Home Care: Half-Year Update H1 2022

Delivery

This report comes in PPT.

Key Findings

Cost inflation is impacting home care

The home care industry is facing serious challenges related to the current supply chain crisis and the cost increases associated with it. Raw material prices have increased sharply, and with it the cost for energy and transportation. This is leading to downtrading and downsizing among consumers across fmcg industries. Home care is benefiting from a lag effect of consumption stemming from the pandemic experience and a heightened recognition of home care as a key hygiene provider.

Inflation surge as sustainability driver

Economic tensions are supporting the existing industry drive for more sustainable solutions. Industry players have come to realise that their sustainability goals can also be profitable goals. More than ever before, circularity and cutting down on resources in production and transportation are proving essential, especially as companies will not be able to pass on all costs to consumers as inflationary effects are continuing to impact the industry.

Product prices on the rise

Euromonitor’s Voice of the Industry survey reveals that 49% of businesses have responded to the ongoing inflationary pressure on their profit margins by increasing prices of some or all of their products. Those retail price increases also reflect in Euromonitor’s VIA price tracker, with frequent double-digit median price increases, comparing August 2022 with August 2021.

The industry has learnt from past events

The leading home care players, Procter & Gamble and Unilever, are reporting strong H1 2022 results, benefiting from price increases and a less-than-expected impact of those increases on demand. While the industry is counting on the lasting positive effect of the pandemic on demand, price segmentation and “shrinkflation” are commonly observed strategies used by home care players to minimise the effect of brand migration and downsizing on their brands.