Deloitte Global Powers of Consumer Products 2015
Global consumer products industry rides out another year of global economic uncertainty
Singapore, 15 April 2015 – The world’s 250 largest consumer products companies generated sales of nearly $3.1 trillion in fiscal year 2013 (which encompasses fiscal years ended through June 2014), despite economic uncertainty. This resulted in an average company size of US$12.3 billion, according to the 8th annual Global Powers of Consumer Products 2015: Connecting with the connected consumer report issued by Deloitte Touche Tohmatsu Limited (DTTL).
The report provides an outlook on the global economy, a look at merger and acquisition activity in the consumer products industry; and a discussion on the importance of connecting with the connected consumer.
“The fall in the price of oil is having a considerable impact on the global economy, with increased disinflationary pressures, especially in developed markets such as the U.S., Europe, and Japan. It is boosting consumer purchasing power in oil-consuming nations such as Japan, India, the U.S., and much of Europe, and contributing to faster economic growth than would otherwise be the case,” said Dr. Ira Kalish, DTTL’s Chief Global Economist.
Strong M&A deal activity in consumer products industry
The number of deals has picked up every year since flat lining in 2009, with 1,421 total deals completed by consumer products companies in 2013. Based on the numbers to date, 2014 is on track to reach or surpass 2013’s deal volume. Unlike deal volume, however, deal values have trended down since 2009—that is until 2013 when the average value rebounded sharply. The decline in deal values through 2012 may be accounted for, at least in part, by bargain hunting opportunities coming out of the global economic slowdown that allowed companies to pick up assets at distressed prices.
Jack Ringquist, Global Consumer Products Lead, DTTL, comments: “Organic growth remains a challenge for many consumer products companies. As a result, companies will continue to view strategic acquisitions as a fast-track method to increasing market share. Over the next few years, we expect consumer products companies to continue to use acquisitions and disposals to streamline and focus their product portfolios, making their organizations more agile and responsive to changing consumer preferences.”
“Southeast Asia, with its rapidly growing middle class, has become a target market for consumer products companies searching for growth further afield as the prospect of high growth in the consumer products sector is limited in developed markets for all but a few categories. Local players within the region, too, have been trying to consolidate as they seek to dominate leading market positions rather than diversify; to right-size, not necessarily upsize,” said Eugene Ho, Deloitte Southeast Asia’s Consumer Business Industry Leader. “This is especially so for mature product categories such as beverages and, indeed, the two Southeast Asian acquisitions listed within the report’s top 10 acquisitions in the consumer products sector in 2013 have both involved beverage companies, namely Thai Charoen Corporation Group’s acquisition of Fraser & Neave Limited in Singapore and Heineken N.V.’s acquisition of Asia Pacific Breweries Ltd./Fraser & Neave in Singapore.”
Connecting with the connected consumer
While consumers have unprecedented access to product information and online expertise to guide their purchasing decisions, recent research from Deloitte shows that, surprisingly, consumers are talking far less to product or service experts than they are to families, friends, and other consumers. Sixty percent said they either trust family and friends or customer reviews for information on products and service, followed by independent product/service experts (43 percent); store staff/retailer website (16 percent); and product manufacturers (12 percent).
“Consumers are increasingly turning to those they feel they can trust and, as the statistics indicate, trust is an important driver of consumer purchasing behavior,” said Ringquist. “It is imperative, therefore, that in return for sharing their data, consumers have assurance that their data will be protected and that they receive something valuable in return. This is one of the big challenges facing consumer goods companies.”
“While, in general, e-commerce adoption in Southeast Asia continues to lag that of other developed markets, the online space is definitely a channel that consumer products companies should watch as it enables them to offer consumers solutions to problems that are unique to the region,” commented Eugene. “If we look at Indonesia, for example, e-commerce growth in some consumer goods sectors appears to be stronger in cities outside the main metropolitan area of Jakarta, as consumers in these outlying areas increasingly utilize the online channel to purchase products from their favorite brands that have yet to become available at local stores, and at more competitive prices. But even within the highly urbanized areas, issues of traffic congestion, logistical difficulties and fragmented markets have resulted in room for innovative online solutions as they enable companies to bypass indirect distributors as well as better control the delivery cycles and costs.”
As a whole, 2013-2014 was another challenging year for the global economy. Europe remained in recession during most of 2013, although it began to recover modestly by the end of the year and heading into 2014—but growth remained poor. The U.S. economy grew slowly in 2013 largely due to a tightening of fiscal policy. While the economy strengthened in Japan, supported by improved exports and the government’s massive economic stimulus measures, the Chinese economy decelerated in 2013, and similar slow growth continued into 2014. Economic growth also cooled in several Latin American countries as they faced the end of China’s commodity boom, weaker domestic demand, social unrest, and other downward pressures. Overall, recovery by many economies around the globe continued to be jagged and weak.
Top 10 consumer products companies 2013
|Company name||Country of origin||Product sector||2013
|1||Samsung Electronics Co., Ltd.||South Korea||Electronic Products||210,397||13.7%|
|2||Apple Inc.||United States||Electronic Products||170,910||9.2%|
|3||Nestlé S.A.¹||Switzerland||Food, Drink & Tobacco||99,485||2.7%|
|4||The Procter & Gamble Company||United States||Personal Care & Household Products||83,062||-1.3%|
|5||Sony Corporation||Japan||Electronic Products||66,756||17.4%|
|6||PepsiCo, Inc.||United States||Food, Drink & Tobacco||66,415||1.4%|
|7||Unilever Group||Netherlands and United Kingdom||Personal Care & Household Products||66,143||-3.0%|
|8||LG Electronics Inc.||South Korea||Electronic Products||53,489||14.1%|
|9||The Coca-Cola Company||United States||Food, Drink & Tobacco||46,854||-2.4%|
|10||JBS S.A.||Brazil||Food, Drink & Tobacco||43,306||22.7%|
Source: Published company data.
1 Deloitte Research, May 2014