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Packaged Food: Quarterly Statement Q3 2017

August 2017

This quarterly statement focuses on snacks. Key markets, including the US and Europe, see a forecast upgrade supported by their resilient economies and lower risk of a potential recession. Only a few emerging markets see downgrades. However, uncertainty around Brexit leads to lower growth prospects in the UK. Savoury snacks sees the strongest upgrade, driven by the healthier perception of these products, and investment in premium snacks is gaining traction among snack manufacturers.

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The US is the single biggest contributor to the global forecast upgrade

Almost half of the upgrade in forecast retail value stems from the restored confidence in the US financial market and the resilience of the global economy. The Eurozone has also seen an upgrade in growth, driven by the stronger growth prospects in Germany and Spain, while growth rates for Indonesia and Nigeria have been downgraded.

Savoury snacks sees a higher upgrade than sweet biscuits and ice cream

Globally, savoury snacks categories have seen a bigger upgrade in growth than their sweet counterparts, driven by consumer macro trends such as the war on sugar, weight management and the rise in gluten-free diets, while the volume prospects for sweet biscuits and confectionery remain more modest.

Premiumisation and healthy snacking take their toll on mainstream confectionery players

As healthier eating habits and premiumisation are the main growth drivers behind snacking, companies which have failed to capitalise on a premium positioning have lost ground to rivals. Such is the case with Nestlé in confectionery in the US, and Cadbury producer Mondelez, which has seen a strong dip in its half-year sales.

Cost-cutting and consolidation define the new norm for snack companies

As consumers are switching to more niche brands which they perceive as healthier and cleaner, mainstream players are either consolidating their operations across their core brands, divesting underperforming brands and/or restructuring their business. This is also in response to shareholder pressure, as shareholders improve margins through aggressive cost-cutting measures, as exemplified by Nestlé and Mondelez.

introduction

Scope

Forecast Overview

Executive summary
GDP forecasts: Revisions over last quarter
Global risk scenarios
Major macro risks for packaged food

Snacks Forecast Update

Key findings
The US contributes the most to the global forecast upgrade
Downgrades in Indonesia and Nigeria belie different growth drivers
Brexit set to fuel inflation and hit consumer confidence in the UK
Savoury snacks sees the biggest upgrade globally
US: Popcorn set to benefit from premiumisation; gum less so
German consumers seek healthy indulgence with higher price tags

Corporate Strategies 2017 Q3

Corporate activities revolve around four core strategies
Unilever exemplifies the Brexit-induced risks to the food industry
Nestlé shifts its focus away from confectionery in North America
Mondelez growth: Not as sweet as its Cadbury chocolate
Rosenfeld steps down, feeding rumours of a potential takeover

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Key applications for Industry Forecast Models
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