What’s happening in consumer goods
A review of deals and current trends in consumer goods

2012 represented a cautious deal market in consumer goods, reflecting the back-drop of uncertain economic conditions and in many situations there being a gap in price expectations.

Deals in emerging markets continued to grow and overseas investors in Europe also increased, with Japan, US and China being the most active buyers overall in 2012.

The volume of UK deals was down on the prior year, although deals in the food sector, which continue to be an attractive sector to investors, was up compared to 2011, with many household brands changing hands.

The key challenges facing consumer goods companies currently include:

  • Adapting to the changing ways that consumers are choosing to shop, as well as living with continued high levels of promotional activity and the ongoing tensions between branded and private label businesses.
  • The 2012 Christmas trading figures for the UK illustrated how shopping trends are changing, with UK consumers becoming noticeably more sophisticated in switching between channels, a trend to which consumer goods companies must continue to respond.
  • The ongoing challenge of commodity price inflation, which we see continuing, will be another important factor impacting profitability of companies.
  • Europe still faces a very uncertain economic situation, which is likely to impact deal activity in 2013.
  • We foresee that emerging markets will remain an important trend, and sectors such as personal care, alcohol, and growth sectors such as mothers & baby, and sports & outdoor are likely to be hotter areas deal-wise. Interestingly, UK CEOs are planning more domestic deals than their European counterparts.

Whatever happens in 2013, it is likely to present both challenges and opportunities to consumer goods companies, and how they respond will be critical to their success.