This is a downgrade when compared to baseline data released previously by the firm, and comes as a result of core markets being hit by spending cuts, the firm explains, which are likely to persist of the short term.
“While prospects remain robust, dynamic categories had their CAGR over 2015-2020 levelled in strength. This calls for a rethink of innovation in favour of fewer but higher-value SKUs, and greater emphasis on niche brands that typically target resilient growth pockets,” the firm suggests.
It calls out Brazil as a key market dragging global growth down, a situation which is exacerbated by a weaker outlook in various more developed markets too.
Euromonitor notes that its global forecast has needed to drop in response to Brazil’s country-specific growth downgrade by USD 1 billion. Brazil has lost momentum, with its GDP moving further into negative territory.
Skin care and fragrances are picked out as two categories that, although still showing strength, are beset by lower demand. This is the case in Brazil and Saudi Arabia with fragrances, and in the US and China with skin care.
“While discretionary categories such as fragrances and skin care continue to exhibit strength, their resilience is limping as markets that fuelled growth witness lower demand,” the firm explains.
Multinationals are most at risk from market lapses, with Euromonitor picking out L’Oréal and Unilever among those in the firing line. The firm predicts more segmented value-added lines will be needed.
Premium proposals: high-end in the spotlight
According to the latest data, it looks like the major players are focusing more and more on offering higher-end portfolios.
“Estée Lauder and Unilever now boast a greater share of high equity niche brands in their portfolios, to target resilient growth pockets and bolster revenue prospects,” the firm observes.
“P&G has divested several premium brands, but its recent streamlining activity suggests it is in pursuit of maximising revenues from fewer but more impactful SKUs.”