Deloitte Global Powers of Consumer Products 2011 survey
Getting back to growth, especially in the emerging markets
Samsung first in ranking Top 250 consumer products companies. AB-InBev still only Belgian company in Top 250, climbing to the 11th spot.
Brussels, 13 April 2011 — Today, Deloitte publishes the fourth annual "Global Powers of the Consumer Products Industry" report. This report identifies the 250 largest consumer products companies around the globe, based on the companies' fiscal year 2009, and sketches the trends and issues affecting the consumer products industry in 2011. The report shows that nearly 90 percent of all listed consumer product companies in the Top 250 was profitable in 2009, with Samsung ranked on the first place. The only Belgian company in the ranking is AB-InBev on the 11th place, climbing 18 places compared to last year. Overall, the outlook for 2011 is for strong global economic growth with the preponderance of growth taking place in emerging markets. In the developed world, growth of the consumer products industry is expected not to be exceptional. Even if the M&A activities in the sector were limited in 2009, there was the important acquisition of Alpro by Dean Foods. This acquisition was the 13th most valuable transaction in the industry in 2009.
13 Apr 2011
The new Deloitte report indicates that in 2011, consumer product companies must worry about inadequate demand in rich countries and overheating in emerging countries. In addition, they face challenges about exchange rate volatility, rising commodity prices, changing fiscal policies, and the sustainability of recovery in some markets. The global economy remains imbalanced. Koen De Staercke, Consumer Business Industry Leader at Deloitte Belgium, comments: "Countries that have traditionally relied on export (such as China, Japan and Germany) and need to move toward domestic led growth continue to depend heavily on export. Countries that relied too heavily on their consumers (such as the US and UK) and need to export more, now face competitive devaluations in their target export markets, thereby hurting their own export competitiveness".
Top 250 of Consumer Products Companies: Samsung at the top, number 1 of last year no longer in the ranking
Companies selling electronic products occupy half the top 10 spots, with Samsung as a leading company ranked on the first place. The 2011 list of top 10 consumer products companies differs considerably from prior years. That is because Hewlett-Packard (ranked number one in the report of 2010) and Toshiba (number nine in the report of 2010), along with a number of other electronics manufacturers, are no longer included among the Top 250 consumer products companies as they target primarily business customers rather than individual consumers.
In addition, excise taxes have been excluded from the sales of tobacco and drinks companies. As a result, Japan Tobacco and Philip Morris International no longer rank among the top 10 consumer products companies. Swiss group Nestlé, with Belgian Paul Bulcke as CEO since April 2008, remains the biggest food group in the world.
As a group, the Top 250 consumer products companies suffered a composite sales decline of 1,2 percent in the fiscal year 2009, a dramatic drop from 4,3% sales growth for this same group of companies in 2008. While the rate of decline slowed or even reversed for some companies in the fourth quarter of 2009, 60 percent of the Top 250 experienced negative sales growth for the whole of 2009.
In half the product sectors (fashion goods, home improvement products, leisure goods and tires), sales declined for all but one or two companies. However, many companies acted swiftly in this challenging environment to adjust their cost structure in order to maintain or improve profitability. The 2009 composite net profit margin increased to 6.4 percent from 5.6 percent for these same companies in 2008. In stark contrast to the dismal sales results, nearly 90 percent were profitable in 2009, compared with 80 percent of those companies in 2008.
Combined sales for the 250 largest consumer products exceeded $2.57 trillion in 2009, significantly less than the Top 250 in previous years. Koen De Staercke, comments: "With Samsung leading the way, the 10 largest consumer product companies accounted for more than one-quarter of the total top 250 sales in 2009. The top 10 outperform the Top 250 as a whole".
AB-InBev only Belgian company in top 250, and one of the fastest growing consumer product companies
The only Belgian company ranked in the Top 250 of the 2011 report remains AB-InBev at place 11, climbing 18 places on the ranking compared to 2010. After the completion of its combination with Anheuser-Busch in November 2008, sales soared 56,4 percent in 2009 for the world's largest brewer.
Some of the report's key findings include:
- Global companies are increasingly talking about Africa: this region, which failed to have significant growth for much of the last half century, is now experiencing good growth. This is a result of rising commodity prices and better governance.
- Developed markets of the world still present major opportunities, but they are challenging: consumers in the developed markets hardest hit by the recession are willing to buy, but this reflects a recalibration of value. They don't want cheap, but better at a low price. Koen de Staercke: "The challenge for consumer products companies will therefore be to offer more for less".
- The emerging middle class in developing markets represents the biggest growth opportunity: with consumer spending curbed in most developed markets and a disproportionate share of global economic growth taking place in emerging markets, consumer products companies will continue to focus on emerging markets to drive growth. Many fast-growing economies such as South Africa are getting a lot of attention due to their young populations, rising disposable income and vast natural resources.
- M&A market slow to recover in consumer products sector: for the consumer products industry, 2009 was particularly lean for mergers and acquisitions. The report predicts that more mergers and acquisitions can be expected in the Asia Pacific Region, especially in China, as well as in Latin America, specifically Brazil. As those markets continue their fast growth trajectory, both foreign and domestic consumer product companies want a part of the opportunity. In 2009, Europe was the most active region for M&A overall. There were 428 acquisitions of European businesses by consumer products companies with the greatest levels of activity in the UK (70), France (57) and Germany (54). However, only 36 deals were over the $100 million mark, resulting in a relatively small average deal value of $119 million. In Belgium, Alpro was acquired by the American Dean Foods, being the 13th most important transaction in this industry in 2009.
- Growth accelerates for Latin America and UK, North America is most profitable: Latin America stands out for top-line growth that continued to be well above average. Combined sales for the eight companies headquartered in this region soared 16,3 percent in 2009. Companies based in the United Kingdom are also notable for their strong performance in 2009. The nine UK-based firms generated composite sales growth of 9,5 percent. Elsewhere in Europe, the picture was not as rosy. Overall, Europe's consumer products companies saw sales decline in 2009 at a rate very similar to that of the Top 250, at -1,1 percent. German companies were particularly hard hit. Composite sales for the group declined 5,4 percent. Germany's 3,9 percent net profit margin also lagged the Top 250. Nevertheless, profitability for the European region as a whole performed well, with a 7,2 percent composite profit margin.
- Tobacco and drinks companies resilient in tough economic times: in 2009, the 143 companies in this group accounted for over half of both Top 250 companies and Top 250 sales. Three sectors were especially hit hard by challenging market conditions posed by the struggling economy in 2009: the home improvement and the tire sector both suffered declining sales for the second year in a row, and composite sales plunged 13.8 percent for the leisure goods sector, the biggest decline in top-line growth of all the sectors.
- Consumer products companies need to listen to conversations on social media sites: In an increasingly connected world, consumer products companies need to continuously rethink how they nurture and protect their brands. Koen de Staercke: "Consumer products companies need to actively listen to the conversations consumers are having on social media sites about their brands, address any issues bubbling to the surface and take the lead in collaborating with consumers on solutions that will make consumers brand advocates".