Premium FMCG brands face new pressures as consumers shift to cheaper alternatives

The global cost-of-living crisis may be easing in some regions, but its effects continue to reverberate across the fast-moving consumer goods (FMCG) sector. As households grapple with rising costs, consumer behaviours and priorities are shifting – posing fresh challenges for premium brands, according to research by GlobalData.

In a new report titled Evolving Consumer Attitudes and Behaviours, the data and analytics company finds a dramatic change in the perception of “value for money” from 2021 to 2024, particularly among older consumers. Generation X and Boomers, in particular, have adjusted their spending habits, increasingly seeking out more affordable options in health, hygiene, toiletry and household products, even as economic conditions improve, the report says.

“The effects of the cost-of-living crisis were deep and far-reaching, with numerous aspects of everyday life such as groceries, energy, and fuel, becoming more expensive globally,” says Chris Rowland, consumer analyst at GlobalData. “Brands also continue to face difficulties with rising costs since their ability to pass them on to consumers through price hikes has diminished. Consumers are now increasingly considering lower price options as better value for money relative to high quality.”

With these shifts, premium FMCG brands are now facing a difficult market, and as more consumers gravitate towards budget-friendly alternatives, businesses must rethink how they compete in this evolving landscape.

“A clear price point architecture, including affordable ranges for household and personal care brands, is crucial to align with new consumer perceptions around value for money. This will ensure that a wide range of consumer preferences are catered to,” says Rowland.

“Private label brands stand to benefit most from these developments and are increasingly sought by consumers. They should be viewed as a value for money benchmark, while other brands should consider where they can reduce unit costs, whether by incorporating more simple branding or prioritising high efficacy ingredients over non-essentials like luxury scents."