The recovery in the fast-moving consumer goods (FMCG) industry is on an uphill climb as the prolonged pandemic has forced most Filipinos to cut their spending and drove them to shop more in sari-sari stores, according to a study.

According to Kantar, the world’s leading data, insights and consulting company, FMCG spending over the past two years went down by 11 percent overall. In terms of classes, the D market suffered the biggest decline in spending at 12 percent while the E went down by 11 percent, the C1 by 9 percent, and the ABC1 by 2 percent.

FMCG refers to fast-moving consumer goods or products that sell quickly at relatively low cost. These goods are also called consumer packaged goods.

Of the 156 FMCG categories tracked by Kantar, 51 percent raised their prices by more than five percent, 28 percent were stable, and 21 percent decreased, in fiscal year 2021 versus fiscal year 2019.

Notably, there was also a pivot among buyers to shop in proximity stores or the sari-sari stores than to the groceries or supermarkets. This has resulted in smaller options and lesser goods shopped in smaller packs. For instance, spending in proximity stores grew to 71 percent from 66 percent, maintaining the relevance of sari-sari stores to Filipinos.

“When we reflect back on the two years it has been a long journey for shoppers ... and then come 2021 it seems like we were expecting that things will be better. But again because of the lockdown, we become exhausted with the pandemic, so there was like a slight decline. And so now we are still experiencing this, it's still not back to pre-pandemic levels,” said Lourdes Deocareza-Lozano, new business director at the Worldpanel Division of Kantar Philippines.

There are still risks like low vaccine booster rate, high inflation, low purchasing power and high unemployment. Overall, the outlook is cautious optimism resulting in gradual improvement in FMCG spending.

As everybody is still coping with all these factors, she said, “there might be slow recovery.”

There are reasons though to be optimistic given the above 6 percent GDP growth forecast this year, the election spending, less restrictions, and the going back to school that could help perk up economic activities.

In the months to come, given the more positive context, and initial recovery, Deocareza-Lozano said, “Were already seeing, we can expect some degree of recovery in terms of shopping frequency. Being placed on Alert Level 1 and the upcoming national elections will also create new occasions for shopping in many areas across the country that will contribute to economic activity.”

“The year 2022 will see brands, especially in the FMCG industry become cautiously optimistic about their growth prospects,” Deocareza-Lozano added. “FMCG companies must be able to assess and understand the changing behaviors of Filipinos in order to attract them to choose their products and buy it as frequently as possible.”

The Kantar study also showed five Filipino shopper trends for 2022. These are value for money, new channel missions, e-commerce, return to school, and sustainability.

With more than half of the 156 categories monitored by Kantar raising their prices by more than 5 percent in the last two years, shoppers will continue to switch to brands that offer them greater value. This search for such products that offer their money’s worth, especially among the lower socio-economic classes, will continue and brands that are able to address this need can join the ranks of other growing and fast rising value brands.

Mobility restrictions over the past two years have resulted to less shopping trips, which translates to less opportunities for products to make their way into the shopping baskets of Filipinos. Shoppers have also adjusted where they shop, and have returned to more traditional channels such as sari-sari stores. Laurice Obana, Shopper and Consumer Insight Director for Kantar, believes that with the return to neighbourhood stalls, brands that can get themselves into the limited shelf space will be the ones who stand to gain the most.

The number of Filipinos shopping in E-Commerce platforms will continue to grow, with the Personal Care category currently dominating the online shopping basket. With only 8 percent of Filipino homes shopping online, there is a huge opportunity for brands to leverage this platform. Obana, however cites that the E-Commerce category will truly take off when Filipino shoppers turn to online channels to purchase their food and beverage needs.

The Department of Education is starting to prepare public schools in areas with the lowest alert level and a significant decrease in active Covid cases for face-to-face classes. The FMCG categories that are likely to grow are categories that will support this new lifestyle. This includes those that will keep children safe and fresh (sanitizers, baby powder and colognes), while also ensuring that they have nutritious lunchboxes and are properly hydrated while in school. Moreover, households may see an increase in demand for laundry detergents with more instances for children to change outfits.

In 2022, sustainability will be more critical than ever. According to Kantar’s Ledz Lim, Expert Solutions Director, 82 percent of shoppers said they are personally affected by environmental problems, while 68 percent admitted to not buying certain products which they feel greatly impact the environment and society. Moreover, Filipino shoppers believe that various stakeholders, including FMCG companies, have a bigger role in taking action and pursuing a more sustainable path.