Otherwise put, the buying decision has become more and more a rational one, the quantity of products is now smaller and the price and offers are key factors in the decision to buy a product; consumers’ budgets have shifted mainly towards basic food supplies.
How did the market react?
A sector analysis by market research company Nielsen puts the 2011 fast moving consumer goods market slightly below the volumes it registered in 2010, however, in absolute value, the FMCG market has grown to some extent, testifying to an increase in prices in 2011.
The Nielsen study shows that the sectors most hit by the financial and economic crisis were the food one (a decrease of over five per cent in volume) and the juice one (minus six per cent in overall sales). Speaking about non-food products, it seems that heavy water treatment, home care products, electric toothbrushes and bleachers have witnessed the steepest decline in 2011, according to the Nielsen study.
Regardless of the field of activity (be them producers, retailers or distributors), all major market players bet on further development in 2012, as opportunities still exists when it comes to finding cheaper locations or better selling points. Large expansion projects go hand in hand with emphasizing brand value and in-store advertising, as well as strengthening existing relations with traditional partners.
For example, beer consumption went up four per cent in the first half of this year as compared to the similar period in 2011, according to the Romanian Brewers Association. Romanians drank 8.3 million hectoliters in the first six months of 2012, the volume of sales registered between January and June 2012 by the Association’s members – Bergenbier, Heineken Romania, Romaqua Group, Ursus Breweries and United Romanian Breweries – also registering an uptrend, reaching 7.8 million hectoliters, up 5.4 per cent over the year-ago period. The association says, at present, 98.4 per cent of all beer consumed in Romania is produced locally, with the beer market witnessing the lowest level of imports in the food industry.
Still, the beer market was severely hit by the economic crisis, which in turn induced a major decline in the Romanians’ purchasing power. The Brewers Association says the cumulated decrease of the market in 2009 and 2010 stood at 16 per cent, followed by a short stable setting in 2011 which was, unfortunately, canceled in the first three months of 2012, when the decline started again.
The decrease in beer consumption in the past four years had major negative social implications, as, in just three years, jobs in the sectors at a national level were cut by 21 per cent, says the Association. Based on the latest census data, the Romanian beer consumption per capita stood at 89 liters in 2011.
An indirect but positive influence seems to come from the fierce competition in modern retail, which is actively looking to attract new consumers through the best offers and price promotions. Almost all major European players are active in Romania, and the ratio of the modern sales channel in the overall sales mix is becoming a more and more important partner for FMCG producers, be them food or non-food ones.
Market analysts hint towards viewing the current moment in Romania not as a crisis, but as a different context. The crisis is, in fact, a general framework dominated by volatility, with small increases immediately replaced by small decreases. Most talk about a consumption crisis no one knows when it’ll come to an end, hence the need to find ways to counteract it. FMCG players need to identify the market’s strong points, look for opportunities given by this context and find a way to exploit them at full impact and be prudent, as well as thinking on the long term
Along these lines, rethinking communication strategies based on consumer behavior might be the way out.
At the end of 2011, official economic predictions were positive for 2012; however, the deepening of the EU crisis has brought new reasons of concern for Romania. Not to mention the political debacle the country has seen this summer and the increased European Commission scrutiny with regards to the rule of law in this country…
In this context, what were the main consumer trends in 2012?
The focus on budgeting continued to deepen, buoyed by the ability of consumers to easier monitor outgoings – from spending on grocery shopping to household energy usage – in real time. Recession had a strong impact on the consumers’ budgets and lifestyle. Faced with the reduction of personal income and increasing price rates, they learned to cut out spending on goods considered unessential or they delayed major purchases like cars, houses and electronics. They became smarter shoppers looking for the best prices, comparing between products alternatives, searching for more information before any purchase and finally, reducing quantity and frequency of consumption, resulting in a negative effect on loyalty towards brands, products or service providers.
The consumer market seemed to be mainly driven by the aging of population. In the near future, there are likely to be more people with a traditional mindset, placing high stability on life, respecting rules and conventions, resistant to anything new and innovative or longing for the past. According to one of the latest Euromonitor predictions, it is expected that all age groups below 43 will see a decline in numbers in the next years. The steepest decline, in both percentage terms and actual numbers, will be for those aged 20-35. The trends are driven by a combination of factors, and the variations in the natural rate of change are caused by the low birth rate, the ageing population and the emigration of young adults.
Given all these, FMCG players should think about approaching consumers through the “Me Branding” paradigm. It’s about being different and recognized by others, or showing off, also about being faithful to the personal style more than being trendy, about building one’s own personal brand in society (investing in personal image and striving for a better position in society), in the digital space (personal blogging and social networking sites). This will also be reflected in consumption – demand for products and experiences that are deemed to be authentic, those offerings that feel “really real” and different.