TTS: The Consumer Sector & Role of Treasury

Fast moving consumer goods: Staying one step ahead It is safe to say that almost everyone comes into contact with the fast moving consumer goods sector everyday. Yet few will understand how the sector is undergoing profound change. Having enjoyed growth of 3-5% five to 10 years ago, top line performance has fallen to just 1-3%, due to slowing GDP growth and flat household incomes in both OECD and emerging markets. This depressed growth has been compounded by aggressive price/mix strategies, the increasing penetration of private label and discount retailers, and the unbundling of the consumer basket as new more nimble players enter the market and re-shape the consumer proposition for specific products. A few years ago, who would have imagined subscribing to a razor club and having blades mailed to you or having coffee pods delivered to your door? “ FMCG firms have been forced to respond to this challenge  Many FMCG players have been slow to react to these trends, not least because their higher cost base makes them less nimble than new players. Consequently, with depressed top line growth, pressure on margins and return on assets, falling market share (losses of 150bps are common among large FMCGs), and declining earnings per share (EPS), many FMCG companies have come under pressure from activist investors and private equity firms. These players’ demands vary but they typically seek to drive stronger EPS. This can be in the form of divesting non-core product groups that act as a drag, developing Peter Cunningham and Hans Oostenbrink from Citi’s Treasury and Trade Solutions team explore how the fast moving consumer goods sector and the role of treasury are changing. How are new companies transforming this industry? Why is treasury’s role becoming more important? What role does Big Data play? Hans Oostenbrink Head of Benelux Sales Treasury and Trade Solutions, Citi Peter Cunningham EMEA Head of Consumer and Healthcare Sector Sales Treasury and Trade Solutions, Citi