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1、uncommon senseTMTHE FMCG GLOBAL 50 2023GRIT AND GUTS Unearthing ways to win in a new world02|OC&C The FMCG Global 50 2023The OC&C Global 50 2023In our latest edition,we unpick the trends behind the numbers in the 2022 rankings,shine a spotlight on star performers and assess what these businesses nee
2、d to do to stay ahead of the curve in this ever-changing economic climate.What we cover in this reportTHE GLOBAL 50 LEADERBOARD WHOS IN AND WHOS OUTTHE EMERGING SUB-SECTOR THATS THRIVINGSTAR PERFORMERS HOW BRANDS WILL OBTAIN THE NEXT WAVE OF GROWTH5 KEY QUESTIONS EVERY FMCG BUSINESS SHOULD ASKTHE OC
3、&C GLOBAL 50,PRODUCED IN CONJUNCTION WITH THE GROCER,TRACKS THE PERFORMANCE OF THE WORLDS 50 LARGEST CONSUMER GOODS BUSINESSES.WE PROVIDE AN ANALYSIS OF THEIR MOST RECENT ANNUAL ACCOUNTS,CONTEXTUALISING THIS IN GLOBAL INDUSTRY THEMES.OC&C The FMCG Global 50 2023|03DESPITE INFLATION SOARING TO RECORD
4、 HIGHS IN 2022 IN THE AFTERMATH OF THE PANDEMIC,THE GLOBAL 50 EMERGED ON THE OTHER SIDE WITH RECORD REVENUE GROWTH AND RESILIENT SHARE PRICES.They weathered the storm better than most,outperforming the wider market,but will need to be cautious,and strategic,in their attempts to recover margin and co
5、ntinue growing now the transition to input cost deflation has begun.As the dust starts to settle on a period that will be remembered for tumultuous and irrevocable change,there will need to be a shift in focus to longer-term strategy.Brands have to carefully consider where the next wave of growth wi
6、ll come from once no longer supported by price.Despite inflation soaring to record highs in 2022 in the aftermath of the pandemic,the Global 50 emerged on the other side with record revenue growth and resilient share prices.04|OC&C The FMCG Global 50 2023RANKCHANGE 2022/211COMPANYCOUNTRYGROCERY SALE
7、S IN MILLION US$IN 20222GROCERY SALES%CHANGE IN LOCAL CURRENCY SALES 22 VS 2131Nestl AGSwitzerland98,8738.4%2PepsicoUS86,3928.7%3Procter&GambleUS79,4435.0%4JBSUS71,7356.8%5UnileverUK/Netherlands63,16814.5%6AB InBevBelgium57,7866.4%7Tyson FoodsUS53,28213.2%8Coca-Cola Company(The)US43,00411.3%9LOrealF
8、rance40,23218.5%10British American Tobacco P.L.CUK34,1007.7%11Phillip Moris InternationalUS31,7621.1%12WilmarSingapore31,5208.8%13MondelzUS31,4969.7%142Heineken HoldingNetherlands30,19930.9%15-1DanoneFrance29,08613.9%16-1Kraft HeinzUS26,4851.7%17WH GroupChina26,3562.2%1812Marfrig GroupBrazil25,29253
9、.0%19Altria GroupUS20,648-2.0%20SuntoryJapan20,22616.3%21-3Japan TobaccoJapan20,21914.3%225Grupo BimboMexico19,82817.7%23-2Asahi BreweriesJapan19,03614.2%24-1General MillsUS18,9934.8%25-1DiageoUK18,98621.1%Overall ranking 2022 Global 50 list1.Ranking changed as compared to the revised ranking in 202
10、1 based on latest results reported in 20222.Grocery sales excluding excise duty payments.Currency exchange rate is based on the average exchange rate in 20223.Percentage change excludes excise duty paymentSource:Annual reports,10K,OC&C analysisOC&C The FMCG Global 50 2023|05*Originally called SCA be
11、fore 2017RANKCHANGE 2022/211COMPANYCOUNTRYGROCERY SALES IN MILLION US$IN 20222GROCERY SALES%CHANGE IN LOCAL CURRENCY SALES 22 VS 21326Yili GroupChina17,98311.7%27-2Colgate PalmoliveUS17,9673.1%28-6Reckitt BenckiserUK17,8219.2%29-Este Lauder Companies(The)US17,6889.4%30-2Kimberly-ClarkUS16,9193.4%312
12、Kweichow MoutaiChina16,24916.3%32LVMHFrance15,58517.8%331Kellogg CompanyUS15,3158.0%34-3NEWKenvue NEW ENTITYUS14,950-0.7%351Essity*Sweden14,39828.8%362Dr Pepper Snapple GroupUS14,05710.8%37-2Mengniu DairyChina13,7445.1%38-1NEWHaleon NEW ENTITYUK13,38813.8%391Royal FrieslandCampinaNetherlands12,56221
13、.5%401Hormel FoodsUS12,4599.4%412Arla Foods A.M.B.A Denmark11,89318.8%42-3HenkelGermany11,7307.0%43-1Tingyi China11,5736.4%44ConagraUS11,5363.1%452Pernod Ricard SA France11,25221.3%463Molson Coors Brewing CompanyUS10,7014.1%479Hersheys NEW ENTRANTUS10,41916.1%48-3CarlsbergDenmark9,9295.4%496Wuliangy
14、e YibinNEW ENTRANTChina9,69511.8%503Saputo Group NEW ENTRANTCanada9,2543.3%06|OC&C The FMCG Global 50 20232022:record revenue growthFOR THE SECOND YEAR IN A ROW,THE GLOBAL 50 ACHIEVED DECADE HIGH REVENUE GROWTH.All but one of these businesses grew between 2021-22.This growth was,unsurprisingly,drive
15、n by price.However,volume elasticities in response were less than feared,demonstrating the resilience of the sector.Those that report price and volume impressively achieved continued volume growth despite average price increases of c.11%.As consumers became squeezed,Private Label gained share overal
16、l.However,this was not consistent across categories or countries in many segments the Global 50s leading brands continued to successfully win share.-212019-20Post CovidFY19-22 CAGR 6.9%1.1%9.3%10.9%+8.2ppt+1.7pptKEY STATS:11.4%this driven by price10.7%vs.0.8%in volumeRevenue growthPrice g
17、rowthVolume growth+c.5%c.10%c.15%Beer and spirits:the prolonged bounce back from the pandemic helped drive c.5%volume growth despite c.10%price growth,leading to a staggering c.15%revenue growth.However,this has already slowed in2023 as the covid positive bump plays out.34 of the Global 50 saw absol
18、ute EBITgrowth 2021-22.For those that reported,organic growth at 11.4%.EBIT GROWTHSTAR SUB-SECTOR:BEER&SPIRITSORGANIC GROWTH10.7%price0.8%volumeOC&C The FMCG Global 50 2023|0775%of the Global 50 reduced marketing as a percentage of revenuec.50%of the Global 50 have reduced their absolute marketing s
19、pendGlobal 50 EBIT margins were at their lowest level in the last 5 years in 2022,and only 17 of the Global 50 successfully grew both revenue and margin.STRONG REVENUE GROWTH FAILS TO TELL THE FULL STORY:2022 WAS A CHALLENGING YEAR.Soaring input costs still put pressure on margins,in spite of the re
20、cord price increases.Global 50 EBIT margins were at their lowest level in the last 5 years in 2022,and only 17 of the Global 50 successfully grew both revenue and margin.Operating cost cutting programmes predominantly reductions in marketing spend helped mitigate some,but not all,this impact.Strong
21、revenue growth was enough to drive total absolute EBIT growth of the Global 50 by c.4%,although this profit is,of course,worth less in the context of inflation.However,the relative resilience of the industry was recognised by investors Global 50 share prices,specifically in Tobacco and Food&Drink,ou
22、tperformed the majority of sectors,with a 1%decrease in share price,compared to a 39%fall in the technology sector and 38%in automobile.Source:Google Finance,OC&C analysis08|OC&C The FMCG Global 50 2023New entrantsFOR THE FIRST TIME,CONSUMER HEALTH PURE PLAYS HAVE BEEN INTRODUCED TO THE GLOBAL 50.Ha
23、leon and Kenvue,spun-out of GSK and J&J respectively,have been added to the mix.These players benefit from attractive market tailwinds and now have strategic focus and clarity,and a mandate to invest behind value creation levers relevant to their categories(compared to the value creation levers of t
24、heir former pharma parents).Strong growth from Hersheys,Wuliangye and Saputo has also brought them into the Global 50 2022 rankingsThe notable changes to the ranking list this year,particularly its new entrants,demonstrates that there is still opportunity to grow with an adaptable strategy that swif
25、tly caters to change.OC&C The FMCG Global 50 2023|09Star performers“Our star performers are those that have continued to pursue and shape their longer-run strategies-including activities to drive premiumisation through NPD and marketing,and inorganic activity to pivot portfolios towards areas of gro
26、wth”CLAIRE DANNATT,PARTNERHALEONHaleon was spun out of GSK in 2022 and has benefitted from strategic and operational focus this has afforded them.The company delivered 13.8%sales growth in 2022,driven by market tailwinds particularly in their respiratory health business,successful product developmen
27、t and growth in eCommece sales They also achieved 1.1ppt margin improvement through the realisation of synergies from the merger with Pfizers consumer health business and a range of cost management initiatives.MOUTAIMoutai growth was driven by investment in DTC channels,and in a new Moutai app in pa
28、rticular(direct sales grew c.105%in 2022).In March 2022,the company launched the I Moutai app which allows them to sell Moutai baijiu at attractive prices(i.e.without large wholesale mark-ups),proving popular with customers.The app has also helped the brand expand into new customer segments,particul
29、arly younger generations.10|OC&C The FMCG Global 50 2023HERSHEYSHersheys 16.1%growth saw the company climb 9 places to enter the Global 50 for the first time.The business successfully grew volume despite significant price rises in its North America Confectionary business,as consumer willingness to s
30、pend on treats remained buoyant.Growth was also supported by its 2021 acquisitions into the fast growth salty snacks category(Dots Pretzels and Pretzel Inc.).Hersheys achieved 21%revenue growth in the North America Salty Snacks category.LVMHLVHM successfully capitalised on strong post-Covid market t
31、ailwinds for luxury,perfumes&cosmetics and wines&spirits.Their perfumes&cosmetics business saw strong growth in the US and Japan in particular as they successfully captured rebounding consumer spend through new product launches across key brandsIn Wines and Spirits,strong underlying tailwinds combin
32、ed with creative brand and marketing campaigns and targeted geographical expansion helped the business grow 24%in Champagne and Wines and 14%in Cognac&Spirits.DIAGEODiageos strong global portfolio of brands across BWS sub-categories allowed them to capitalise on post-Covid market recovery across dif
33、ferent geographies and channels.Amongst other things,the business benefited from strong growth in spirits in North America as the on-trade channel recovered,growth in beer in Europe driven by the strength of the Guiness brand,and recovery of the travel retail channel in Asia and the Middle East.OC&C
34、 The FMCG Global 50 2023|11HISTORY TELLS US THAT AS WE TRANSITION TO A PERIOD OF INPUT COST DEFLATION THERE WILL BE OPPORTUNITIES FOR THE GLOBAL 50 TO RECOVER MARGIN.This is never a straightforward task.Brands must tread carefully:category dynamics have shifted,consumers are still squeezed,and retai
35、lers will prioritise passing on lower prices or protecting margin for themselves.To maximise the opportunity,the Global 50 will need to:Refresh their understanding of consumers and categories which have likely been warped by recent turmoil Use this to identify their portfolio,range and pricing strat
36、egy needs to evolve and what levers are available to protect and grow margin Make the sell-in to retailers compelling,centred on how these levers will create value for both sidesTime for a re-think Given the tumultuous times of the last 3 years,consumer preferences and behaviours have rapidly shifte
37、d.With category norms being challenged during and after the pandemic,and the interface between suppliers and retailers evolving,the Global 50 will need to build a refreshed view of these dynamics.Brands must understand where category architectures have fallen out of shape,how elasticities have chang
38、ed and the role their products play in this new normal.Brands must understand where category architectures have fallen out of shape,how elasticities have changed and the role their products play in this new normal.Looking ahead:A tale of(cautious)optimism 12|OC&C The FMCG Global 50 2023Routes to mar
39、gin recoveryONCE BRANDS HAVE CLARITY ON HOW THEIR CATEGORIES,CONSUMERS AND ECONOMICS HAVE EVOLVED OVER THE LAST 3 YEARS,THEY WILL NEED TO IDENTIFY HOW THEIR PORTFOLIO,RANGE AND PRICING STRATEGY NEEDS TO EVOLVE AND WHAT LEVERS WILL BEST HELP RECOVER MARGIN.There are a range of levers available and ex
40、amples of members of the Global 50 successfully pulling them to recover margin in the past.This time around,the right mix will depend on specific brands market positions as well as category and consumer characteristics.Selected Portfolio,Range and Pricing Strategy Leversfor CG Players123456StrategyS
41、KU RationalisationClassic Price PackClarity in Brand Rolese.g.Format EvolutionPromotional ResetDiscounter Channel Architecture(PPA)PremiumisationPortfolio,Range and Pricing Strategy LeversThe right mix will depend on specific brands market positions as well as category and consumer characteristics.O
42、C&C The FMCG Global 50 2023|13As businesses begin to look beyond the turmoil of the last 3 years there is an imperative to refocus on longer-term strategy.They will need to identify where the next wave of growth will come from and how business models will need to evolve to ensure they remain relevan
43、t in a rapidly evolving environment.In 2022,we saw examples of the Global 50 starting to reshape portfolios and business models for future success across 3 key areas.However,more work is required.AIM&AESGAs businesses begin to look beyond the turmoil of the last 3 years there is an imperative to ref
44、ocus on longer-term strategy.Refocussing on the long term14|OC&C The FMCG Global 50 2023Excitement or alarm:The AI question AS WE ALL KNOW,GEN AI HAS THE POTENTIAL TO TRANSFORM THE WAY WE DO BUSINESS PRESENTING SERIOUS THREATS AS WELL AS SIGNIFICANT OPPORTUNITIES FOR THE GLOBAL 50.Conversations arou
45、nd AI are well underway within the Global 50.However,stated adoption of the technology is limited predominantly to narrow AI applications primarily to drive supply chain efficiency and deepen consumer insights.Reported use cases of Gen AI models are rare.There are potential applications for Gen AI a
46、cross the value chain,not least in category and consumer insights,hyper-personalised direct to consumer engagement,route to market analytics and advanced supply chain planning.Those that move quickly to harness the technology could create material competitive advantage.Those that do not could see th
47、e balance of power shift to competitors and/or retailers.30%of the Global 50 mentioned they were actively using AI in 2022 annual reportsExampleCoca-Cola has used AI to inform product development.The company used its Gen AI tools to identify popular product combinations at soda fountins,launching Ch
48、erry Sprite and Exotic Mango Coke as a result of the analysis.The brands ongoing plan with AI will leverage OpenAI tools to operational use cases as well as marketing.OC&C The FMCG Global 50 2023|15No excuses for ESGDESPITE THE TOUGH ECONOMIC CLIMATE OF THE LAST YEAR,THE GLOBAL 50 HAS CONTINUED TO M
49、AKE PROGRESS ON ESG.They have set more detailed and measurable targets,increased the sophistication of their ESG reporting,and most importantly made progress against these targets.For those reporting,Scope 1,2 and 3 emissions were down c.5%2021-22,as businesses began to take action against their lon
50、g-term goals to become net zero.This downward trend holds true even after indicatively adjusting for changes in volume.Further developments in ESG will likely require ongoing pressure from investors,as theyre starting to seek great transparency in ESG disclosures.ExampleUnilever published a Climate
51、Transition Action Plan(CTAP)in 2022,which assessed GHG emission at each stage in value chain and outlined a tailored approach to reduce emissions by analysing trends and drivers of GHG emission levels.The organisations Climate&Nature Fund,launched in 2020,is a commitment to invest$1.1bn by 2030 in c
52、limate,nature,and waste projects.By 2022 Unilever has already committed over$220m.Amongst the Global 50,several businesses demonstrated sustained volume growth alongside a reduction in emissions.20222021Average proportion of ESG content in G50 reporting1,2,3&4 FY2021 vs.FY2022(%)26.8%+2.0ppt28.8%202
53、220212020Index:Indicative Emissions Per Volume Unit2020-22(2020=100)1.000.960.89-4%-7%1.Proportion of annual reports dedicated to ESG related content2.Data collection based on companys FY21&22 Annual Reports and seperate ESG reports FY21&223.Excludes 6 companies which do not disclose comparable annu
54、al reports in 2021&20224.Of the Global 50;4 companies have not yet released FY22 ESG reportsSource:Annual Report,Desktop Research,OC&C analysis16|OC&C The FMCG Global 50 2023Diversifying portfolios and the evolution of value chainsTHE ECONOMIC CLIMATE NECESSITATED CAUTION IN THE GLOBAL 50S M&A ACTIV
55、ITY IN 2022,WITH DEAL SIZES LOWER THAN PREVIOUS YEARS AND MINORITY STAKES PROVING MORE POPULAR.Despite this,these businesses used M&A to diversify portfolios into growth categories,continuing to reshape their operations.As the world continues to evolve,there is an important question emerging for con
56、sumer businessees:What should and shouldnt they own across the value chain to deploy capital most effectively?With time,we may see more capability-led acquisitions as businesses seek to transform the way they operate.ExampleCapital could be released through divestments of manufacturing sites to co-m
57、anufacturers.With time,we may see more capability led-acquisitions as businesses seek to transform the way they operate.Assets previously seen as essential(such as manufacturing)may be less effective uses of capital.In many cases,these assets may be better owned by other industry players,releasing f
58、ixed costs from the P&L and capital to be deployed elsewhere.OC&C The FMCG Global 50 2023|17HOW HAS THE RECENT ECONOMIC UPHEAVAL IMPACTED YOUR CATEGORIES AND CONSUMERS?5 questions to consider about your businessIf you would like help answering these questions,or if you would like to find out more ab
59、out the OC&C FMCG Global 50,our team would be delighted to hear from you.Contact our Consumer Goods team:1 1WHAT VALUE CREATION LEVERS CAN YOU PULL TO MAXIMISE MARGIN RECOVERY AS INPUT COSTS COME DOWN?2 2WHERE SHOULD YOU PLACE BETS WITHIN YOUR PORTFOLIO TO DRIVE GROWTH OVER THE MEDIUM TERM?3 3WHAT O
60、PPORTUNITIES AND THREATS DOES GEN AI PRESENT ACROSS YOUR VALUE CHAIN?4 4NOW THAT WE HAVE SET AMBITIOUS ESG TARGETS WHAT IS THE PATHWAY FOR ACHIEVING THESE?5 5OFFICESBelo HorizonteBostonHong KongLondonMelbourneMilanMunichNew YorkParisRotterdamSo PauloShanghaiSydneyWarsaw OC&C Strategy Consultants 202
61、3.Trademarks and logos,including Uncommon Sense,are registered trademarks of OC&C Strategy Consultants and its licensors.uncommon senseTMLocal contactsAustralia Jeremy Barker Brazil Daniel Wada China Leo Chiang France David De Matteis Jean-Baptiste Brachet jean-Germany Christoph Treiber Italy Marco Valsecchi Netherlands Bob Chermin Poland Marek Zdziech U.S.Coye Nokes To share your experience,start your strategy shake-up,or continue the discussion,please get in touch Key contactsWill Hayllar,PClaire Dannatt,Partner