Has been better – will be better?

Regarding last year, everybody agrees that it has been a difficult period and it’s far from being over. As a result of austerity measures, purchasing power and sales dropped, while cost, tax burden and even prices in some categories increased. In 2006, everybody could see that the inflation rate was going to rise. But 8 per cent was far more than anybody had expected. Last year, it was the turn of food and energy prices to rise at an accelerated pace and on a global scale. Below average domestic corn and fruit production, the fodder crisis and the bio-fuel issue made problems worse. As a result, turnover in the FMCG sector dropped by 3-4 per cent, according to estimates. After a short period of stabilisation for supermarkets, hyper markets and domestic retail chains continue to dominate the market. It looks like the Northern-type, more concentrated retail structure is here to stay. Owing to the concentration of retail trade and the success of discount stores, private labels continued to grow dynamically last year. Manufacturers of brands have to accept this trend and adapt their business policy accordingly. It was interesting to see the very diverse attitudes adopted by manufacturers of different brands. Many chose to cut their marketing budgets and focus on production, logistics, tactical POS activities etc. Others focused on brand building, maintaining the level of ATL spending and innovative marketing solutions. It was a positive development, that the government began to implement strict measures aimed at fighting illegal trading activities and counterfeit. The Brands Association signed an agreement on co-operation with The National Customs HQ to make joint action more effective. . Further improvement is expected to take place in the field of consumer protection and fighting the black market during 2008. I hope that the Hungarian FMCG sector will survive the hard times with the help of a positive attitude on part of both retailers and suppliers.