1、FMCG Quarterly ReviewA Marketers Guide to Navigate KSA&UAE FMCG SectorIn-home purchase behaviour and strategiesGet in touch for more insightsImtiaz.HashemK FMCG Quarterly ReviewA Marketers Guide to Navigate Saudi FMCG SectorIn-home purchase behaviour and strategiesQ3,2022 ReportWorldpanel Division,K

2、antarDecember 2022A staple read for the brand owners and retailers on Saudi Arabias retail dynamics in FMCG during the third quarter of 2022Source:Household panel in KSA3,000households*85%of populationKSA Panel DetailsData updated as per Q3,2022*From October 2022 our panel enhancement initiative wil

3、l see this increase to 5,000 households3Petroleum prices and crude production put Saudi economy in a strong position.Controlling inflation is a key challenge while investments&reforms continueEconomic progress continuesNon-oil sector expandingThe PMI index rose to 57.7 in August,the 24th consecutive

4、 month above the 50 mark.The rise was supported by growth in business activity,output,and input purchases.Inflation eating up real incomeInflation reached 15-month high in September as it picked up from a relative plateau of Q2.Its affecting the real incomes of the families and in the longer term ma

5、y weigh on property and financial markets.For the everyday shopper,rising commodity prices has shrunk the real income significantly0.60.81.11.2 1.21.62.02.32.22.32.73.0 3.1sep-21oct-21nov-21dic-21ene-22feb-22mar-22abr-22may-22jun-22jul-22ago-22sep-22PMI indicating strong improvement in non-oil econo

6、myInflation trend in last 1 year:In our in-home purchase data,we have seen a much higher,13.5%price jump this quarter vs.SPLYPrivate Sector Stimulus and womens participation growsGovernment committed to pro-growth policies even though global economic concerns loom.Womens participation in labor force

7、 reached a high of 33.4%.New plans around Vision 2030Investing SAR40bn to develop local infrastructure projects across 11 cities.New agreement with UAE about using data and artificial intelligence.A new green bond mandate by PIF to fund clean energy.Windfall from oil boosts GDP and government budget

8、 balanceGovernment budget balance is expected to improve drastically to a 7.3%of GDP surplus in 2022,from higher oil prices and crude production.Macro-economic ContextSource:Oxford Economics Country Economic Forecast report,September 2022 https:/ FY19Jan 20Feb 20Mar 20Apr 20May 20Jun 20Jul 20Aug 20S

9、ep 20Oct 20Nov 20Dec 20Jan 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 2222-Apr22-May22-Jun22-Jul22-Aug22-SepSpendsVolumesShoppers restrain their purchase as spends gap mounts onSpend reversing upwards unusually for a post Ramadan period while volume dropped l

10、ower than pre-COVID times.VAT increased to 15%Russia Ukraine War StartsCOVID 19KSA FMCG Monthly KPIs|Indexed to the average of FY 2019Key FMCG TrendsBasis the 77 FMCG categories we currently track in the KSA,Worldpanel Division,Kantar*In order to see the trends/crests and troughs in terms of volumes

11、 for overall FMCG we have removed the contribution from Bottled Water which is about 55%of the overall volumes and does not fluctuate much over timeRamadan 2020(April&May)Covid Impact BeginsCurfew liftedGradual reopening of offices and public placesSummer VacationsLearning to live with a higher VATR

12、amadan 2021Back to schoolBack to schoolSummer VacationsRamadan 2022583046989592390784900140150Avg.of FY19Jan 20Feb 20Mar 20Apr 20May 20Jun 20Jul 20Aug 20Sep 20Oct 20Nov 20Dec 20Jan 21Feb 21M

13、ar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 2222-Apr22-May22-Jun22-Jul22-Aug22-SepSpendsFrequencySpend per TripRattled by inflationary impact;shoppers plan fewer shopping trips Spend per trip becomes higher than even a Ramadan period two years agoBasis the 77 FMCG cate

14、gories we currently track in the KSA,Worldpanel Division,KantarKSA FMCG Monthly KPIs|Indexed to the average of FY 2019VAT increased to 15%Russia Ukraine War StartsCOVID 19Ramadan 2020(April&May)COVID Impact BeginsCurfew liftedGradual reopening of offices and public placesSummer VacationsLearning to

15、live with a higher VATRamadan 2021Back to schoolBack to schoolSummer VacationsRamadan 20226FMCG decline,not surprisingly,is correlated with price inflation-1.24.510.410.53.9-0.72.63.1-1.2-9.0Q321Q421Q122Q222Q322SpendVolumeBigger spends and volume deficit on the short run;consumers highly responding

16、to increasing pricesQuarterly FMCG|Performance DriversQuarterly FMCG|Growth Rates vs.SPLY%*PenetrationVolume per Trip KG/Ltr.Average Price SR/KG/Ltr.FrequencyTotal HH 000sSpend 000s SR*In order to see the trends/crests and troughs in terms of volumes for overall FMCG we have removed the contribution

17、 from Bottled Water which is about 55%of the overall volumes and does not fluctuate much over time7Average shopper foregoing consumption across all segmentsQuarterly%change Sep22 vs.SPLYFMCGFoodBeverageDairyPersonal CareHome CareValueVolumeAvg PriceIn order to see the trends/crests and troughs in te

18、rms of volumes for overall FMCG we have removed the contribution from Bottled Water which is about 55%of the overall volumes and does not fluctuate much over time3.95.7-0.88.1-3.3-3.613.515.29.818.85.76.3How did shopper behavior change as a result?Segment Deep Dive-0.9-8.4-9.9-8.8-8.6-10.

19、01102 630354045900140150160Avg.of FY 19Jan 20Feb 20Mar 20Apr 20May 20Jun 20Jul 20Aug 20Sep 20Oct 20Nov 20Dec 20Jan 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 22Apr 22May 22Jun 22July 22Aug 22Sep 22%Spends

20、 on Promotions*per Month(in Total Trade)Volumes*(Indexed to FY 2019)Promo-driven shopping reached one of the highest levels since 2019Figures at an overall FMCG level in the KSASmart promo strategy leveraging brand equity that favours bottom line would be vitalVAT increased to 15%COVID impact%of spe

21、nds under promotions*for all FMCG MAT SEP 20 MAT SEP 21 MAT SEP 22Total Trade 34.337.538.2Modern Trade 63.968.869.8Russia-Ukraine War startsRamadanStartEnd2020/21Mid AprilMid May2022AprilAprilBasis all FMCG categories we currently track in the KSA except bottled water,Worldpanel Division,Kantar*Plea

22、se note that report promotions as recorded by the panelists and hence this includes both manufacturer and retailer driven promotions*In order to see the trends/crests and troughs in terms of volumes for overall FMCG we have removed the contribution from Bottled Water which is about 55%of the overall

23、 volumes and does not fluctuate much over timePromotions and Offers9 Volume per buyer decline in larger cities bear difficult news for brands Big retailers suffered drop,but not for similar reasons More shopper connect needed as they are limiting how many channels they visit Investing in understandi

24、ng your shoppers behaviour,brand building and communication are important for the long run success On the shop floor,generating trials and meeting shoppers expectation is fundamental Then extending the shopper base by expanding the brand to new occasions and territories would help the brand aim for

25、growth Spend gap mounts on,shoppers restrict volume Shopping frequency lower than pre-covid level More prudent shopping manifests in lower volume per trip,smaller basket size and smaller pack size per buyer.More planned trips as spends soarRevival in urban shopping a priorityBeing strategically cons

26、istent is the key recipe for brand growthThird quarter of Saudi FMCG market has seen restrained shopping behavior.Muted urban shopping in MT dragging down brand growth.Brands needs to stay close to their core through consistency and patienceKey Observations&ConclusionsQ2 2022 vs SPLY,Worldpanel Divi

27、sion,Kantar10FMCG Quarterly ReviewA Marketers Guide to Navigate UAE FMCG SectorIn-home purchase behaviour and strategiesQ3,2022 ReportWorldpanel Division,KantarDecember 2022A staple read for the brand owners and retailers on UAEs retail dynamics in FMCG during the third quarter of 2022Source:Househo

28、ld panel in UAE3,000households83%of populationUAE Panel DetailsData updated as per Q3,2022,Worldpanel Division,Kantar12UAE economy is strong and resilient against global recession worries.Higher borrowing costs and slower increase in oil output may weigh on GDP growthSource:Oxford Economics Country

29、Economic Forecast report,September 2022 https:/ is strong and growingTourism&property prices strongTourism:The travel and tourism sector that accounts for about 16%of GDP in the UAE enjoying vibrant growth.Real estate:Property prices shot up 8.8%y/y&residential rents were up 24.8%y/y.UAE Equity Pric

30、esUAE:Residential house prices(AED/Sq Meter)Oil sector:Higher oil revenue supports surplus although slowdown in oil output may weigh in on overall GDP growth.Non-oil sector:PMI for non-oil sector was 56.7 in Aug,firmly in expansionary territory.Real GDP Growth:Capital market rise heralds a boonThere

31、 has been a push to deepen capital market growth in Abu Dhabi and Dubai.A flow of IPOs should maintain relatively strong performance of local equity markets.Macro-economic Context13Consumption recovering in last couple of months since biggest yearly dropA higher than pre-COVID era increase indicates

32、 an incremental pressure on wallet 980499980899696959298990100110120Avg.of FY19Jan 19Feb 19Mar 19Apr 19May 19Jun 19Jul 19Aug 19Sep 19Oct 19Nov 19Dec 19Jan 20Feb 20Mar 20Apr 20May 20Jun 20Jul 20Aug 20Sep 20Oct 20Nov 20Dec 20

33、Jan 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug 22Sep 22SpendsVolumes*COVID 19UAE FMCG Monthly KPIs|Indexed to the average of FY 2019Back to schoolSummer VacationsCOVID impact beginsRamadan 2019Ramadan 2020(April&May)Gradual openi

34、ng upMany offices resumeSummer VacationsVaccination starts but cases continueRamadan 2021Back to schoolSummer VacationsRamadan 2022Back to schoolRussia Ukraine War StartsKey FMCG TrendsBasis the 79 FMCG categories we currently track in the UAE,Worldpanel Division,Kantar*In order to see the trends/cr

35、ests and throughs in terms of volumes for overall FMCG we have removed the contribution from Bottled Water which is about 55%of the overall volumes and does not fluctuate much over time14Shoppers are still cautious in their trip frequency and spend per tripUAE FMCG Monthly KPIs|Indexed to the averag

36、e of FY 2019Are consumers trading down in their product choices?97909998104 7849086808588963200110120130Avg.of FY 19Jan 19Feb 19Mar 19Apr 19May 19Jun 19Jul 19Aug 19Sep 19Oct 19Nov 19Dec 19Jan 20Feb 20Mar 20Apr 20May 20Jun 2

37、0Jul 20Aug 20Sep 20Oct 20Nov 20Dec 20Jan 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 22Apr 22May 22Jun 22Jul 22Aug 22Sep 22SpendsFrequencySpend per TripCOVID 19Russia Ukraine War StartsBack to schoolSummer VacationsCOVID impact beginsRamadan 2019Ramadan 2020Gr

38、adual opening upMany offices resumeSummer VacationsVaccination starts but cases continueRamadan 2021Back to schoolSummer VacationsRamadan2022Summer VacationsBasis the 79 FMCG categories we currently track in the UAE,Worldpanel Division,Kantar15Clear pickup in consumption in Q3 bears good news for FM

39、CG landscape-7.5-4.43.93.56.9-10.7-8.7-0.8-5.9-0.3Q321Q421Q122Q222Q322SpendVolumeExpat population increase drove recent FMCG growth alongside inflationQuarterly FMCG|Performance DriversQuarterly FMCG|Growth Rates vs SPLY%*PenetrationVolume per Trip KG/Ltr.Average Price SR/KG/Ltr.FrequencyTotal HH 00

40、0sSpend 000s SR*In order to see the trends/crests for overall FMCG we have removed the contribution from Bottled Water16The additional UAE shoppers absorbed most of the volume pressure from price inflation in Q3Quarterly%change Sep22 vs.SPLYFMCGFoodBeverageDairyPersonal CareHome CareValueVolumeVol/B

41、uyerSeptember Q322 vs SPLY&September Q321 vs SPLY,Worldpanel Division,KantarIn order to see the trends/crests for overall FMCG we have removed the contribution from Bottled Water6.99.91.83.35.912.1-0.32.40.1-5.2-4.28.2However,individual shoppers volume rationalisation correlates with price inflation

42、Avg Price7.37.31.88.910.53.7-4.5-2.0-4.1-9.5-8.83.3Segment Deep Dive17UAE is not witnessing a conspicuous promo driven volume growthSmart promo strategy leveraging brand equity that favours bottom line would be vital08699691 92969794959298932333

43、43536373839408590955120Avg.of FY 19Jan 19Feb 19Mar 19Apr 19May 19Jun 19Jul 19Aug 19Sep 19Oct 19Nov 19Dec 19Jan 20Feb 20Mar 20Apr 20May 20Jun 20Jul 20Aug 20Sep 20Oct 20Nov 20Dec 20Jan 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 22Apr 22May 22June 22J

44、uly 22Aug 22Sep 22%Spends on Promotions*per Month(in Total Trade)Volumes(Indexed to FY 19)Figures at an overall FMCG level in the UAE%of spends under promotions for all FMCG MAT Sep 20 MAT Sep 21 MAT Sep 22Total Trade 37.438.733.6COVID impactRamadanStartEnd2020/21Mid AprilMid May2022AprilAprilPromot

45、ions and OffersBasis all categories we currently track in the UAE except bottled waterPromotions*Data is available from April 2019 onwards*Please note that report promotions as recorded by the panelists,and we also validate this with the promo bar code information.Hence this includes both manufactur

46、er and retailer driven promotions.Russia-Ukraine War starts18Key Observations&Conclusions Emirati shoppers cutting back on volume/buyer,especially on dairy and beverages While Northern Emirates remains steady,AD and Dubai shows somewhat restrictive shopping behaviour i.e.smaller basket size More mar

47、keting efforts needed including presence and visibility in the outlets where key TG frequents Online shopping volumes are gaining critical mass(From 4.1%two years ago to 7.5%now)Need to target online shoppers by ensuring large pack availability within expected price ranges Ensuring online portals ar

48、e Arabic and affluent shopper friendly and by hyper-targeting with personalized marketing,likely to offer optimum growth Volume/buyer drop gets offset in the face of a quarterly price inflation of 7.3%due to influx of expats Value growth remains strong especially in Food and Home Care,driven by affl

49、uent shoppers Shoppers do rationalize on some Dairy and PC essentials,but fast serving and convenience categories remain in the growth terrainThird quarter of UAE FMCG market has seen less volume resistance even after price inflation,thanks to expat population rise.Muted Emirati and upper SEC obstac

50、les for growth.Coming of age online shopping holds future potentialsSpends remains on expansion territory,boding good news for FMCGRevival of Emirati and SEC AB key concern for marketersOnline landscape holds potential for recovery and growthQ2 2022 vs SPLY,Worldpanel Division,Kantar19FMCG Quarterly ReviewA Marketers Guide to Navigate KSA&UAE FMCG SectorIn-home purchase behaviour and strategiesGet in touch for more insightsImtiaz.HashemK Thankyou