimism in job prospects and finances with

Czechs ranking as the second most optimistic nation in Europe. Confidence in

spending has fallen slightly in line with consumers’ increasing concerns about food

and utility prices.

In FMCG, the sector recorded 1.7% value growth for the year driven by increased

prices. Part of the price growth is connected with the growth of costs (commodities,

wages), but also premiumisation. Confident consumers are ready to spend more

money to trade up to more premium, luxury and convenient segments and

products. Health is considered to be the number one concern for Czech consumers

with a growing importance on leading healthier lifestyles. Not only are new

categories and segments entering the market, but more and more retailers are

dedicating space to these products that usually have higher margins. After almost

a decade without major shifts in the importance of retail channels, Hypermarkets,

despite still being the most important channel, continue to lose in favour of

Supermarkets, Discounters and Drug chains.

The key question and challenge for many players’ remains how to optimize

promotional spend. The Czech Republic is the leading EU country in promotional

dependency and this reliance continues to grow even now in times of prosperity.

Now is the right time to evaluate the optimal mix of regular and promotional prices

before any slow-down is on the horizon to secure higher margins and less

promotional wastage. As these channels become increasingly important to Czech

consumers who are looking to save money but also looking for convenient

offerings that save them time, it is critical for both retailers and manufacturers to

ensure their promotional strategies focus on the right mix of products to give

optimal returns. Understanding the optimal regular price tiers and promotional

support for products with price sensitivity is key to optimizing margins for both

retailers and manufacturers.

67


TOTAL CZECH REPUBLIC – CHANNEL PERFORMANCE


(weighted average)


Premiumisation is behind FMCG value growth rather than increased

consumption.

Czech consumers are becoming increasingly time poor and look to stores that

offer value and convenience

NB: 2016 and 2017 updates due to product enhancements, universe update, implementation of new chains and new categories with full history

1.7%

-4.9%

6.5%

8.5%

2.4%

6.4%

Total FMCG Hypermarkets Supermarkets Discounters Traditional Trade Drugstores

38%

18%

23%

13%

9%

4.9%

3.3% 3.4%

4.7% 6.0%

5.5% 3.8%

3.8% 3.6%

2.5%

-0.7% -1.6% -1.2% -0.3%-1.6% 0.0%

0.7%

-2.8%-2.5% -1.8%

4.2%

1.7%2.2%

4.4% 4.4%

5.5%

4.6%

1.0% 1.0% 0.7%


Czech Rep.


68


Private label is gaining thanks to growth of Discounters and better

performance in Drug chains.

Healthier life-styles is driving performance of many categories where

premium offerings have been seen in commodities like flour with healthier

alternatives to personal care categories with therapeutic benefits.

TOTAL CZECH REPUBLIC – SUPER CATEGORIES PERFORMANCE

TOTAL CZECH REPUBLIC – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 15.3%

Top 6-10 8.1%

Top 11-30 18.0%

Top 31-100 21.0%

100+ 18.2%

Private Label 19.4%

1.7%

2.5%

1.6%

1.7%

1.0%

-0.3%

4.0%


Total FMCG 100.0%

Dairy 18.9%

Beverages Alcohol 17.2%

Sweets & Treats 14.3%


Culinary - Shelf Stable 9.6%

Beverages Non Alco 8.9%

Beverages Hot 4.0%

Home Care excl. Laundry 3.2%

Pet Care 2.3%

Home Care - Laundry 2.2%

Infant Care 2.0%

Culinary - Frozen 1.8%

Frozen-Ice Cream 1.6%

Baking - Shelf Stable 1.4%

Culinary - Refridgerated 0.5%

1.7%

0.1%

6.5%

0.2%

1.6%

-2.0%

6.8%

-1.3%

1.7%

2.8%

-1.1%

-0.7%

-2.3%

17.0%

-9.1%

-6.6%

69


ESTONIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source: OECD & Statistics Estonia

Ilona Lepp

Managing Director

Baltics


Survey is conducted in collaboration with Nielsen

4.5

5.3

3.6 3.7

4.2 4.2

3.7 3.8

3.13.3

3.6 3.7

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87

8687 87

84

8181 81

88 8889

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU EE

Estonia finished the year with a positive outlook and in good shape. Exports

increased by 12% and imports by 10% over 2018, while labour market indicators

also improved. The unemployment rate (5.4%) and the number of long-term

unemployed is the lowest it’s been over the last 20 years. However, inflation was

one of the highest in the EU at 3.7%, driven mostly by housing costs. Despite

this, thanks to growing incomes and a favourable job market, Estonian

consumers remain optimistic with the Consumer Confidence Index at 89 points -

eight points higher than a year ago and five points above the European average.

While the FMCG market finished slightly ahead for the year versus 2017, growth

was down this quarter compared to the last quarter. However there are positive

signals as the last two quarters growth has come from volume increases instead

of price inflation. Chilled and Frozen products (3.4%), Non-Alcoholic Beverages

(14.4%), Snacks (4.4%), Pet Care (3.2%) and Baby Food (6.6%) were driving the

growth in 2018.

Large and Small Supermarkets, the most important trade channels, continue to

grow faster than Hypermarkets and Superettes/Groceries. Whilst still a small

channel, consumer demand for convenience has increased sales in the

Convenience/Petrol channel by 15.1%. Despite rising prices, Private Label

declined, with both big and small manufacturers demonstrating solid growth, as

consumers seek more innovative products focusing on health and convenience

trends.

We anticipate that growth prospects for FMCG will remain positive thanks to

consumers rising incomes and confidence. Manufacturers and retailers should

leverage emerging convenience and health trends, but also take care not to

underestimate the importance of attractive pricing and promotions, as higher

inflation puts pressure on consumer spending.

70


TOTAL ESTONIA – CHANNEL PERFORMANCE

Total FMCG volume has been growing for a second consecutive quarter, as the

decline in local alcohol sales has slowed.

Supermarkets are growing faster than Hypermarkets and Small Food stores due

to new store openings. Demand for convenience is fuelling the growth of Petrol

Stations/Convenience channel.


(weighted average)


* Backdata not available due to Universe Update

3.1%

0.5%

3.7%

4.9%

1.2%

15.1%

-0.4%


Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations

Drug Stores+Pharmacies

23%

33%

30%

11% 1%2%

3.4%

7.0% 6.6% 4.7% 3.8%

2.4%1.8%

-0.3%

-3.7% -4.0%

-1.9% -1.1%

1.5%

1.1%

3.1% 3.3%2.6% 2.8% 2.8%

3.8%

2.9%

MAT TY Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Estonia


71


Non-Alcoholic Beverages show solid growth, while Hot Beverages decline in

value due to the lower coffee prices.

TOTAL ESTONIA – SUPER CATEGORIES PERFORMANCE

TOTAL ESTONIA – MANUFACTURER PERFORMANCE - FMCG

Both large and small manufacturers grow capitalising on convenience and

health trends while private labels struggle to attract consumers.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 23.3%

Top 6-10 11.8%

Top 11-30 21.8%

Top 31-100 17.2%

100+ 18.3%

Private Label 7.7%

3.1%

3.3%

1.5%

3.6%

5.2%

2.9%

-0.7%


Total FMCG 100.0%

Chilled and Frozen products 38.8%



Personal Care 7.1%


Confectionery 6.1%

Household products 3.9%

Snacks 3.2%

Hot Beverages 3.2%

Pet Care 2.2%

Baby Food 0.8%

3.1%

3.4%

2.6%

0.7%

1.0%

14.4%

-0.7%

2.7%

4.4%

-2.5%

3.2%

6.6%

72


GREECE SNAPSHOT


Source Economist Intelligence Unit (EIU). Q4 2018 GDP estimate

Vicky Grigoriadou

Managing Director

Greece



2.0 2.1

2.5

1.7

2.22.3

0.8 0.8

0.3

0.70.9

1.1

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

60 60 6167 68

71

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU GR

Over the past year, all key macroeconomic indexes for Greece have showed

signs of recovery with stable GDP growth and low inflation. Accordingly, Greek

consumers are increasingly optimistic across all measures of job prospects,

financial status and willingness to spend with the overall Consumer Confidence

Index climbing 10 points throughout the year, to reach 71.

In this positive environment, FMCG is up marginally this year at 2.3% (compared

to 2017) driven mainly by increased consumption. This positive momentum of

organized trade is mainly due to the restructuring of the retail network, with the

opening of the ex-Marinopoulos stores by Sklavenitis boosting the performance of

the Hypermarket format growing at 16.5% compared to previous years.

At the same time all big manufacturers display a positive trend in total, taking

advantage of the re-opening of formerly low performing stores. While Private

Label still holds a significant share in Greece (14.9%), its performance is down

(-1.6%) compared with other EU countries, given the intensive promotional

activities of branded players diminishing the price gap between branded and

private label products.

Looking ahead, 2019 is a year where further restructuring is expected in the retail

trade and mergers and acquisitions are probable. These developments will result

in a more concentrated and competitive retail landscape for Greece and it will be

important for manufacturers to ensure they adjust their strategies to a more

competitive environment and ensure the distribution strategy is focused on the

retailers and stores that really make a difference.

73


TOTAL GREECE – CHANNEL PERFORMANCE

Restructuring within the retail landscape has boosted overall consumption,

but inflationary trends are still evident.

The opening of more Hypermarkets by Sklavenitis is producing double-digit

growth in Hypermarkets.


(weighted average)


2.3%

16.5%

2.1%

-0.1%

-0.4%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes

11%

38%37%

15%

-0.9%

0.5%

-1.2% -1.1% -1.4% -0.1% -0.5%

0.3% 0.5%

0.8%

3.1% 1.8%

-3.9%

3.3%

6.6%6.8%

5.4%

1.7% 1.6%

-0.2%

2.2% 2.3%

-5.1%

2.2%

5.2%

6.7%

4.9%

2.0% 2.1%

0.6%


Greece


74


All Supergroups present positive trends, except for Alcoholic Drinks that are

marginally declining. The positive momentum of household products is both

price and volume driven and presents a switch from other channels.

TOTAL GREECE – SUPER CATEGORIES PERFORMANCE

TOTAL GREECE – MANUFACTURER PERFORMANCE - FMCG

Smaller local manufacturers show the most positive growth, whereas

Private Label is in decline as the price gap narrows compared to branded

products due to increased promotional pressure

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Dairy & Refrigerator Cat. 24.1%

Grocery 23.0%

Non Alcoholic Drinks 12.1%


Confectionery 9.3%

Household 6.3%


Detergents 4.2%

Paper Products 3.3%

2.3%

2.5%

1.5%

3.9%

1.2%

4.3%

4.7%

-0.1%

0.9%

1.2%


Total FMCG 100.0%

Top 1-5 19.9%

Top 6-10 9.9%

Top 11-30 21.5%

31+ 33.8%

Private Label 14.9%

2.3%

1.7%

3.5%

0.8%

5.1%

-1.6%

75


HUNGARY SNAPSHOT

COUNTRY HIGHLIGHTS



Agnes Szucs-Villanyi

Market Leader, Connect, Hungary



87 8786

87 87

84

7674

7880

7675

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU HU

4.4

5.0 4.8 4.85.0 4.9

2.4 2.32.0

2.7

3.53.2

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



GDP growth in 2018 slightly exceeded market expectations at 5% versus

2017. Stable growth, significant wage rises, moderate inflation and a low

unemployment rate brought the Hungarian consumer confidence to 80 points

in Q2, a figure previously unseen mid-year. While confidence declined

marginally in the last two quarters, it may suggest the Hungarian economy had

reached its peak. As a consequence, experts expect slightly lower growth in

2019.

The same phenomenon may transpire in the local FMCG market as well. The

Hungarian FMCG market concluded 2018 with a strong annual performance at

7.2%. This figure resulted from the mean of the first three quarters with 7+%

growth rate and the last quarter with a noticeable slowdown (5.5%).

Consumers’ change in attitudes towards spending is most evident in altered

perceptions to prices. In Q4 2018, slightly more consumers felt that it was a

good time to purchase (27%, +2%). But their major concerns surround

increasing food prices with grew sharply from 14% to 22% year over year.

Nonetheless, this is still a great time for consumers to shop, and this

environment provides manufacturers and retailers with the opportunity for

thinking big. The above-mentioned changes may highlight the importance for

thinking ahead to the future needs of consumers as exceptional growth rates

are difficult to sustain. Thus, consumers growing demand for premium

products and constant need for low prices and promotions need to be

satisfied in an effective and creative manner as well.

76


TOTAL HUNGARY – CHANNEL PERFORMANCE

Despite the slowdown in Q4, the Hungarian FMCG full year growth

exceeded the already impressive growth of the last two years.

Due to constant and strong double-digit growth, Discounters became the most

important channel in the market, outperforming Hypermarkets not only through

sharp price points but also expanded ranges and shopper experience.

FMCG MARKET DYNAMICS OFFLINE

(weighted average)


7.2%

3.1%

3.2%

17.6%

2.1%

10.8%

6.8%

Total FMCG Hypermarkets Large Organized Discounters

Small Organized Drug Stores Independent Stores

25%

14%

25%

17%

8%

12%

4.3%4.3%

2.0%2.8%

5.0%4.5%

3.8% 4.2% 4.2%4.5%

1.6%2.9%

1.5%

3.7%

0.3% 3.7%4.5%

3.6%3.4%

1.0%5.9%

7.2%

3.5%

6.5%

5.3%

8.2% 8.3%7.8% 7.6%

5.5%


Hungary


77


Growth of Top 11-30 upper mid-sized company range jumped far ahead of

the others riding, first and foremost, the growth of the alcohol category

TOTAL HUNGARY – SUPER CATEGORIES PERFORMANCE

Convenient, healthy and indulgent categories, segments and products are

ahead of the average growth.

Total FMCG includes Private label but Private label is not included in manufacturer tiers

TOTAL HUNGARY – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 20.4%

Top 6-10 11.7%

Top 11-30 21.8%

Top 31-100 22.2%

100+ 23.8%

7.2%

7.6%

7.1%

8.3%

5.1%

4.7%


Total FMCG 100.0%


Processed Meat 12.8%



Personal Care 9.1%

Dry Grocery 8.0%

Cleaning / Household 6.3%

Confectionery 5.5%

Hot Beverages 3.6%

Snacks 3.2%

Frozen Foods 3.0%

Household Paper 3.0%

Petfood 2.9%

Biscuits/Wafers 2.7%

Breakfast 2.0%

Baby Care 1.3%

7.2%

4.2%

5.8%

12.3%

9.9%

7.7%

2.1%

9.5%

6.7%

4.7%

11.8%

11.9%

6.4%

8.2%

4.2%

7.1%

7.8%

78


KAZAKHSTAN SNAPSHOT

COUNTRY HIGHLIGHTS


Source Local statistical office

Ilona Lepp

Managing Director

Baltics



4.2

3.1

4.1 4.3 4.1 4.1

7.07.4

6.66.2 6.0

5.3

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87

8687 87

84

83

81

79

84

79

83

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU KZ

Kazakhstan continued its positive economic growth through Q4 with a 4.1% growth in the

GDP versus the same quarter in 2017. This positive trend contributes to the growth of

consumer confidence that reached 83 points. Price increases over the last three months

of the year were down 1.8% against 2.9% for the 4th quarter of 2017 and 2.7% in 2016.

The FMCG market showed an increase in Q4 year-on-year by 4.7% growth in value and

-1.7% in volume. The greatest contribution to the positive growth of the FMCG market

comes from large channel (with 35% growth contribution) due to deep promotions and

medium channels (20%) due to changing service type from counter to self-service.

Changing consumer preferences in channels as well as heating promotional pressure,

continues to impact Drug stores (-11.4%) and Small stores (-3.1%).

Alcohol categories displayed some negative performance for the year, while the smaller

value contributors such as Pet food, Baby food, Baby Care and Dairy are thriving by deep

promotions in large channels stores. Tobacco and Beverages - two super categories

taking almost half of the market - have managed to maintain significant growth 5% and

4%, respectively. Tobacco growth in value driven by increasing of minimum retail selling

price (regulated by government) and Beer as consumers switched from spirits to beer

(lower price point and increased alcohol content in beer). The main growth in the market

is coming from the top 10 that are performing well as operations scale and small

producers, many local players, who have captured niche segments. Stable prices in the oil

market have had a positive effect on the growing economy. Slower inflation offers

opportunities to alleviate consumer concerns over prices, while increasing disposable

income of consumers in Kazakhstan (7.9% in the last year) is encourage spending.

The demographic profile of Kazakhstan also plays a pivotal role in understanding shopper

needs as the average age of Kazakhstan residents is 30 years old. With a strong skew to

a younger generation, it is important that manufacturers focus on this group’s preferences

towards convenience and quality service. These consumers prefer multi-functional stores,

speed and comfort and buy goods on-the-go. For retailers, now is the right time to offer

quality products with targeted promotions.

79


4.1%

14.7%

2.9%

-3.1%

-11.4%

3.6%

Total Kazakhstan Urban Large Stores Medium Stores Small Stores Drug Stores Other*

TOTAL KAZAKHSTAN URBAN – CHANNEL PERFORMANCE

The FMCG market shows an increase in Q4 versus the same quarter a year

ago by 4.7% in value and -1.7% in volume, due to price increases of 6.3%.

The greatest contribution to the positive growth of the FMCG market comes from

large channel (35% of growth contribution) due to deep promotions and medium

channels (20%) due to changing service type from counter to self-service.


(weighted average)


* Other includes: Kiosk s/Pavilions, Open markets, Petrol Stations, Tobacconist

35%

20%

34%

3%

8%

8.1%

6.2%

10.6%

7.5%

5.8% 6.0% 5.5%5.2%

6.6%

6.3%

-1.7%-2.2% -2.4% -2.3%

0.0% 0.3% 0.4%

-3.2% -3.6% -1.7%

6.4%

4.1%

8.2%

5.2%5.9% 6.4% 5.9%

2.0%3.0%

4.7%


Kazakhstan Urban


80


Smaller value contributors such as Pet food, Baby food, Baby Care and Dairy

are thriving by deep promotions in large channels stores.

TOTAL KAZAKHSTAN URBAN – SUPER CATEGORIES PERFORMANCE

TOTAL KAZAKHSTAN URBAN – MANUFACTURER PERFORMANCE - FMCG

The main growth in the market is due to the top 10 - due to scale effect with

better distribution and retailer relationships helping assortment and promotion.

Small producers grow due to owning niche market, including local producers.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total Kazakhstan Urban 100.0%

Top 1-5 39.9%

Top 6-10 14.7%

Top 11-30 4.1%

Top 31-100 0.4%

100+ 41.0%

4.1%

2.3%

7.7%

1.1%

6.1%

4.8%


Total Kazakhstan Urban 100.0%

Beverages 25.4%

Tobacco 21.7%

Dairy 14.3%

Personal Care 10.2%

Food 9.7%

Confectionery 8.1%

Alcohol 6.1%

Home Care 2.6%

Baby Food 1.3%

Pet Food 0.4%

Baby Care 0.1%

4.1%

3.9%

5.0%

9.8%

1.8%

3.0%

6.6%

-10.1%

6.7%

9.5%

24.2%

13.9%

81


LATVIA SNAPSHOT

COUNTRY HIGHLIGHTS


Ilona Lepp

Managing Director

Baltics

Source: OECD/local government The Conference Board® Global Consumer Confidence


5.8

4.85.2

4.2

4.8 5.0

2.92.6

2.02.4

2.9 2.9

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 8478

73

8680 82 83

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU LV

The Latvian economy completed the year in a strong position with GDP growth

at 5% for Q4 although positive growth was likely due to some traction in Q4,

due to softer export demand amid elevated global trade tensions, a passive EU

business environment and the lack of clarity with Brexit. The overall expansion

was underpinned by strong growth dynamics, as tighter labour market

conditions stimulated private consumption. Consumer confidence remains

stable over the past few quarters, however consumers rarely put savings aside

for a rainy day. In an environment of labour shortages, incomes are

increasingly supporting consumer spending.

In FMCG, Q4 saw the market grow by 5.9%, driven more by price increases

(3.3%) rather than volume (2.6%). Convenience/Petrol Stations (24.2%) and

Pharmacies (15%) witnessed the strongest growth for the year but smaller

outlets were also strong, with focus on proximity and convenience such as with

Superettes and Groceries (7.7%). From a category perspective, Beverage

performance was strongest in both Non Alcoholic (14.5%) and Alcoholic Drinks

(10.5%), with the former traditionally growing due to the Winter holidays. Pet

Care (8.9%), Snacks (8.2%) and Baby Food (7.0%) continued their positive

trend, partly due to shelf price increases.

As Latvian retailers have upgraded their branding concept over the past few

years, we have seen increased demand for convenience, fast self-service and

healthy solutions. Latvian consumers continue to seek out “local” and “healthy”

options, so it is critical for both retailers and manufacturers to ensure they

address these emerging needs offering value-for-money by determining the

optimal shelf and promotional pricing across channels.

82


TOTAL LATVIA – CHANNEL PERFORMANCE

The FMCG market continued its recovery across the year with positive sales

volume growth for the fourth consecutive quarter, as the improving economy

led to increased demand.

Convenience/Petrol Stations enjoyed solid growth due to strong performance

of Impulse categories such as Beverages, Snacks and Chocolate count

lines.


(weighted average)



2.8%

4.3%3.4%

1.6%2.2%

3.2% 3.3%

2.8%

-0.2%

0.4%

2.0%

2.7%

4.5%2.6%

5.5%

4.0% 3.8% 3.5%

4.9%

7.6%

5.9%

MAT TY Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

LatviaUnit Value Growth Volume Growth Nominal Value Growth

5.5%

4.8%

3.7%

7.7%

24.2%

15.0%

Total FMCG Hypermarket/Large Supermarkets+Drugstores

Small Supermarkets/Discounters Superettes/Groceries

Conveniences/Petrol Stations Pharmacies

41%

35%

20%

3%

1%

83


Winter and Christmas seasonality was behind strong performance of

Beverages this quarter.

TOTAL LATVIA – SUPER CATEGORIES PERFORMANCE

TOTAL LATVIA – MANUFACTURER PERFORMANCE - FMCG

Growth is not polarised by large or small players rather by manufacturers

with balanced product portfolios across price tiers and segments that meet

consumer demands with competitive price points as well.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 18.2%

Top 6-10 9.6%

Top 11-30 19.1%

Top 31-100 21.8%

100+ 22.0%

Private Label 9.4%

5.5%

3.8%

10.8%

5.1%

8.9%

4.1%

0.8%


Total FMCG 100.0%




Personal Care 7.7%


Confectionery 6.1%


Hot Beverages 3.9%

Snacks 3.4%

Pet Care 2.2%

Baby Food 0.9%

5.5%

5.3%

10.5%

-1.7%

4.3%

14.5%

1.3%

2.3%

-2.2%

8.2%

8.9%

7.0%

84


LITHUANIA SNAPSHOT

COUNTRY HIGHLIGHTS


Ilona Lepp

Managing Director

Baltics



Source: OECD

3.63.8

3.53.7

2.2

3.6

4.4 4.2

3.4

2.62.3 2.5

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 8786

87 87

84

7779

7778

8382

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU LT

After a disappointing third quarter impacted by lower crop yield and weak external

demand, the Lithuanian economy displayed signs of recovery by the end of 2018

with 3.2% growth. Fuelled by recovering internal consumption and positive

performances in the manufacturing, construction, wholesale and retail trade

sectors, the country’s GDP remains stable but at a lower level compared to the

first two quarters of the year. Inflation continued to decline to a low of 2.5% for Q4

2018 affecting households’ disposable income. Consumer confidence trended

upwards in the last two quarters becoming more optimistic across all measures of

future job prospects, personal finances and it being a good time to buy. Health

remains a key issue for Lithuanians, and while easing inflation has eased

consumers’ concerns around increasing food prices, escalating utility costs are

top of mind.

An unusually hot summer boosted FMCG volume growth in Q2 and Q3 of 2018;

and in Q4, the FMCG market recorded a positive overall value growth of 2.4%,

however this was largely driven by price influences. Seasonal categories, which

had outstanding performance within Q3 strongly influenced the annual FMCG

performance. Chilled and Frozen products (6.5%), Non Alcoholic Beverages

(14.8%), Snacks (6.9%) continued to enjoy solid performances throughout 2018.

Meanwhile, Hot Beverages and Shelf Stable Foods had some negative

performance of -2.3% and -1.1% respectively, indicating signals of shifting

consumer habits and declining consumption. Private Labels have not kept pace

with consumers’ growing preference for innovative and convenience products that

have been the focus of medium and smaller manufacturer’s brands.

With continued uncertainties and EU slowdown, the Lithuanian economy becomes

more dependent on internal consumption. Although inflationary pressure is

slowing, consumer preference for products with a strong value positioning is

strong. It is highly important for retailers and manufacturers to take into

consideration price sensitivity, to ensure promotional offers are targeted at the

most responsive products and innovation focuses on growing convenience and

health trends.

85


TOTAL LITHUANIA – CHANNEL PERFORMANCE

After outstanding FMCG market performance in Q3, consumption

declined with the only growth coming from inflationary pressures.

New openings of Large supermarkets support consumers’ increasing desire for

more convenient locations with a good assortment. Convenience/Petrol stations

growth follows consumers’ ongoing need for convenience offerings.


(weighted average)



22%

25%37%

10%

1%3%

2%

3.0%

7.3%

7.5%

4.7%

1.9%2.6%

2.0%

0.3%

-2.6%-2.6% -2.1%

1.2%

2.6%0.4%

3.4%

4.7% 4.9%

2.6%3.1%

5.2%

2.4%

MAT TY Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Lithuania


3.4%

2.1%

8.2%

0.4%

2.7%

25.0%

2.1%

10.9%


Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations

Drug Stores Pharmacies

86


Declining performance of Hot Beverages and Shelf Stable Foods indicate signals

of changing consumer habits and declining consumption of basic categories.

TOTAL LITHUANIA – SUPER CATEGORIES PERFORMANCE

TOTAL LITHUANIA – MANUFACTURER PERFORMANCE - FMCG

Medium and Small players are focusing on health and convenience trends. Private

Label has not kept pace with these trends and suffered accordingly.

MAT Q4-2018 MAT Q4-2018

.

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 18.1%

Top 6-10 9.2%

Top 11-30 21.6%

Top 31-100 22.7%

100+ 19.6%

Private Label 8.9%

3.4%

3.3%

4.7%

4.8%

4.6%

3.2%

-3.5%


Total FMCG 100.0%




Personal Care 10.1%


Confectionery 5.6%


Hot Beverages 4.1%

Snacks 3.2%

Pet Care 1.9%

Baby Food 0.7%

3.4%

6.5%

-1.2%

-1.1%

3.5%

14.8%

-0.2%

6.6%

-2.3%

6.9%

10.6%

7.0%

87


POLAND SNAPSHOT



Karolina Zajdel-

Pawlak

Managing Director,

Poland



87 87 86 87 87 84

104 104 103 105 103 105

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU PL

5.5

4.65.0 5.2

5.7

4.6

2.02.3

1.51.8

2.1

1.4

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



2018 turned out to be a very strong year for Polish economy with 5.1% annual GDP

growth, despite some moderation in the last quarter at 4.6%. Favourable

macroeconomic conditions combined with the governments’ initiated social transfers,

translated into households with increasing disposable incomes and high levels of

optimism. Consumer confidence in Poland reached an index of 105 in Q4 2018,

significantly above the EU average of 84. Poles remain positive about their job

prospects in the coming year which is a reflection of continued low unemployment levels

(below 6% on an annual basis) as well as the optimism surrounding their personal

finances in the next 12 months. In light of record-low inflation level (1.6% for 2018) the

concern around increasing food prices is also declining.

FMCG nominal value growth rate in 2018 reached 4.8%, slightly lower in Q4 (4.3%)

than in Q3 (5.8%) as a result of the exceptional summer-season boost to many

categories. Increasing prices (2.2%) which is above the inflation rate of 1.6%,

contributed towards FMCG growth for the year reflecting the rising importance of more

premium offerings across multiple categories. The volume growth rate accounted

respectively for the 2.6%. In 2018 there were two contradictory events that impacted

FMCG performance: an exceptional summer period boosted sales while the

implementation of a Sunday trade ban regulation limited the number of Sundays in a

month that shops could trade on. In light of this, we can see hypermarkets and

supermarkets did not capitalise on the favourable summer conditions and seem to be

more impacted by Sunday trade limitations. In contrast small format stores and

discounters have prospered in this environment.

While it appears that unusually favourable summer conditions have negated the

expected negative impact of Sunday trade ban in 2018, further restrictions to Sunday

trading in 2019 may have a more significant impact. However there are still

opportunities for growth in the Polish retail landscape as Poles are optimistic about their

personal finances and eager to trade up to more premium offerings that meet their

evolving needs and conscious shopping choices. Healthy, environmentally friendly

options as well as products meeting shopper need for convenience have been on the

rise in 2018 and are expected to continue their momentum.

88


TOTAL POLAND – CHANNEL PERFORMANCE

FMCG sales value grew by 4.3% in Q4 18 in comparison to the same

period last year. Price change was the main driver of this growth.

Discounters growth has come from new store openings while Small

Format has benefited from the Sunday ban.


(weighted average)


4.8%

-1.1%

-0.3%

7.4%

5.8%

6.3%

Total FMCG Hypermarkets Supermarkets Discounters Drugstores Small Format

10%

14%

32%7%

36%

2.7% 2.2%2.0%

2.0%3.0%

2.1%0.9%

1.7% 2.0% 2.7%

1.6% 2.6%

-1.2%

3.6%1.6%

3.8%5.0%

1.8%

3.9%1.6%

4.3%4.8%

0.7%

5.6%

4.6%

5.9% 5.9%

3.4%

5.9%

4.3%


Poland


89



Total FMCG 100.0%


Culinary 16.3%


Dairy 13.7%

Confectionery 11.5%

Cosmetics Categories 8.5%

Paper Sanitary Hygiene & Other 4.6%

Home Categories 4.4%

Frozen Products 3.3%

4.8%

5.0%

2.4%

7.2%

4.3%

4.7%

4.3%

3.0%

4.9%

13.3%

The wider assortment of Branded products available in Discounters is

behind the faster growth of Top Manufacturers compared to Private Label.

Convenience offering underscored the performance of Beverages and

Frozen food.

TOTAL POLAND – SUPER CATEGORIES PERFORMANCE

TOTAL POLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 16.1%

Top 6-10 10.9%

Top 11-30 19.9%

Top 31-100 16.9%

100+ 17.1%

Private Label 19.1%

4.8%

6.3%

5.6%

4.4%

5.6%

4.9%

3.0%

90


ROMANIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q4 2018

Iulia Pencea

Managing Director

Romania



87 8786 87 87

84

98

9091 92

98

101

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU RO

8.8

6.7

4.0 4.1 4.3 4.1

1.5

3.1

4.75.3

5.0

3.6

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



The Romanian economy continued positively, with GDP growth to be 4.1% for

Q4 2018 versus year ago and inflation slowing to 3.6%. After several waves of

salary increases and looking ahead to when Romania holds the presidency for

the Council of Europe, consumers are feeling more confident in the economy

and their own finances. This opinion is reflected also by the consumer

confidence index which peaked at 101 in Q4.

FMCG performance was strong across 2018 driven finishing Q4 with 8.6%

nominal growth based on a 4.9% volume increase and an average of 3.7%

prices growth. Hypermarkets remain the slowest growing channel, with a 2.2%

value increase brought only by inflation, while the trend towards convenience

drives consistent growth in the proximity formats. Supermarkets continue to grow

in double digits, supported by their numeric expansion, while Traditional Trade’s

positive evolution continues, supported by salary increases and convenience.

Beverages, followed closely by Household and Personal Care products also had

double digit growth, while Frozen Food development is surpassing Fresh Food

development in Q4, 2018.

Despite higher prices, Romanians’ optimism is still translating into increased

consumption and this will be supported further through the social-oriented

measures expected during an electoral year (elections for EU Parliament in May

and presidential elections in Nov 2019). However, the corporate world is

concerned with the latest governmental decisions impacting private sector’s

budgets, so growth plans for 2019 must be backed-up by flexible scenarios to

accommodate possible economic trend changes.

91


TOTAL ROMANIA – CHANNEL PERFORMANCE

Consumption continues to be the economic growth trigger, driven by

higher wages and low unemployment rates.

With Hypermarkets growth is slowing, market growth is driven by the

convenience / proximity channels (Supermarkets and Traditional Trade).


(weighted average)


8.8%

2.2%

16.1%

10.3%

9.9%

11.7%

10.8%

Total FMCG Hypermarkets Super/Minimarkets

Discounters Traditional Trade Pharma/Cosmetics

Petrol Stations/Convenience

27%

19%

11%

41%

1%1%

3.8%5.3%

1.2%1.7%

4.6%5.6% 5.3%

3.1% 3.4% 3.7%

3.6%

3.5%

5.4% 4.9%

2.3%

3.7%

3.3%6.7%

4.7% 4.9%

7.4%

8.8%

6.6% 6.6% 6.9%

9.3%8.6%

9.8%

8.1%8.6%


RomaniaUnit Value Growth Volume Growth Nominal Value Growth

92


Overall increase is visible across most categories. Main food categories

remain behind beverages, household and personal care products that

continue their growth in double digits.

TOTAL ROMANIA – SUPER CATEGORIES PERFORMANCE

TOTAL ROMANIA – MANUFACTURER PERFORMANCE - FMCG

Top 5 FMCG manufacturers are predominantly operating in beverages

have driven growth via new product lines, premium packaging and

year-end promotions

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Dry Grocery 29.0%

Fresh Food 22.4%

Beverages - Alcoholic 14.5%

Beverages - Non Alcoholic 13.8%

Personal Hygiene/Cosmetics 8.6%

Household Care 7.8%

Frozen Food 3.0%

Non Food 0.8%

8.8%

6.8%

7.4%

10.4%

13.3%

10.0%

11.2%

8.4%

-6.3%


Total FMCG 100.0%

Top 1-5 17.0%

Top 6-10 9.3%

Top 11-30 19.1%

Top 31-100 20.9%

100+ 21.2%

Private Label 12.4%

8.8%

13.5%

5.7%

9.3%

9.7%

6.8%

6.3%

93


RUSSIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q4 18 Rosstat

Alexander Kotsuba,

Managing Director

Nielsen Russia



87 87 86 87 87 84

70 69 68 70 67 65

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU RU

2.1

1.01.3

1.8 1.92.2

3.3

2.52.4 2.4

2.9

3.9

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



2018 turned out to be the fifth year in a row where Russian consumers’ real income -

one of the key economic indicators of consumer spending power - was in decline: -0.2%

vs 2017 (Rosstat). Experts agree that real income is not likely to return to positive

direction in 2019 either as: growing tax burden, decreasing share of income from

entrepreneurial activity and stagnation of social transfers put pressure on consumers’

disposable funds. At the same time, retail turnover in 2018 grew 2.6% (Rosstat) - most

likely due to increased volume of credits borrowed: its amount in 2018 went up 23% - as

opposed to 13% a year ago. Amount of loans taken for retail spending purposes is

among the highest in Eastern Europe and stands for almost 10% of Russian GDP.

Consumer Confidence in Russia closed the year (Q4) at its two-year lowest score (65

points with the historically low 63 points being posted in Q1 and Q4 2016). Rising prices

for food is a concern for 35% of consumers versus 23% in Q3 - this notable increase

comes as no surprise, as inflation totalled 4.3% in 2018 with significant acceleration at

the end of the year.

Transformation in FMCG retail has gained momentum with a great deal of recent

activity. Metro announced online sales availability for all of its shoppers, Ozon.ru

launched subscription for delivery, largest food tech company, Delivery club, announced

its revenue growth of almost 50% in 2018 and its customer base increase of 67% in Q4

2018. Yandex. Market, a joint venture between Sberbank and Yandex, announced its

new marketplace for international FMCG products delivery, on top of the existing

marketplace “Beru” for Russian FMCG produce. Retailers continue to re-think their

business models, with the largest retailer, X5, investing in postamat business (in-store

pick up service for online orders) and specialty retailer Vkusvill entering the vending

market and launching self-service stores in office locations.

For FMCG manufacturers, these shifts mean they need to be faster, smarter and more

granular in their sales efforts. The increased number of sales channels, rising power of

online in FMCG and emerging competition from niche products delivered internationally

is changing the retail landscape and fast-casual meal delivery companies are

encroaching on traditional FMCG space. Recent news in the retail market is that

retailers Krasnoe & Beloe, Bristol (two largest alcohol specialists with wide FMCG

assortment) and Dixy (fifth food retailer) announced their merge into one business,

becoming the third largest player in the market. This will lead to further strengthening of

retailers’ negotiating positions.

94


TOTAL RUSSIA – CHANNEL PERFORMANCE

Weak December sales (0.5% growth in volume terms vs year ago compared

to 5.1% in 2017) contributed to the slow-down of sales in volume in Q4 2018.

Growth in Traditional Trade channel is attributed to the proliferation of

specialist stores that are part of "traditional" segment in Russia.


(weighted average)


5.9%

7.3%

1.9%

Total FMCG Modern Trade Traditional Trade

75%

25%

3.2%

2.8%

6.0%3.5%

1.9% 1.3% 1.5%2.2%

3.5% 3.8%

-0.1%

3.1%

-3.3%

-0.3%

0.2%

2.8% 2.3%

4.6%3.1% 2.4%

3.1%

5.9%

2.7%3.3%

2.1%

4.1% 3.8%

6.7% 6.6% 6.2%


Russia


95


Private Label decline was driven by supermarkets channel that accounts for

50% of PL value sales and where its share declined by almost 1%.

Beer’s strong growth in contrast to preceding years of decline were supported by

FIFA World Cup, hot and long summer period and by low 2017 base

TOTAL RUSSIA – SUPER CATEGORIES PERFORMANCE

TOTAL RUSSIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Tobacco 15.0%

Other Food 14.8%

Dairy 12.5%


Beer 8.6%

Personal Care & Make-Up 7.0%

Vodka 6.6%

Sauces & Grocery 5.9%

Other Alcohol 4.8%

Home Care 3.1%

Pet 2.9%

Baby Food & Infant Formula 2.2%

Ice Cream 2.0%

Frozen Food & Fish 1.6%

Baby Care 1.2%

5.9%

12.3%

5.1%

2.4%

8.1%

7.9%

3.1%

-2.7%

0.7%

9.8%

2.1%

13.9%

4.2%

16.7%

6.7%

-2.9%


Total FMCG 100.0%

Top 1-5 20.2%

Top 6-10 11.8%

Top 11-30 17.7%

Top 31-100 16.9%

100+ 29.6%

Private Label 3.8%

5.9%

9.2%

3.6%

6.0%

5.9%

5.9%

-4.4%

96


SERBIA SNAPSHOT


Source Local government source Q4 2018 estimates

Miroslav Tasic

Group Managing

Director Adriatic

Region



2.3 2.4

4.9 4.8

3.73.5

3.0 2.9

1.6 1.7

2.42.0

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

69 6974 75 74

78

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU RS

Serbia’s economy recorded a GDP growth of 3.5% year-on-year in Q4, which is

slightly slower than Q2 and Q3, but stimulated by higher public investment and

consumption. Inflation in Q4 was lower than expected (2%) due to significant

decreases in world oil prices. Consumer confidence continued its upward trend

and in Q4 reached 78 points, closing the gap with the European average. Greater

consumer optimism stimulated higher consumption and less price sensitivity. Still,

job prospects remains the biggest concern with as many as 71% of Serbians

saying they only have enough money to cover basic expenses.

The FMCG industry is also showing some healthier volume growth; but price

remains the strongest driver. In Q4, many Serbians were celebrating their “Slava”

and New Year so one of the biggest value increases came from Alcoholic

Beverages and Frozen assortment, bought mostly in Q4. Lidl announced their

business results which were higher than expected and voiced intentions that they

will be opening more stores in the near future. This is expected to have more

impact on the growth of hyper/supermarkets channel.

On the channel side, we see smaller format stores getting stronger with more

shoppers switching from monthly to weekly or bi-weekly store visits. Proximity of

stores and convenience remain the main shopping drivers, something that is

heavily influencing the growth of smaller format stores. Large and Medium

groceries are recording significant growth in Q4 as well, due to their more

accessible format.

Following news of Coca Cola acquisition of one of the biggest local

manufacturers, there is industry discussion about the separate but further

acquisition of two other big local manufacturers in Serbia. This will impact FMCG

market concentration, so manufacturers should closely monitor happenings on the

market. Serbia FMCG industry is expected to continue its growth, and alongside

the increase in pensions and minimum wages, it is a chance for both

manufacturers and retailers to grow by focusing on straightening their business

and closely following the needs of these consumers who will have more money in

their pockets.

97


TOTAL SERBIA – CHANNEL PERFORMANCE

Increase in prices is driving FMCG growth

Significant growth of smaller format stores is, due to changing shopping

trends and a preference towards convenience.


(weighted average)


4.2%

0.5%

8.2%

5.4%

-0.4%

8.6%

9.6%

11.7%

Total FMCG Hyper/Super Large/Medium Groceries Small Groceries

Kiosks/ Pavillions Drug Stores Petrol Stations Pharmacies

28%

29%

22%

13%

4%3%

0%

*Serbia data has 3 (4 monthly periods) in a year, (Jan-Apr, May-Aug & Sept-Dec)

2.9%

3.3% 3.7%

3.6%

3.4%3.9%

3.3%

2.9%

3.6%

3.3%

-0.5%

0.9% 0.6%

-1.2% -2.0% -2.0% -0.5%

0.7%

1.3%

0.8%

2.4%

4.2% 4.2%

2.4%

1.3%

1.9%

2.9%

3.6%

4.9%

4.0%


Serbia


98


Beverages and frozen assortment grew significantly, primarily due to

the holiday season in Serbia.

TOTAL SERBIA – SUPER CATEGORIES PERFORMANCE

TOTAL SERBIA – MANUFACTURER PERFORMANCE - FMCG

A new government policy encouraging the growth of start-ups and small

businesses has resulted in improved performance among smaller players.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018

MAT Q4-2018


Total FMCG 100.0%

Tobacco 29.8%

Food Fresh Refrig. 14.6%

Beverages Non-Alcoholic 13.7%

Confectionery And Snacks 11.8%

Beverages Alcoholic 8.5%

Personal Care 7.1%

Food Shelf Stable 6.5%


Frozen 2.8%

Pet Food 0.3%

4.2%

3.7%

3.3%

5.0%

4.8%

10.0%

3.1%

-0.6%

1.7%

10.7%

8.8%


Total FMCG 100.0%

Top 1-5 33.7%

Top 6-10 10.8%

Top 11-30 21.9%

Top 31-100 17.3%

100+ 12.3%

Private Label 4.0%

4.2%

2.9%

5.9%

2.9%

6.9%

6.5%

0.5%

99


ECONOMY WATCH

SLOVAKIA SNAPSHOT

COUNTRY HIGHLIGHTS



Karel Tyra Managing Director,

Slovakia



87 87

8687 87

84

87

86

90

93

90

92

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU SK

3.3

3.73.9

4.34.5

4.0

1.62.0

2.4

2.8 2.7

2.2

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



The Slovak economy continues to be in good shape and 2018 was not an

exception with GDP continuing its growth trajectory for nine consecutive years.

These positive conditions are supporting the labour market with unemployment

levels at a historic low of 5% (vs 14% in 2010). Slovak consumers continued to

be increasingly optimistic throughout 2018, with the index ending Q4 at a high of

92 points. Declining unemployment improved confidence about future job

prospects and pushed concern about job security out of top three. Similarly to

Czechs, Slovaks are most concerned about their own health, which presents

great opportunities for manufacturers and retailers to drive innovations in this

area in new categories, segments, improved ingredients and in their

communication to consumers.

In Q4 consumers’ concern regarding increasing utility bills doubled compared to

the previous quarter as inflationary pressures pushed up prices. As a result,

more Slovaks are searching for opportunities to save on gas and electricity.

Despite the optimistic economic environment, FMCG growth has slowed due to

declines in volume consumption. Growth was buoyed by price increases which

we anticipate will continue if inflationary levels continue throughout 2019.

Looking ahead, there is much speculation about the new taxes that could be

implemented on the retail sector against large, (mostly foreign) retailers. Behind

the legislation is also the notion that retailers should be giving more support to

local brands and that the money raised should be used to support local food

production. This type of disruptive legislation could have a huge impact on the

retail landscape for retailers and manufacturers alike, but it also points to a

growing sentiment to support local which we see across many markets.

100


TOTAL SLOVAKIA – CHANNEL PERFORMANCE

Inflationary pressures and the growth of premium segments is driving FMCG

performance.

Drug chains are performing very strongly as consumers seek convenience from

smaller stores with varied assortment.

FMCG MARKET DYNAMICS*

(weighted average)


1.1%

0.4%

1.3%

-2.2%

10.4%

Total FMCG Hyper/SupermarketsHyper/Supermarkets (incl. Lidl)

Organized Groceries Non Organized Groceries

SK Organized Drug

60%

27%

6%7%

3.1%

2.7%

2.2% 3.1%

4.7%

3.3%

2.9%3.5%

1.7%

2.8%3.3%

-1.5%

2.0%6.3%

-0.5%

4.3%

-1.7%

-4.0%

0.5%

-1.2%

6.4%

1.1%

4.3%

9.4%

4.2%

7.5%

1.2%

-0.5%

2.2%1.6%


Slovakia


101


For the first time in several years Private Label is declining due to heavy

promotional pressure of major brands and consumer preference for

branded products.

All drug product groups and seasonal food categories drive nominal growth

in 2018.

TOTAL SLOVAKIA – SUPER CATEGORIES PERFORMANCE

TOTAL SLOVAKIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Top 1-5 13.7%

Top 6-10 9.0%

Top 11-30 17.0%

Top 31-100 19.3%

100+ 19.3%

Private Label 21.6%

1.1%

2.3%

3.0%

2.0%

1.9%

0.2%

-0.8%


Total FMCG 100.0%

Dairy 18.2%

Sweets & Treats 17.0%

Beverages Alcohol 16.8%


Culinary - Shelf Stable 9.6%

Beverages Non Alco 9.2%

Beverages Hot 4.6%

Home Care excl. Laundry 2.5%

Home Care - Laundry 2.3%

Baking - Shelf Stable 1.9%

Infant Care 1.8%

Culinary - Frozen 1.7%

Pet Care 1.5%

Frozen – Ice Cream 1.5%

1.1%

-0.2%

0.1%

3.0%

3.3%

-0.6%

3.2%

-1.4%

3.0%

2.9%

-12.1%

0.5%

-0.1%

4.7%

14.1%

102


SLOVENIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source Local government The Conference Board® Global Consumer Confidence


Miroslav Tasic

Group Managing

Director Adriatic

Region

5.1

6.2

5.0

3.8

4.8

4.1

1.2 1.3 1.3

1.9 1.9 1.9

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87

86

87 87

848483

81

87 8787

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU SI

Slovenian GDP continued its strong growth in Q4 reaching 4.1% over the same

period versus previous year and according to first estimates saw full year 2018

GDP at 4.5% growth. The positive economic conditions were complemented by

the lowest unemployment rate in the last ten years leading to a mild increase in

the cost of living essentials at 1.5%

Despite the overall positivity, consumer sentiment (measured by the Consumer

Confidence Index) remained unchanged at 87 points in Q4 2018 which was just

above the European average. The favourable economic environment means

households have more disposable income, some of which is being put into

savings, but also increasingly into holidays and home improvements. Value

growth continues to drive FMCG growth with an increase by 2% in Q4.

Benefitting from the warmer Q3, annual performance of Salted snacks grew the

most in comparison to the same period last year 5.9%. They were followed by

Meat and meat products 5.7%, whereas Baby Food performance (3.9%) was

driven by increased prices.

Among the channels, Discounters recorded the highest growth in Q4. Private

label growth was mainly led by their lower cost as well as new product lines

following current trends like Bio, Eco and Organic, as well as less intensive

promotions in traditional retail chains.

Increasing utility bills and work-life balance are very highly ranked concerns but

health is still the number one concern for Slovenian consumers (and

significantly above the European average). This concern for health is an

opportunity within the Slovenian marketplace for companies with relevant

products and communication as 29% of Slovenian consumers willing to pay a

premium for organic or all natural products.

103


TOTAL SLOVENIA – CHANNEL PERFORMANCE

FMCG growth was influenced by rising prices, due to less promotional

activity.

Discounter sales are led by sales of their private labels which are featured

heavily in promotional activity.


(weighted average)


1.8%

2.5%

0.8%

0.6%2.2% 2.6% 2.5%

2.7%

2.2%2.0%

0.8%

-0.5%

-1.2%

2.0%

0.0%

3.2%

1.5%

-1.4%

0.5%

-1.6%

2.6%2.0%

-0.4%

2.6%2.1%

5.8%

4.0%

1.3%

2.7%

0.4%


SloveniaUnit Value Growth Volume Growth Nominal Value Growth

2.0%

-1.6%

1.0%

-1.8%

1.0%

-1.5%

7.5%

2.5%

Total FMCG Hypermarkets Supermarkets Large groceries Medium and Small groceries Kiosks Discounters Drugstores

15%

41%10%

3%

0%

27%

4%

104


Salted Snacks and Beverages kept their growth momentum influenced

by soccer World Cup and prolonged warm weather.

TOTAL SLOVENIA – SUPER CATEGORIES PERFORMANCE

TOTAL SLOVENIA – MANUFACTURER PERFORMANCE - FMCG

Private labels growth was driven by strong growth of Discounters.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Beverages 21.6%


Meat And Meat Products 15.4%

Packed Food 13.5%

Confectionery 11.2%

Personal Care 10.3%

Household Care 5.7%

Frozen Food 3.3%

Salted Snacks 1.6%

Baby Food 0.6%

2.0%

2.1%

1.9%

5.7%

2.0%

-0.9%

-0.1%

0.8%

2.5%

5.9%

3.9%


Total FMCG 100.0%

Top 1-5 15.8%

Top 6-10 7.4%

Top 11-30 15.1%

Top 31-100 16.0%

100+ 12.4%

Private Label 33.4%

2.0%

0.7%

-0.9%

1.3%

2.6%

1.0%

3.8%

105


TURKEY SNAPSHOT

COUNTRY HIGHLIGHTS


Source Local government sources

Didem Sekerel

Erdogan

General Manager

Nielsen Turkey,

Connect



87 87 86 87 87 84

113 112

89 8879

87

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU TR

5.3

11.5

7.3 7.3

1.6

-3.0

10.612.3

10.2

12.8

19.4

22.4

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



Turkey’s economy continued its momentum, with GDP growth contracting to -3% in

Q4 (+2.6% for the year) amidst currency turbulence which started in August ’18 and

ongoing geopolitical tensions.

As exchange rates normalized throughout the quarter, inflation fell to 20.3% in

December from peak level of 24.5% in September. This is an encouraging sign

supported by renewed optimism among consumers with the Consumer Confidence

Index increasing eight points in Q4 driven predominantly by an improvement in

consumers perception of future job prospects.

As for FMCG market, the overall volume gain of 1.2% for the year indicates growth

has been possible despite price pressure. Body Care, Hair Care, Confectionery and

Dairy have been the fastest growing categories over the latest 12 months, in terms of

volume. The volume performance of those categories was mainly due to more

households shopping in Perfumery chains and small supermarkets (BIM&A101&SOK)

as they continued their rapid store expansion strategies.

Looking ahead, we should note that as exchange rate movements stabilize, inflation

has started to fall after its peak in September and consumer confidence has started to

recover. However, it is likely that it will take some time for those positive attitudes to

reignite consumer demand. In this environment, it is critical for manufacturers to

closely monitor changes in shopper behaviour throughout this turbulent period and

ensure pricing and promotion strategies are maximized for growth. Strategies that

focus on value for money (such as pack downsizing, maintaining existing price points)

will help consumers manage budgetary constraints. Innovation should also be high on

manufacturers’ agenda to reinvigorate consumer demand.

106


TOTAL TURKEY – CHANNEL PERFORMANCE

Exchange rate turbulence has driven inflationary pressures in FMCG

resulting in negative volume growth in Q4’18.

Small supermarkets (including BIM&A101&SOK) and perfumeries growth

has been mainly driven by store expansion.


(weighted average)


FMCG: excluding Tobacco/Alcohol

9.5%

18.4%

6.1%8.6% 10.3% 12.4% 13.3% 13.7%

18.9%26.9%5.4%

1.2%

5.5%

6.0% 5.1%5.2%

2.8% 2.8%

2.1%

-2.7%

14.9%

19.6%

11.7%

14.6% 15.5%17.5%

16.1% 16.6%

21.0%

24.2%


TurkeyUnit Value Growth Volume Growth Nominal Value Growth

19.6%

6.0%

13.2%

26.2%

33.2%

15.2%

Total FMCG Hypermarkets Large & Medium Supermarkets

Small Supermarkets* Perfumery Traditional Trade

4%

21%

47%

3%

25%

107


Body Care, Hair Care, Confectionery and Dairy categories showcase strong volume

growth due to store expansion of Small Supermarkets and Perfumeries. Price

increases buoy Paper Products performance with negative volume growth.

TOTAL TURKEY – SUPER CATEGORIES PERFORMANCE

TOTAL TURKEY – MANUFACTURER PERFORMANCE - FMCG

Smaller manufacturers and Private Label are growing fastest as consumers

seek value offerings in the face of increasing prices.

FMCG: excluding Tobacco/Alcohol

*100+ includes private label brands

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Confectionery 21.3%

Non Alcoholic Drinks 21.0%

Dairy 13.1%

Grocery 12.2%

Housekeeping 8.0%

Paper Products 6.4%

Fats And Oils 5.4%

Body Care 3.8%

Ice Cream 3.2%

Hair Care 2.8%

Oral Care 1.3%

Grooming 0.8%

Other 0.7%

19.6%

19.6%

19.4%

22.0%

18.6%

20.8%

22.7%

12.2%

21.9%

15.9%

21.2%

17.2%

17.9%

26.6%


Total FMCG 100.0%

Top 1-5 23.8%

Top 6-10 10.8%

Top 11-30 17.6%

Top 31-100 14.7%

100+ 33.0%

19.6%

17.4%

15.7%

16.7%

16.3%

26.0%

108


UKRAINE SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q4 18 GDP local government

Vaios Dimoragas

Managing Director

Ukraine and Belarus



2.4 2.3 3.1 3.8 2.8 3.4

16.2

13.9 13.8

11.5

9.09.7

Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018



87 87 86 87 87 84

58 6158

62 6459

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EU UA

Ukraine is approaching the Presidential Elections of March 2019 with positive

momentum, although Q4 was anything but dull. The martial law that was

announced at the end of November did not have serious implications in the

business sector but at the same time it did add to the uncertainty that has

belied the country for years. The consumer confidence dip by 5 percentage

points compared to the previous quarter can be directly associated with these

events, however this relatively controlled drop could be even interpreted as

resilience in the shoppers’ mood. GDP grew 3.4% in Q4, whereas inflation

seems to be more controlled at the long-awaited single digit of 9.7%. Income

growth was above these inflationary levels which is enabling Ukrainian

consumers to buy more products that they really want rather than only the

ones they absolutely need.

The strong FMCG growth continues, albeit, after a year of 20%+ growth, the

comparison with an already high base of Q4 2017, resulted in a slight slow

down in pace, both in value and volume terms. FMCG players at the

manufacturer and retailer side remain optimistic and predict that solid growth is

likely to continue in 2019, supposing no major surprises in the always volatile

Ukrainian political and retail environment.

Manufacturers and retailers should further exploit this positive momentum,

ensuring a good balance between winning share in commodity categories but

also exploring ways of assortment optimisation, to enable strategies and

tactics to increase penetration of newer, more innovative categories or less

widespread categories. The ‘new” Ukrainian consumers are ready to embrace

new products and services that will enrich their lives and it is up to

manufacturers and retailers to ensure both access and education of their

usage to ensure these products become part of consumers’ everyday lives.

109


TOTAL UKRAINE – CHANNEL PERFORMANCE


(weighted average)


FMCG market demonstrates a slight slow down in growth in Q4, expected

after a period of strong continuous uplift.

The global trend of convenience is also impacting Ukraine with stronger

growth of minimarkets and perfumeries.

21.4%

22.5%

31.7%

29.8%

13.6%

Total FMCG Hypermarkets/Supermarkets MT Minimarkets MT Perfumeries MT Traditional Trade

53%

13%

6%

28%

10.4% 11.4% 10.0% 10.0% 10.5% 10.8% 10.4% 11.4% 11.9%9.5%

5.5%

10.0%

1.6%

5.3%

8.4%10.7% 11.1%

11.0% 8.6%

6.6%

15.9%

21.4%

11.6%

15.3%

18.9%

21.5% 21.5%22.4%

20.5%

16.1%


UkraineUnit Value Growth Volume Growth Nominal Value Growth

110


Confectionery and snacks are seeing strong growth as Ukrainian consumers’

higher incomes allow for more indulgence of impulse products.

TOTAL UKRAINE – SUPER CATEGORIES PERFORMANCE

TOTAL UKRAINE – MANUFACTURER PERFORMANCE - FMCG

Retailers have increased their focus on Private Label with greater assortment

and quality accounting for the highest growth.

MAT Q4-2018 MAT Q4-2018

MAT Q4-2018 MAT Q4-2018


Total FMCG 100.0%

Beverages - Alcoholic 21.5%

Beverages - Non Alcoholic Rtd &

Not Rtd21.0%

Confectionery & Snacks 18.4%


Personal Cleaning & Hygiene 9.2%

Household 5.1%

Seasoning & Sauce 3.7%

Baby Care 2.2%

Meals/Meal Mixes Shelf Stable 2.1%

Pet Food 2.1%

Baby Food & Drinks 1.8%

Desserts/Cakes/Sweet Products 0.6%

21.4%

18.3%

21.2%

25.3%

19.1%

20.2%

25.7%

15.9%

23.9%

24.3%

30.4%

26.5%

26.9%


Total FMCG 100.0%

Top 1-5 23.7%

Top 6-10 13.2%

Top 11-30 23.6%

Top 31-100 20.5%

100+ 13.1%

Private Label 6.0%

21.4%

20.0%

18.9%

23.3%

20.0%

21.6%

30.3%

111


CHANGING CONSUMER PROSPERITY

TOP 5 CATEGORIES CONSUMERS

ARE WILLING TO PAY A PREMIUM

CLOTHING/

SHOES

33% PERSONAL

ELECTRONICS

32% MEAT/

SEAFOOD

31%

COFFEE/TEA

27% DAIRY

24%

27%

TOP 5 CATEGORIES CONSUMERS

ARE SPENDING MORE ON

GROCERIES

39% UTILITIES

33% HOUSEHOLD

GOODS

RENT/MORTGAGE

25% TECHNOLOGY &

COMMUNICATION

25%

WORSE SAME BETTER

37% 32% 31% 48%

42%

10%

For Better or Worse – How Consumer Spending is Evolving

HOW CONSUMERS FEEL ABOUT

THEIR FINANCIAL SITUATION

STILL NOT ALL

CAN SPEND FREELY

“I’m able to

spend freely”

“I live comfortably

and am able to

buy some things

because I want

them.”

“I only have enough

money for food,

shelter and basics.”

5 YEARS

AGO

2013

TODAY

2018

VS.

CAUSED BY

GROWING DISPARITY

OF INCOME

DISTRIBUTION

INCREASING

COST OF LIVING

CHANGING SPENDING

PRIORITIES

FOR MORE INFORMATION ON ‘CHANGING CONSUMER PROSPERITY’ AND HOW TO WIN CONSUMERS’

WALLETS DOWNLOAD THE REPORT AND REACH OUT TO YOUR NIELSEN CONTACT.

EUROPE

Source: Nielsen Global Premiumization Study 2018


112


Economy Watch

% GDP per annum growth sourced from Economist Intelligence Unit (EIU)

Inflation, consumer prices % change per annum sourced from Economist

Intelligence Unit (EIU) or from local government statistics offices where

unavailable.

The Conference Board® Global Consumer Confidence Survey is conducted

in collaboration with Nielsen. - Survey is based on respondents with Internet

access. Index levels above and below 100 indicate degrees of

optimism/pessimism. Q1 2017 CCI results are unavailable this quarter due to

a Nielsen global survey service enhancement.

FMCG Market Dynamics - compares overall market dynamics (value and unit

growth) in the Fast Moving Consumer Goods sector based on the sales

tracking Nielsen performs in the mentioned markets. The FMCG definition is

based on the widest possible basket of product categories that are

continuously tracked by Nielsen in each of these countries and channels.

Nominal value growth: Percentage change in value sales (expenditures) as

measured by the total basket of reported product categories

Unit value growth (≈ ‘price’ change):

• The change in average price per unit may result from:

• Price changes of individual products

• Change in the mix of purchased products; more or less expensive

products, more or less promotions, etc.

• Channel switching; more or less purchases in discount stores, or

hypermarkets, or convenience outlets, etc.

• Product or channel mix changes may be induced by price change

or may just be the result of market dynamics.

• The unit value growth reflects how consumers experience ‘cost of

living’ in their actual grocery shopping behaviour.

Volume growth: Percentage change in purchased volume (quantity) of

products

Super Category Performance – definition of Super Categories are based on

local market definitions

CLICK HERE FOR DETAILS

DEFINITIONS AND SOURCES

https://www.nielsen.com/content/dam/nielsenglobal/eu/docs/quarterbynumber/qbn-super-category-eu-q4-2018.pdf

113


ABOUT NIELSEN

Nielsen Holdings plc (NYSE: NLSN) is a global measurement and

data analytics company that provides the most complete and trusted

view available of consumers and markets worldwide. Our approach

marries proprietary Nielsen data with other data sources to help

clients around the world understand what’s happening now, what’s

happening next, and how to best act on this knowledge. For more

than 90 years Nielsen has provided data and analytics based on

scientific rigor and innovation, continually developing new ways to

answer the most important questions facing the media, advertising,

retail and fast-moving consumer goods industries. An S&P 500

company, Nielsen has operations in over 100 countries, covering

more than 90% of the world’s population. For more information, visit

www.nielsen.com.

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