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.
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.
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.
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.
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.
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