Revenue in the UAE from sales of fast-moving consumer goods such as milk, rice and shampoo rose 11 per cent in the first eight months of the year, less than half the rate for the period last year, data from the research company Nielsen show. Sales turnover in 102 products - including food, home care and personal care - between January and August this year totalled Dh8.92 billion (US$2.42bn), compared with Dh8bn in the same period last year.
Food products make up about 70 per cent of this figure; personal-care items such as skin cleansers make up 20 per cent; and home-care products the remaining 10 per cent. Roughly 50 per cent of the sales growth came from daily necessities such as rice, cooking oil, salty snacks and milk, said Sohail Ali, Nielsen's UAE research manager for retail measurement services. "People will not compromise on the consumption of these categories," Mr Ali said. "Did you reduce your milk consumption because of the recession? No. Same is the case for laundry detergents, shampoos, the categories which are day to day."
The top 10 items driving sales growth, in descending order, were rice, salty snacks, sports drinks, fresh milk and laban, cooking oil, skin cleansers, chocolates, detergents, ice creams and soft drinks, Nielsen's data show. But the growth was mainly driven by price increases and inflation, Mr Ali said. Sales volumes either declined or stayed stable during the first half of the year, Nielsen found.
That prices are rising seems counter-intuitive, as inflation in the Emirates, as reported by the Minister of Economy, has slowed from 10.8 per cent last year to an estimated 2.5 per cent in the first eight months of this year. But fast-moving consumer goods tend to be resistant to fluctuations in inflation, said David Edwards, the managing director of IMES Consulting Group, a market research and consulting firm based in Dubai.
While producers of expensive goods such as refrigerators and cars would have to cut prices to boost sales, products such as toothpaste do not have to be priced to move, Mr Edwards said. "Consumer goods companies don't have to do a lot of promotion, because people have to eat and drink anyway," he said. "And a lot of consumer goods companies have been under price pressures, in terms of rising costs throughout 2008. Transport costs, labour costs, rent here; all were rising through 2008."
But early figures show sales volumes for fast-moving consumer goods in are improving, said Sevil Ermin, Nielsen's UAE director of retailer services. "We started seeing some volume recovery in some of the categories in the last couple of months," Ms Ermin said. "This is very much in line with our consumer confidence survey findings, where we do see a very positive [increasing] score in consumers' confidence in UAE."
Although sales of fast-moving consumer goods continue to grow, the growth is at less than half the rate of last year, Nielsen says. Sales growth of home-care items slowed to 15 per cent in the first eight months of the year, compared with 26 per cent growth during the same period last year. Personal care products' sales growth slowed from 23 per cent last year to just 8 per cent. Food took the biggest hit, slowing from 30 per cent growth to 11 per cent growth in the year to August.
Mr Ali said that while the global downturn obviously contributed to the stalled growth, it was difficult to know exactly what role it played. "We don't know for sure in the UAE because we don't know how many people have left the country," he said. "So the people who are left in the country may be consuming the items in these categories in the same patterns they were before. But because of the population flux, the growth may have slowed down."
@Email:aligaya@thenational.ae
