Ad spending associated with fast-moving consumer goods (FMCG) is expected to surge this year in a remarkable turnaround for a sector that was battered harder than most in 2020 when it tanked 10.7% to be valued at a dismal $26.7bn.According to the latest market report from Zenith, a sharp bounce-back will recover much of this lost ground, but fall 6% short of levels reached in 2019.
A year of recovery
According to Zenith’s FMCG business intelligence report, recovery will be founded on restored production capacity and beefed-up supply chains to feed resilient consumer demand for food and drink brands, with annual growth of 4.4% tracking the broader market through 2021-23.
This headline growth masks fluctuations in FMCG performance in the years ahead, topping out at 5.2% growth this year before falling back to 3.7% in 2022 and settling at 4.3% growth in 2023.
The outperformance of the FMCG sector versus the total market will also be shortlived, with a steadier performance seeing the market as a whole post consistent growth of 4.9% in 2021, before regaining the lead in 2022 with growth of 4.8%, maintained through to 2023 with an increase of 4.7%.
If this growth trajectory is maintained FMCG ad spend could account for $30.3bn of transactions by the end of the prediction period – up from $28.1bn this year.
TV and digital reign supreme
TV is likely to be the chief beneficiary of the recovery, accounting for 38.5% of FMCG ad spend across 12 key markets in 2020.
This strong springboard places it second behind digital, which commands a dominant 46.1% slice of the FMCG ad market.
This duopoly leaves other mediums fighting over scraps as also-rans with newspapers having to make do with a 1.3% share and magazines overseeing a 5% proportion of ad spend.
Radio (2.5%), cinema (0.4%) and out-of-home (6.1%) round out the lower ranks of FMCG ad spend markets.
E-commerce surge shows no sign of abating
The standout growth story of 2020 was e-commerce and that shows no sign of changing in the immediate future, as evidenced by a breakneck 50% expansion in 2020 despite FMCG brands being far slower to embrace the sector than average and underdeveloped infrastructure.
Significant bottlenecks such as a lack of delivery slots kept a lid on growth but packaged food e-commerce sales rose 49% year-on-year, up from 16% in 2019 and the equivalent of 4.3% of all e-commerce related retail sales.
Soft drink e-commerce sales meanwhile jumped 47%, also up from 19% the previous year, to hit 2.4% of all retail sales.
The exponential growth of e-commerce as a share of total retail sales was confirmed in 2020 with a share of 20.5%, eclipsing the 16.1% share recorded in 2019 and the 14.1% in the year before that.
Turbocharged growth in key markets
Chinese counterparts meanwhile continue to drive growth courtesy of a homegrown digital transformation of its own making, driving average annual growth in FMCG ad spend to 5%.
Established markets are left trailing in the wake of these powerhouses with the growth of 2.8% and 3.8% in the UK and US respectively. At the bottom of the growth league sit Germany and Spain on just 1.9%.