Magazine: Brands as an engine of growth and looking into the crystal ball

One of the engines of economic growth is strong brands. Trade magazin has asked Dr Ágnes Fábián, president of Branded Goods Association Hungary (BGA ) and managing director of Henkel Hungary, to speak about 2018 from the perspective of FMCG brands, and to look into the crystal ball and tell us what the future might bring.

She told that last year there had been a record 4.9-percent economic growth and the unemployment rate had dropped to 3.6 percent. It was really good news for companies in the FMCG market that consumption kept increasing dynamically. Retailers and service providers profited from two things: since 2016 wages have grown by two-digit numbers and there were more than 4.5 million people employed last year. In 2018 households spent 5.3 percent more on FMCG products.

Compared with 2010, Hungarian retail trade expanded by more than 30 percent. Sales in the FMCG market grew by more than 4 percent. The premiumisation trend of recent years continued – since they are earning more, many shoppers are upgrading to more expensive products. BGA members launched many new innovations last year. Manufacturer brands were selling well, but price promotions remained important. As private label products are an ever-bigger presence in the premium segments too, brand manufacturers are facing a challenge. Ms Fábián is convinced that Hungarian households will be buying even more in the short term. Certain elements of the recently published competitiveness programmes of the government are likely to result in higher salaries for workers, which will mean bigger spending too.

For the time being all is well and good, but how long will the situation stay this way? One thing is for sure, the global excess of funds is over and Hungary will receive less EU money in the future. These two things can have a great influence on Hungary, since we are a small and open market. One of the biggest problems right now is the workforce shortage, and unfortunately FMCG companies aren’t among the most attractive workplaces at the moment. What is more, although higher salaries are a good thing when people are spending the money they have earned, increased wage costs cause problems for companies in their competitiveness and profitability.

What makes a brand these days? My view is that strong brands can’t live off the glories of the past, traditions and innovation aren’t enough in themselves. Brands need to concentrate more on the heart of the consumer, offering them more honest and likeable brand experiences. Sustainability has to be present in each stage of a brand’s life cycle. The strongest brands can ensure their leading roles in the future by championing relevant and progressive social causes already today. //

Tags: brandek, FMCG, Magyar Márkaszövetség, márkák, munkaerőhiány