Top fast moving consumer goods brands returned to organic volume growth whilst posting record profitability in 2018

- Profitability of the top Global 50 FMCGs reached 18.2% in 2018, the highest level since the Global 50 began in 2002

- Organic growth increased by 3.2% year on year, demonstrating a remarkable comeback since the financial crisis

- M&A deal value fell 48% from 2017, decreasing by $70bn as no megadeals matched the 2017 BAT deal, but deal volumes remained high at 55 versus the record high of 60 in 2017

- Chinese spirits producer Kweichow Moutai entered the Global 50 leader board for the first time, knocking out Brazil Foods Nestlé; while Procter & Gamble and PepsiCo retained their podium positions

- 2018's star players that outperformed their peers are Coca Cola, Estée Lauder, Yili, Kweichow Moutai and Shiseido

News provided by

OC&C Strategy Consultants

Jul 08, 2019, 17:22 ET

NEW YORK, July 8, 2019 /PRNewswire/ -- FMCG giants are starting to see the benefits of their efficiency drive as profitability of the top 50 FMCGs has reached an all-time high at 18.2% in 2018, revealed the annual OC&C Global 50. This is the highest level since the Global 50 began in 2002 and marks a return to levels pre the financial crisis in 2008.

More impressively the strength of FMCG brands is further demonstrated in their improving organic growth, which increased to 3.2% up from 2.6% in 2017. The majority of that progress is now coming from volume growth, accounting for 1.8% points of growth, up from only 0.6% in 2017, with1.4% points from price/mix.

Now in its 17^th year, OC&C Global 50, produced by OC&C Strategy Consultants, examines the financial performance of the world's largest consumer goods companies. It is the industry authority on the statistics and big themes that drive the FMCG sector.

Will Hayllar, UK Managing Partner at OC&C Strategy Consultants, comments: "Despite the lack of blockbuster acquisitions in 2018, it was a very strong year for the Global 50 as prior M&A activity began to bear fruit. In the years before, the Global 50 were snapping up companies that cater to new and fast-growing consumer trends, such as the shift towards wellness, and consumers' seemingly never-ending love affair with coffee. These acquisitions are beginning to pay off, resulting in a return to organic volume growth and record profit margins."

OC&C identified two phenomena driving profit levels: premiumisation and efficient management of operating costs. There has been a continued and increasing consumer demand for all things luxury. Coffee is an excellent example of this. Instant coffees have been usurped by the single origin expresso from the coffee machine. This has allowed producers to charge a significant premium for capsules and drive up profits.

As for cost efficiency, total operating costs were down 0.2% points compared to 2017. This was in part due to synergies from previous M&A consolidation being realised as well as ongoing efficiency drives.

Will Hayllar, UK Managing Partner at OC&C Strategy Consultants, comments: "For FMCG brands to continue to drive growth, staying one step ahead of consumer trends is vital. Adapting brand strategy to meet the ever-changing consumer needs and investing early in emerging sectors will continue to drive organic growth and profit in the market.

"Our research has identified five stand out FMCG businesses: Coca Cola, Estée Lauder, Yili, Kweichow Moutai and Shiseido that have outperformed their peers this year. All five are united in having identified fast growing consumer markets and acted to serve them. Cola Cola and Yili won the health-conscious crowds, Estée Lauder and Shiseido won over online millennials, and Kweichow Moutai quenched the Chinese thirst for premium spirits."

Deal activity in 2018 was driven by the continued desire to shift portfolios towards fast growth areas and strengthen existing positions. However, in the absence of mega deals, M&A value fell 48% from 2017 to USD 75bn, though the number of deals remained relatively high (55 vs 60 in 2017).

A full leader board of the Global 50 can be found below.

2018 ranking of the Global 50 (1 of 2)

Rank	Change 2018/17		Company	Country	Grocery Sales
Rank	Change 2018/17		Company	Country	In million US$ in 2018¹	% Change in Local Currency Sales '18 vs '17²
1	→	-	NESTLÉ AG	Switzerland	$93,400	2.10%
2	→	-	PROCTER & GAMBLE	US	$66,335	2.80%
3	→	-	PEPSICO	US	$64,661	1.80%
4	→	-	UNILEVER	UK/Netherlands	$60,120	-5.10%
5	→	-	AB INBEV	Belgium	$54,619	-3.20%
6	→	-	JBS	Brazil	$49,044	12.40%
7	→	-	TYSON FOODS	US	$40,052	4.70%
8	↑	+6	BRITISH AMERICAN TOBACCO P.L.C	UK	$32,656	25.20%
9	↓	-1	COCA-COLA COMPANY	US	$31,856	-10.00%
10	→	-	L'ORÉAL	France	$31,766	3.50%
11	↓	-2	PHILIP MORRIS INTERNATIONAL	US	$29,625	3.10%
12	↓	-1	DANONE	France	$29,070	-0.60%
13	↑	+2	HEINEKEN HOLDING	Netherlands	$26,499	4.00%
14	↓	-2	KRAFT HEINZ	US	$26,259	0.70%
15	↓	-2	MONDELEZ	US	$25,938	0.20%
16	→	-	ARCHER DANIELS MIDLAND	US	$24,831	10.90%
17	→	-	WH GROUP	China	$21,283	-0.10%
18	↑	+1	SUNTORY	Japan	$20,383	4.30%
19	↓	-1	ALTRIA GROUP	US	$19,513	0.50%
20	↑	+2	JAPAN TOBACCO	Japan	$18,974	3.30%
21	→	-	ASAHI BREWERIES	Japan	$18,765	1.60%
22	↓	-2	KIMBERLY CLARK	US	$18,434	0.70%
23	↑	+3	RECKITT BENCKISER	UK	$16,796	10.00%
24	↑	+1	DIAGEO	UK	$16,148	0.90%
25	↓	-2	GENERAL MILLS	US	$15,740	0.80%


1.Sales exclude excise duty payment
2.Percentage change exclude excise duty payment
Source: Annual reports, 10K

2018 ranking of the Global 50 (2 of 2)

Rank	Change 2018/17		Company	Country	Grocery Sales
Rank	Change 2018/17		Company	Country	In million US$ in 2018¹	% Change in Local Currency Sales '18 vs '17²
26	↓	-2	COLGATE PALMOLIVE	US	$15,544	0.60%
27	↑	+1	GRUPO BIMBO	Mexico	$14,993	7.80%
28	↓	-1	JOHNSON & JOHNSON	US	$13,853	1.80%
29	↑	+1	ESTÉE LAUDER COMPANIES	US	$13,616	15.80%
30	↓	-1	ESSITY	Sweden	$13,614	8.40%
31	↑	+1	LVMH	France	$13,249	5.60%
32	↓	-1	KELLOGG COMPANY	US	$12,312	6.00%
33	→	-	HENKEL	Germany	$12,228	-1.40%
34	↑	+9	YILI GROUP	China	$11,891	17.80%
35	↑	+1	KIRIN BREWERIES	Japan	$11,748	5.70%
36	↓	-2	ROYAL FRIESLANDCAMPINA	Netherlands	$11,563	-4.10%
37	↑	+1	NIPPON MEAT PACKERS	Japan	$11,494	5.60%
38	↓	-1	KAO	Japan	$10,824	-1.70%
39	↑	+2	BUNGE LIMITED	Bermuda	$10,820	12.80%
40	↓	-5	MOLSON COORS BREWING COMPANY	US	$10,770	-2.10%
41	↓	-2	PERNOD RICARD SA	France	$10,598	-0.30%
42	↑	+4	MENGNIU DAIRY	China	$10,420	14.70%
43	↓	-3	IMPERIAL TOBACCO	UK	$10,347	-0.80%
44	↓	-2	ARLA FOODS A.M.B.A	Denmark	$10,301	-1.10%
45	→	-	CARLSBERG	Denmark	$9,891	3.00%
46	↑	+12	KWEICHOW MOUTAI	China	$9,813	25.40%
47	↑	+2	SHISEIDO	Japan	$9,657	9.20%
48	↓	-4	HORMEL FOODS	US	$9,546	4.10%
49	↑	+1	TINGYI	China	$9,064	3.00%
50	↓	-2	YAMAZAKI BAKING	Japan	$8,973	0.90%

1.Sales exclude excise duty payment
2.Percentage change exclude excise duty payment
Source: Annual reports, 10K

Notes to Editors

ABOUT OC&C GLOBAL 50

The Global 50 is OC&C Strategy Consultants annual snapshot of the world's largest 50 FMCG businesses. Now in its 17^th year, it is the industry authority on the statistics and big themes that drive the sector. Information is taken from the latest annual report of each business. Turnover is stated in US dollars but growth rates quoted are those in the local currency in which each company reports.

OC&C STRATEGY CONSULTANTS

Founded in 1987, OC&C is a leading global strategy consulting firm that brings clear thinking to the most complex issues facing today's management teams. OC&C's client roster includes some of the world's most respected companies throughout the retail, consumer goods, leisure, media, communications and technology, industrial products and services and private equity sectors.

For more information about OC&C Strategy Consultants, please visit http://www.occstrategy.com

SOURCE OC&C Strategy Consultants