Driven by Rising Prices, Croatian FMCG Sector Grew Nearly 6 Percent

Consumers in the Adriatic region are becoming more relaxed in 2024, which is reflected in their willingness to pay more for quality as price awareness has significantly decreased compared to the previous year. Furthermore, a large portion of buyers are purchasing beyond their initial intentions. Although the vast majority plan to buy groceries, 6 out of 10 end up buying additional items, according to the latest analysis “State of the Nation Q2 2024” published by the analytical company NIQ.

The analysis “NIQ Shopper Trends” also showed that in 2024, the economy of the Adriatic market stabilized, inflation slowed down, and consumer spending increased. Interestingly, in the second quarter, the price growth within the FMCG sector was significantly lower compared to the same period last year. Consequently, this trend led to an increase in volume growth.

– Despite the complex effect of inflation on consumers, it is evident that inflationary pressure has now significantly slowed down, and consumption is flourishing. Countries in the Adriatic region are recording faster rates of volume consumption compared to Eastern Europe. We can expect this positive trend to continue as economic prospects improve, as well as consumer spending – commented Miroslav Tasić, General Director of NIQ for the Adriatic region, on the research results.

Promotions continue to have a crucial impact on consumer behavior and significantly influence market trends in 2024. In all Adriatic markets, the importance of promotional purchases has increased in the current 2024 compared to 2023. In Slovenia, purchases driven by promotions in 2024 accounted for 27 percent, in Croatia 30 percent, while in Serbia the promotional contribution was even higher, at 38 percent.

– However, this does not mean that consumers are less sensitive to prices; they have not forgotten the pressure of rising prices they faced in the last two years. Consumers are now more experienced, educated, and have learned new behaviors and adopted new brands, thus forming new habits. The search for promotions, participation in loyalty programs, stricter channel selection, and acceptance of private label brands are trends that will support further consumption growth – concludes Tasić.

FMCG Industry in Croatia

The FMCG industry in Croatia recorded a value growth of 5.9 percent in the second quarter of 2024 compared to the same period last year. Although this growth is still predominantly driven by a price increase of 4.7 percent, it also comes from a growth in volume (1.1 percent). Croatia’s growth rate is positive but lower than it was in the last three quarters.

The following food categories recorded the highest value sales during the second quarter of 2024: chilled fresh meat, beer, ready-to-eat meat products, cheese, and ice cream. All these categories are recording volume growth in 2024 compared to the same quarter last year, with only ready-to-eat meat products recording a volume decline, while this category also recorded the highest price increase of 9 percent compared to last year.

Within the non-food categories in the second quarter of 2024, laundry detergents, toilet paper, deodorants, household cleaning products, and kitchen paper towels stood out in value. Of the mentioned categories, each category records positive volume growth except for kitchen paper towels. The highest price growth of 13 percent was recorded in the second quarter of 2024 compared to the second quarter of 2023 for detergents.

All channels experienced value growth in the last year ending in June 2024 compared to the same period last year. The convenience channel recorded significant growth of 27.1 percent, while hypermarkets had the lowest growth rates of 8.8 percent. Additionally, small and large mixed goods stores and kiosks are reducing the number of sales points by 2 percent in 2024 compared to 2023.

In the last 12 months ending in June 2024, the top 5 manufacturers recorded a slower value growth rate of 7.3 percent compared to the overall FMCG industry, which grew by 12.7 percent during the same period. Private label products follow a similar trend, with a growth rate of 9.7 percent. Private label products accounted for 20.3 percent of market share in Croatia in the last 12 months ending in June 2024. In contrast, other manufacturers generate FMCG growth at a higher rate than the industry average.

Moreover, the technology and durable goods market in Croatia recorded a value growth of 12.3 percent in the last 12 months. The highest growth was recorded in the small household appliances sector at 20.6 percent. The market was significantly influenced by sporting events in the second quarter of 2024, which affected the sales growth trend of televisions, which outperformed the market trend and contributed to the overall market T&D growth of 12.5 percent in the last quarter.

The top 5 brands, which represent 63 percent of the market, recorded slower growth than the market average while above-average market growth was recorded by the top 10-15 brands, which reached 9 percent of value market share. Price growth has slowed in 2024. The retail channel has grown in the last 12 months, while due to the high contribution of sales value growth of televisions, the largest growth in the second quarter of 2024 was recorded by the channel that exclusively sells electronic devices.

Market in Serbia

In Serbia, total sales of consumer goods in the second quarter of 2024 compared to the second quarter of 2023 increased by 9.0 percent in value, thanks to an increase in volume (6.1 percent) and unit value (2.9 percent), showing a continuation and positive trend of increased consumption. In line with the slowdown in inflation at the beginning of this year, there has been a noticeable change in consumer purchasing behavior, with non-essential categories recording the highest growth in the FMCG sector. The main categories that had the highest volume growth in FMCG include non-essential categories such as color-catching laundry wipes, wet toilet paper, rum, energy drinks, and facial toners.

The best-ranked food categories according to their sales value during the second quarter of 2024 are alcoholic beer, non-alcoholic beverages, ice cream, chilled ready-to-eat meat products, and ground coffee (non-instant). Among the mentioned categories, ice cream saw the highest increase in the second quarter of 2024, 32 percent in value, driven solely by a volume increase of 32 percent. The highest price growth among the mentioned categories was recorded for non-alcoholic beverages at 9 percent.

Within the non-food categories in the second quarter of 2024, laundry detergents, toilet paper, fabric softeners, disposable baby diapers, and deodorants stand out in terms of sales value compared to the same quarter last year. Deodorants recorded the highest volume growth of 11 percent. The highest price growth in the second quarter of 2024 compared to the second quarter of 2023 was recorded for detergents at 9 percent. Among the mentioned non-food categories, toilet paper is the only category with a price decline of 12 percent.

All types of channels recorded value growth in Serbia in the last 12 months ending in June 2024. The discount channel recorded the highest value sales growth of 13.3 percent.

The FMCG industry is experiencing significant value growth of 9 percent in the second quarter of 2024 compared to the same period last year. The top 5 manufacturers are recording a faster growth rate of 17.6 percent, which drives the growth of the FMCG industry, as other manufacturers recorded a lower growth rate than the entire FMCG industry. Private label brands (PL) show a slower growth rate in the first quarters of 2024 than in 2023, at 8.1 percent. In Serbia, private label brands hold a market share of 13.5 percent.

On the other hand, the technology and durable goods sector in Serbia recorded a growth of 5.1 percent in value in the last year. The highest growth was recorded in the telecommunications sector at 23.2 percent. The market was influenced by sporting events in the second quarter of 2024, which affected the higher sales of televisions that increased by 10 percent, but at the level of the last 12 months, the group of products is negative. The price trend is negative in the last four quarters.

The top 10 brands cover 65 percent of the market and record weaker results compared to market trends. Above market averages are growing brands that do not enter the top 10 ranked by value. The retail channel is significantly growing in the last 12 months despite the negative trend in the third quarter of 2024, while the retail of electronic equipment has returned a positive result in 2024.