Top fast moving consumer goods brands returned to organic volume growth whilst posting record profitability in 2018

NEW YORK, July 8, 2019 /PRNewswire/ -- FMCG giants are starting to see the benefits of their efficiency drive as profitability of the top 50 FMCGs has reached an all-time high at 18.2% in 2018, revealed the annual OC&C Global 50. This is the highest level since the Global 50 began in 2002 and marks a return to levels pre the financial crisis in 2008.   

More impressively the strength of FMCG brands is further demonstrated in their improving organic growth, which increased to 3.2% up from 2.6% in 2017. The majority of that progress is now coming from volume growth, accounting for 1.8% points of growth, up from only 0.6% in 2017, with1.4% points from price/mix.

Now in its 17^th year, OC&C Global 50, produced by OC&C Strategy Consultants, examines the financial performance of the world's largest consumer goods companies. It is the industry authority on the statistics and big themes that drive the FMCG sector.

Will Hayllar, UK Managing Partner at OC&C Strategy Consultants, comments: "Despite the lack of blockbuster acquisitions in 2018, it was a very strong year for the Global 50 as prior M&A activity began to bear fruit. In the years before, the Global 50 were snapping up companies that cater to new and fast-growing consumer trends, such as the shift towards wellness, and consumers' seemingly never-ending love affair with coffee. These acquisitions are beginning to pay off, resulting in a return to organic volume growth and record profit margins."

OC&C identified two phenomena driving profit levels: premiumisation and efficient management of operating costs. There has been a continued and increasing consumer demand for all things luxury. Coffee is an excellent example of this. Instant coffees have been usurped by the single origin expresso from the coffee machine. This has allowed producers to charge a significant premium for capsules and drive up profits.

As for cost efficiency, total operating costs were down 0.2% points compared to 2017. This was in part due to synergies from previous M&A consolidation being realised as well as ongoing efficiency drives.

Will Hayllar, UK Managing Partner at OC&C Strategy Consultants, comments: "For FMCG brands to continue to drive growth, staying one step ahead of consumer trends is vital. Adapting brand strategy to meet the ever-changing consumer needs and investing early in emerging sectors will continue to drive organic growth and profit in the market.

"Our research has identified five stand out FMCG businesses: Coca Cola, Estée Lauder, Yili, Kweichow Moutai and Shiseido that have outperformed their peers this year. All five are united in having identified fast growing consumer markets and acted to serve them. Cola Cola and Yili won the health-conscious crowds, Estée Lauder and Shiseido won over online millennials, and Kweichow Moutai quenched the Chinese thirst for premium spirits."

Deal activity in 2018 was driven by the continued desire to shift portfolios towards fast growth areas and strengthen existing positions. However, in the absence of mega deals, M&A value fell 48% from 2017 to USD 75bn, though the number of deals remained relatively high (55 vs 60 in 2017).

A full leader board of the Global 50 can be found below.

2018 ranking of the Global 50 (1 of 2)

2018 ranking of the Global 50 (2 of 2)

Notes to Editors

ABOUT OC&C GLOBAL 50

The Global 50 is OC&C Strategy Consultants annual snapshot of the world's largest 50 FMCG businesses. Now in its 17^th year, it is the industry authority on the statistics and big themes that drive the sector. Information is taken from the latest annual report of each business. Turnover is stated in US dollars but growth rates quoted are those in the local currency in which each company reports.

OC&C STRATEGY CONSULTANTS

Founded in 1987, OC&C is a leading global strategy consulting firm that brings clear thinking to the most complex issues facing today's management teams. OC&C's client roster includes some of the world's most respected companies throughout the retail, consumer goods, leisure, media, communications and technology, industrial products and services and private equity sectors.

For more information about OC&C Strategy Consultants, please visit http://www.occstrategy.com

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SOURCE OC&C Strategy Consultants