Some 88% of FMCG manufacturers have experienced sourcing, supply or production challenges in the past year, according to the latest European Consumer Goods Industry Barometer by AIM, the European Brands Association.
While Europe as a whole intensified its focus on competitiveness this year, the consumer goods industry remains 'steadfast but cautious', according to AIM, with inflationary pressures, supply chain disruption and a shortage of labour weighing on the sector.
Disruption 'The New Norm'
“The barometer highlights that supply chain disruption has become the new norm," commented 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.”
Business Challenges
Among AIM's findings are that 58% of manufacturers have reported sourcing challenges for essential components, while more than a third (35%) were forced to reduce or cut production to manage constraints, it noted.
Elsewhere, labour shortages have affected two in five consumer goods manufacturers, with one fifth reporting that said shortages have impacted up to 20% of their product range.
Unsurprisingly, 94% of consumer goods manufacturers have experienced cost increases over the past year, with labour, transport and raw materials seeing the most significant inflationary impact, according to AIM.
More than a third (36%) have had to cut R&D investments or reduce capital expenditure, while 12% have had to reduce their workforce to remain competitive, the data showed.
Nonetheless, the consumer goods industry continues to play a 'pivotal role' in Europe's economy, with a movement of €276 billion in consumer goods in the EU on an annual basis, it added.
'Significant Role'
"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," added Michelle Gibbons, director general of AIM.
"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.”
