The latest AIM European Consumer Goods Industry Barometer suggests manufacturers remain steadfast but cautious amid a complex landscape where sourcing challenges, geopolitical tensions, and fluctuating costs have become the new normal.
AIM is the European Brands Association, which represents manufacturers of branded consumer goods in Europe. Key findings from its report include:
- Supply chain disruptions: 88% of EU FMCG manufacturers reported experiencing sourcing, supply, or production challenges in the past year. These disruptions have led to significant operational adjustments, with 58% facing sourcing challenges for essential components and 35% reducing or cutting production to manage constraints.
- Labour shortages: Labour shortages affected 2 out of 5 consumer goods manufacturers, impacting up to 20% of their product range for nearly one-fifth of businesses. The report notes that this trend underscores the importance of agility and flexibility in the industry to maintain productivity.
- Rising costs: Inflation continues to impact the sector, with 94% of consumer goods manufacturers experiencing cost increases over the last year. Notably, labour, transport, and raw materials saw the most significant inflationary impact, affecting production costs and, consequently, the retail sector.
- Impact on investments and employment: Due to economic pressures, 36% of manufacturers surveyed have had to cut R&D investments, and 38% have reduced capital expenditure (CAPEX). Additionally, 12% have had to make the difficult decision to reduce their workforce to remain competitive in the current economic climate.
“The barometer highlights that supply chain disruption has become the new norm,” said Silviu Popovici, CEO of PepsiCo Europe and President of AIM.
“It is critical for EU policymakers to acknowledge the significant impact on production and take action to support competitiveness through balanced and smart regulation. This will enable Europe’s consumer goods manufacturers to continue to innovate for consumers and deliver the brands they value and trust.”
Michelle Gibbons, Director General of AIM, added: “While the economic conditions continue to be challenging and 37% of those surveyed anticipate reducing production in the coming year, the consumer goods industry will endure. Our brands are present in nearly every household in Europe, and with household consumption accounting for 51% of the EU’s GDP, it is crucial to understand the significant role we play in stimulating the economy and driving Europe’s return to growth.”
NAM Implications:
- The AIM report is a useful way of placing key Issues affecting your business in a European context.
- Issues include supply chain disruptions, labour shortages, rising costs and impact on investments and employment.
- (The British Brands Group is the UK representative of AIM, the European Brands Association, based in Brussels)
