Ukraine War has smashed Covid

While Covid was shaping consumption habits until recently because of its impact on health and generating different attitudes and behaviours, it has been now eclipsed by the Ukraine War, according to a McKinsey Pulse report which covered the biggest 5 European economies (Germany, Italy, UK, France and Spain).

The biggest concern for consumers is price increases (44%), followed by the Ukraine War (24%) and Covid (8%). But price increases are to a great extent a consequence of the Ukraine War.

The other implications for the universe of food and drink companies are:
Groceries and the food for home in general perceived as having suffered the highest price increases by 94%.

The implications on shopping behaviour are significant: 50% of consumers are trying out Private Labels or intend to do so shortly, 38% are willing to try a new brand for price reasons and 32% are shopping in different retailers (the gain share here is for discounters having increased 19% while all the other retailers have decreased).

Switching to lower cost brands is a dominant trend in most food categories but in particular: Snacks / Confectionery (63%), Frozen Foods (61%), Dairy (56%), Non-Alcoholic Drinks (55%), Hot drinks (52%), Bread & Bakery (51%), Fresh Meat & Fish (49%).

These are not easy times for FMCG businesses. They need to deal with higher raw material costs and tough logistic conditions while at the same time needing to pass on higher prices to retailers. Competitiveness has never been so key to success.