Common shopping: Nestle, Unilever and Procter & Gamble compete to adapt

“We need to stay much closer than ever to consumers and their habits, needs and desires,” said the company’s financial director, Jon Moeller, during a call for earnings last month.

Initial evidence shows that the transition to online shopping is accelerating, consumers are increasingly cost-conscious when they choose to buy more products for their health and home, and choose to save more.

In a call by analysts last month, Nestle (NSRGY) CEO Mark Schneider said the company is doing “overtime” to understand what the economic crisis means for each product category. Nestlé is the world’s largest food and beverage company that does everything from breakfast cereals like Cheerios to Maggi instant noodles, Häagen-Dazs ice cream, Nescafé coffee and San Pellegrino juice.

“I think this is a very interesting job because clearly there will not be a quick recovery,” Schneider said. Said. “This will be a few quarters, even if it is not a few years’ time to wait for the changing category dynamics.”

Coming in an environment where almost everything changes overnight, consumer goods companies are likely to end up with which new purchasing models are temporary, with deadlocks or the arrival of a vaccine, and will reshape the way consumers spend their money for years.

“We evaluate the market by market, whether we need to make changes to our core products, prices and package sizes,” said Hanneke Faber, head of food and cooling. Unilever (UL)who Lipton tea, pigeon soap, Hellmann’s mayonnaise and Ben & Jerry’s ice cream.

There is no “game book” for this recession, he told CNN Business. “It will require us to be extremely agile and flexible for the foreseeable future.”

Hanneke Faber, head of Unilever food and cooling.

E-everything

While much is not known, it is clear that some lifestyle changes and changes in spending patterns will take longer than social withdrawal measures. For example, some consumers Online shopping because the physical shops were closed, or they are unlikely to return completely to their old ways, to avoid crowds and because they are now leaping.

“Early lessons from China indicated that three to six percent of the online market share would be” sticky “, driven by digital generations and new consumer segments, driven by new generations that were comfortable. Research paper.

Their research found that the three biggest UK brands have added more than 500,000 new delivery areas within a few weeks, which is an increase of more than 30%.

While many consumers were staying at home, during the Nestlé pandemic, there was increasing demand for Nescafé coffee.

Nestle’s e-commerce sales increased 30% globally in the first quarter of the year, while Procter & Gamble posted 35% growth in online sales in the same period.

The coronavirus crisis is likely to be a “breakthrough event”. online sales Nestle CEO Schneider has discovered how suitable people who will not be buying food online are

Jack Neele, portfolio manager of Dutch financial services firm Robeco, is unlikely to remain at the current high level, but “we have reached a higher plateau to grow”.

Health and hygiene

As with online shopping, health and wellness were a growing lifestyle trend long before the coronavirus hit, and only gained momentum during the pandemic. While consumers wipe the surfaces and wash their hands more than ever, sales of orange juice, which are thought to be beneficial to health, as they are high in vitamin C rose.

“We are confident that everything in the field of health and well-being will gain strength,” Unilever CEO Alan Jope told analysts last month.

Unilever said he saw more sales of products like Lipton Immune Support, as well as drinks containing zinc and vitamin C. The company is moving rapidly to spread them around the world, and added that health will continue to be a priority for product innovation.

Procter & Gamble’s Moeller stated that consumers in the USA wash their clothes more often and add more laundry loads per month, “We will probably serve what will become a focus of changed health, hygiene and cleanliness.” Said.

Procter & amp; Gamble noted an increase in the number of weekly laundry loads in the United States.

Nesting at home

Even when the crashes are removed and restaurants, bars and cinemas reopen, there is a feeling that people will not rush to go out again.

“There may be more focus at home: more time at home, more food at home, more cleaning at home,” Moeller said.

unemployment sky high levelsmany consumers will have smaller budgets for entertainment. They may also decide to save more money to resolve the recession. Recent data from the Bank of England and the European Central Bank show that household savings rates increased in some of Europe’s largest economies in March. The same thing, saving rates highest level Since 1981.

For others who spend time and money or new hobbies to renovate their homes and gardens, the probability of staying is more attractive than before.

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“Staying in is a new way out,” according to the McKinsey report. “After the restrictions have been lifted, we expect consumers to continue spending more time at home, thanks to the desire to save, constant safety concerns and a new pleasure in nesting.”

Increase in online sales of bread machines United States of America According to data compiled by retail technology company Stackline, it was the second of single-use gloves in March, up 652% compared to just a year ago. Online weight training equipment sales (+ 307%), handicraft kits and projects (+ 117%) and table tennis tables (+ 89%) reflect that many consumers have found new ways to entertain themselves at home.

Shaking the head of this trend, Nestlé USA launched new health-conscious ready meals last week. Unilever manager Faber called the trend “cocoon”.

Unilever estimates that 15% of restaurants that went bankrupt in China will never reopen during the crisis. If social distance rules remain in force, if restaurant and bar owners tell their business models, this is likely to be repeated elsewhere. just working without volume and traffic.

Value and trust

coronavirus recession it means businesses and consumers will suffer from cash for the foreseeable future.

Unilever’s Jope said that value and affordability will become increasingly important, even in rich countries. He pointed out the company’s ability to offer products at “incredibly low price” as “a huge power” in countries like India.

“In Europe, we can count on the increasing negative price pressure as economies are entering despair.” Said.

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Likewise, Procter & Gamble said it is in a better position to survive the economic downturn as its portfolio focuses on daily use items. “We have never met the unemployment level we want to see in this country [the United States] and potentially in others, and we don’t know how long it will take. “

Consumers are already to trade, cheaper private label products, Costco (COST), Walgreens (WBA) and CVS (CVS). Sales discount stores, like General Dollars (DG) and Aldi is also taking the elevator.

However, at least for now, Nestlé, Unilever and Procter & Gamble are confident that consumers will balance the price by value, by choosing the well-known brands that they are familiar with and experimenting less.

“People will return to big, reliable brands,” said Faber from Unilever. “They can’t spend money on products they’re not sure of.”

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