The Hungarian fast moving consumer goods market is stagnating despite the fact that households’ money wealth is on the increase at the same time. However, this growth is not realised as an increase in retail trade turnover since Hungarians spend a lot more on repaying debts and creating safety reserves due to the restructuring of households’ spending. Customers still seek offers with a better price-value ratio, and pay a lot more attention to leaflets.

The negative effects of the 2009 economic crisis were a lot less severe on most of the European fast moving consumer goods markets than analysts had previously expected. However, the markets of consumer durables and services were not so balanced; the sharp decline in demand can still be felt in these sectors. Following the fall as a result of the sudden increase of international food inflation in 2008, the markets of fast moving consumer goods show increasing trends in most European countries in 2009 and 2010.

The global growth rate of the fast moving consumer goods market was about 5% in June 2010 compared to the similar period of a year before, while its Western European growth rate was 0.9%.

Hungary is still waiting for the dynamic growth of its fast moving consumer goods market. Households spent 0.2% less on the food and household chemical goods markets in the first eight months of 2010 than during the similar period of 2009. The Hungarian fast moving consumer goods market is stagnating despite the fact that households’ money wealth is on the increase at the same time. However, this growth is not realised as an increase in the turnover of retail trade since Hungarians spend a lot more on repaying debts and creating safety reserves due to the restructuring of households’ spending.

“According to the results of a survey conducted by GfK Hungária Market Research Institute among 2,000 households, Hungarians do not spend more on fast moving consumer goods than last year, however, the amount spent on clothes, travelling and culture has further decreased.

The decrease in the proportion of big shopping trips continues this year, as well as the fall in the amount of fast moving consumer goods bought per visit. Customers have become more rational, they seek a better price-value ratio; among other things, bigger packages or products packed together offering clear price advantages are popular with them. Information about offers has a bigger role since being better informed brings pecuniary advantages, and thus they pay a lot more attention to leaflets,” said Krisztina Kovács, Manager of GfK Hungária’s Consumer Tracking Sector.

The outstandingly intensive promotional activities seen at the beginning of the crisis have slowed down this year; as a result, 28% of all the money spent on food and household chemical products by households was spent on promotional goods in the first eight months of 2010, just like in the similar period of 2008. Retailers still find it a challenge to motivate customers to buy; the value of purchases with loyalty cards has been increasing significantly as a result of the launch of loyalty programmes.

Forecast of the Hungarian fast moving consumer goods market till 2015

GfK Hungária has recently prepared a forecast of the Hungarian fast moving consumer market till 2015, which presents three possible scenarios.

The realistic and optimistic estimates forecast a definite growth of the market for the next year, which growth rate will lessen from 2012 following the initial sudden increase and then the volume increase of households’ consumption will stabilise at about 3%.

The pessimistic scenario, which takes a deepening crisis into consideration, forecasts a more intensive market fall than in 2009, which would hit the market of private label products to the largest extent.

International examples also clearly show that people are ready to spend more on quality; however, it is important that premium offers should be formulated properly stressing the advantages the product has to offer. Strong quality brands offer security, and are often status symbols as well. A shift towards premium brands is expected to take place in Hungary on the long-term, especially in the field of products connected to health and pampering."

Source: GFK