Covid-19 has fuelled the greatest change in FMCG sector in 100 years

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Australians’ FMCG-buying habits are being disrupted more by Covid-19 than by anything else in the last 100 years.

Even as society reopens post Covid-19, Australians are likely to remain homebodies, according to research undertaken by News Corp. 

‘Cocooning’ has become the dominant behaviour of Australian consumers, explains Ed Faith, FMCG industry head at News Corp Australia, one outcome of what he describes as the most serious impact on the sector in a century.

“Seventy-six per cent of people are actively minimising time spent in public areas and time spent on a typical weekday at home has nearly doubled,” said Faith. “This is about risk aversion, but also because society’s reopening will be gradual. Economic rationalisation of decreasing discretionary spend in areas like travel and out of home entertainment will keep people in their homes more than before, for the foreseeable future.”

News Corp spoke to nearly 1000 consumers in successive audience surveys in May, June and August to understand their behavioural and attitudinal shifts.

The company then cross referenced those findings with first-party behavioural data across its network to understand the impact on the consumer journey, before collating and overlaying key themes from other research work conducted across the market including by Kantar, Nielsen, Boston Consulting Group and others, to build a bigger overall picture.

Ed Faith

The result were six themes, of which cocooning was the standout. 

“Covid-19 has created the most serious disruption to the market we’ve seen in the last 100 years, with consumers entering and exiting categories faster than ever before as their needs and circumstances rapidly changed,” said Faith. 

“Previously, brands have had licence to shape communication around a singular “Mood of the Nation”. But differing restrictions by state is creating market nuances which can’t be ignored. 

Here are the five other key insights from this research:

‘Homebody economy’: Consumers will increase spend on household essentials such as grocery, household, home cleaning and fresh produce by 31 per cent. Three in four consumers who have cut down on eating-out are cooking more meals at home, and one-third of Australians are taking up DIY home repairs.

Consumers have re-balanced their baskets: People are adapting their shopping frequency from 2.5 times to 1.7 times per week to minimise time out and about as well as human contact. As a result, they are also changing their habits and repertoires at home. This influences the types and quantities of products they’re buying at the grocery store: what categories they are buying from and the brands they choose. There are many cases where branded products have been outpacing the market, mainly as shoppers look for ways to treat themselves amid an ongoing reluctance to eat and drink away from home.

Wallet shift has created a two-speed economy: The random dispersion of financial impact means that consumers are split into two camps; either focusing on ‘bang for buck’ to ease financial pressures, or “trading up” as other discretionary spend is held back and they have more income to deploy on household and grocery comfort items.

Our origin preferences are ramping up: Australians are doing their bit for the economy by buying Australian brands. Fifty-seven percent of consumers now say they prioritise Aussie brands (2.5 times greater than pre Covid-19). The surveys show significant consecutive increases in the overall net importance of product traits like ‘Australian made’, ‘Australian owned’ and ‘Supports Australian farmers’.

The consumer-brand relationship has been reset: Consumers have shopped far more promiscuously during lockdown which has meant that brand relationships have been built and broken simultaneously. “The more time Australians spend at home, the higher their needs become for a greater diversity of grocery, personal and household products to make this time more comfortable and satisfying,” said Faith. “This has created more light, lapsed and new buyers in the market than ever before.”

Faith said the insights from the research will allow News Corp to help FMCG clients adapt to the new challenges and opportunities that have emerged from disruption.

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