FMCG growth is set to recover this Ramadan, driven by vaccine optimism & relaxed restrictions

The fasting month of Ramadan and the subsequent Aidilfitri celebration are key sales opportunities for FMCG manufacturers and retailers in majority Muslim countries such as Indonesia, Malaysia, Turkey, the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE). According to NielsenIQ data, FMCG sales typically spike by up to 15% in Malaysia, 30% in Indonesia, 20% in Turkey, 11% in KSA and 6% in UAE during the Ramadan compared to normal retailing weeks. 

This year, the recovery in FMCG festive sales will be driven by more relaxed restrictions, optimism surrounding the vaccine availability and the end of panic buying behaviour. 

“The Ramadan and Aidilfitri FMCG boost is driven by increases in the sale of food and beverage categories, as family and friends break their fast together,” said Didem Sekerel Erdogan, Senior Vice President, Intelligent Analytics, Asia Pacific and Eastern Europe, Middle East and Africa (APAC & EEMEA), NielsenIQ. “Ramadan 2021 will be the second one observed amidst the COVID-19 pandemic and while some restrictions are still in place, we are optimistic that FMCG sales will be better this year compared to last year, when it was impacted by the first wave of the pandemic in March, resulting in stockpiling and panic buying prior to the festive period.”

Festive growth will be driven by in-home consumption

Ramadan and Aidilfitri are marked by the family and community gathering to pray and break their fast together. Iftar (breaking of fast) meals can often be elaborate affairs, driving the sales of key food and beverage categories. 

To demonstrate the significance of Ramadan season, in 2019, the top 5 Ramadan categories experienced a sales increase of around 18% in Malaysia, 10% in Indonesia, 20% in Turkey, 14% in Saudi Arabia and 2% in UAE compared to the previous year. Unsurprisingly in 2020, countries such as Malaysia, Indonesia and UAE did not see the “usual” Ramadan spike due to pandemic-related challenges such as restrictions and stockpiling.

While this Ramadan and Aidilfitri will not be marked by restrictions as heavy as last year, limits on gathering sizes still remain and health-conscious consumers will prefer to dine at home rather than eat in at restaurants – leading to a rise in home cooking and food delivery services.

“Given that meals will centre around the home and be smaller in scale, manufacturers and retailers should adjust their assortment and pack size to market,” says Erdogan. “In order to win the hearts and minds of consumers, promotions and messaging should also reflect consumers’ realities.” 

As an example, Erdogan referenced Turkey where one in four people said they attended virtual Ramadan gatherings last year, and he expects this trend to continue this year as families and communities remain socially distanced. In Malaysia, consumers who want to avoid crowded Ramadan bazaars may want to recreate their favourite Ramadan dishes at home so retailers can come up with DIY meal kits containing ingredients that shoppers can either buy in-store or have delivered to their home, he added. 

Financially constrained and financially insulated consumers will spend differently

According to NielsenIQ, due to the pandemic’s impact on consumer burgers, their spending is driven by four distinct consumer groups. Newly constrained, existing constrained, cautiously insulated consumer and unrestricted insulated consumers. The first three groups are streamlining their budgets and have become more discerning about what, where, when and how they purchase products while the group of unrestricted insulated consumers do not feel the need to watch what they spend.

In Malaysia, Turkey, and UAE, constrained and cautiously insulated consumers make up 97%, 99% and 98% of the population, respectively. This indicates that manufacturers and retailers must adjust their offerings and promotions to take into account this segment, while also catering to the insulated consumers who may want to use freed up budgets to indulge in more premium offerings.

Malaysia: Relaxation of restrictions will drive recovery in FMCG sales this Ramadan

Ramadan and the subsequent Hari Raya Aidilfitri celebration is one of the biggest festive events in Malaysia’s FMCG calendar, as it is the main festive event for Malaysia’s majority Muslim population. 

“Even with the vaccine roll out and the ease of restrictions, we expect celebrations to focus in the home, with consumers embracing in-home cooking and baking,” said Managing Director, NielsenIQ Malaysia cum Sales Leader of Southeast Asia, Intelligent Analytics, NielsenIQ,  Luca De Nard. “The rise in in-home baking of Raya cookies and kuih will drive sales in baking-related categories such as chocolate, cream cheese, margarine/ butter, cooking mixes and milk.”

He then continued by saying that cost-conscious Malaysians will be seeking value-for-money deals, so retailers and manufacturers should ensure they promote items in the right way, at the right location and at the right price. 

“Given that many people are still working from home, consumption has shifted away from urban centres to residential areas and therefore it is important that popular Ramadan categories are available in stores that are close to residential areas,” he added. “Malaysians are also curious consumers who are always looking for new and exciting experiences, and Ramadan-Raya is a good time to release new and innovative products that are moderately priced and meet shoppers’ need for affordability.”

Main image credit: 123rf

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