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FMCG Business Outlook and Procurement Report Dec 2017 - May 2018

FMCG Business Outlook and Procurement Report Dec 2017 - May 2018

Summary

GlobalData’s FMCG Business Outlook and Procurement Report Dec 2017 - May 2018, examines executives’ opinion on the business outlook and procurement activities over Dec 2017-May 2018, including comparative analysis of survey results with Jun-Nov 2017 (wherever applicable). It also highlights key business priorities, supplier price variations, changes in capital expenditure, and organizations’ perspective on e-procurement. In addition, this report presents the future projection of merger and acquisition activities within the FMCG industry over the next six months.

In comparison to the previous six months (June-Nov 2017), mergers and acquisition activity in the Global FMCG industry is projected to increase by 10 percentage points over the next six months (Dec 2017-May 2018), as a result of increasing competition, economies of scale, and expansion in product portfolios. Even though rising competition and market uncertainty have been highlighted as major business concerns for the global FMCG industry over the next six months, respondents are willing to increase their focus towards expansion in current markets and to improve their operational efficiency. Furthermore, emerging economies such as India, China, and Brazil are projected to offer significant growth opportunities for the global FMCG industry due to changing lifestyles, rising awareness of FMCG products among the rural population, favorable demographic factors, and a growing urban population. On average, the global FMCG industry’s procurement expenditure is projected to increase by 9.5% over the next six months.

What else does this report offer?

  • Key business priorities: examines FMCG organizations’ important priorities for Dec 2017-May 2018
  • Emerging and developed markets: provides information about key emerging and developed markets, which will offer the most growth over Dec 2017-May 2018
  • Change in M&A activity: analyzes FMCG industry executives’ opinion on changes in merger and acquisition activity globally
  • Business concerns: identifies major business concerns that are likely to impact manufacturers and suppliers
  • Change in capital expenditure: tracks the expected change in capital expenditure both globally and regionally
  • Change in procurement activities: evaluates how procurement activities will change in the FMCG industry over the next six months
  • Procurement budget outlook: projects procurement budget allocation along with changes in procurement objectives over Dec 2017-May 2018
  • Supplier prices outlook: determines the expected change in supplier prices over Dec 2017-May 2018
  • E-procurement: identifies executives’ perspective towards e-procurement implementation and deployment within the global FMCG industry
Scope
  • Expansion in current markets and improving operational efficiency are the major priorities for the global FMCG organizations during the next six months (Dec 2017-May 2018)
  • India and China are highlighted as prominent growth offering emerging markets over the next six months
  • Capital expenditure on new product development and IT infrastructure development is projected to increase during the next months
  • Survey respondents expect an increase in procurement activities on IT services and raw materials purchases in the coming six months
  • The majority of industry executives foresees an increase in supplier prices, while 24% anticipate no change.
Reasons to buy
  • FMCG companies can realign business strategies by comparing the business priorities over the next six months (Dec 2017-May 2018) compared to the previous six months (Jun-Nov 2017)
  • Organizations can develop or adjust business expansion plans by knowing the significant growth offering emerging and developed markets highlighted in the report
  • Helps organizations to adjust their procurement budget by providing information about procurement budget projections anticipated by executives for Dec 2017-May 2018
  • Organizations can implement effective price management by viewing supplier price variations highlighted for Dec 2017-May 2018


  • Introduction
    • Definitions
    • Methodology and Sample Size
    • Respondent Profile
  • Global Business Outlook in December 2017-May 2018
    • GLOBAL BUSINESS OUTLOOK: KEY TAKEOUTS
    • Expand in current market is projected to be a key priority over the next six months for the global FMCG industry, as noted by 60% of respondents
    • Of executives who operate in North America, 63% highlighted improving operational efficiency as a top priority for the next six months
    • Of respondents from small companies, 81% are focused on expanding in current market over the next six months
    • Executives expect India to offer more growth in the six months Dec 2017-May 2018
      • Table Executives expect India to offer more growth in the six months Dec 2017-May 2018
    • Of respondents, 69% with business operations in Asia-pacific each anticipate India and Vietnam to offer significant growth during the next six months
    • Respondents from large and small companies are more optimistic about the growth prospects offered by India and China over the next six months
    • The majority of respondents expect the US to offer significant growth prospects for the FMCG industry over the next six months
      • Table The majority of respondents expect the US to offer significant growth prospects for the FMCG industry over the next six months
    • Over the next six months, the highest number of respondents from North America and Asia-Pacific expect the US to offer significant growth
    • Regardless of company size, respondents indicate the US and the UK as the top growth offering developed markets over the next six months
    • Survey results state a 10 percentage point increase in merger and acquisitions activity over the next six months compared to the previous six months
    • Of respondents who operate in North America, 63% foresee either a significant increase or increase in mergers and acquisitions activity in the coming six months
    • The highest number of respondents from small companies anticipate increased mergers and acquisition activity during the next six months
    • OPINION ON MERGER AND ACQUISITION ACTIVITY: IN THEIR WORDS
    • Rising competition is projected to be the major concern in the FMCG industry over the next six months
    • Over the next six months, 75% of executives operating in Asia-Pacific indicate that rising competition will become the key concern for the FMCG industry
    • Falling demand and market uncertainty are the biggest concerns for medium-sized companies during the next six months
    • Capital expenditure on new product development is projected to increase over the next six months
    • Of executives from Europe and North America, 75% and 63% anticipate the highest increase in capital expenditure towards new product development
    • The highest percentage of respondents from large and medium-sized companies project capital expenditure to increase on IT infrastructure development
  • Procurement Behaviors and Strategies
    • PROCUREMENT ACTIVITIES OUTLOOK: KEY TAKEOUTS
    • Globally, organizations intend to reduce internal operating costs over the next six months
      • Table Globally, organizations intend to reduce internal operating costs over the next six months
    • Of respondents who operate in Asia-Pacific and North America, 63% and 42% anticipate organizations will focus on internal operating cost reductions
    • Overall, 46% of executives from small companies highlight plans to increase use of technology during the next six months
    • Globally, 53% of executives anticipate procurement of IT services to increase somewhat over the next six months
    • Irrespective of the region, the maximum number of respondents expect an increase in IT services purchases during the next six months
    • The highest percentage of respondents from small, medium-sized, and large companies express increased focus on the procurement of IT services
    • Overall, 11% of executives anticipate their global procurement budget to range between US$250,000 and US$1 million over the next six months
      • Table Overall, 11% of executives anticipate their global procurement budget to range between US$250,000 and US$1 million over the next six months
    • Of respondents from small companies, 19% expect their procurement budget to be up to US$100,000 during the next six months
    • Procurement expenditure for organizations is expected to increase by an average of 9.5% over the next six months
      • Table Procurement expenditure for organizations is expected to increase by an average of 9.5% over the next six months
    • Overall, 31% of executives from small companies anticipate procurement expenditure to increase by 20% or more during the next six months
    • Compared to the previous six months, there has been a 10 percentage point increase in supplier prices
    • Overall, 63% of respondents who operate in Asia-Pacific foresee a somewhat increase in supplier prices in the coming six months
    • Of respondents from medium-sized companies, 64% expect a somewhat increase in supplier prices during the next six months
    • Of industry executives, 13% state that e-procurement within their organizations in in the evaluation or pilot phase
    • In total, 19% of executives who operate in Asia-Pacific indicate generalized deployment of e-procurement within their organizations
    • Of respondents from small companies, 19% highlight the intention to implement eprocurement within their organizations

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