Brands, sustainable supply and distribution vital for consumer goods’ recovery post Covid-19

Brands, sustainable supply and distribution vital for consumer goods’ recovery post Covid-19

As the effects of Covid-19 continue to affect global economies, emerging markets, in particular, are facing a severe shock as risk aversion triggers unprecedented capital outflows, tightened financing conditions, and pressured currencies.

The pandemic has inflicted a temporary but material shock to the consumer goods industry worldwide.

Among longer-term risks, associated tourism spending has been adversely affected by ongoing disruption to international travel; this includes negative effects on travel retail channels, leisure activities, and the personal luxury goods sector, prompting a strategic revision to more localised supply chains, which could add costs and exacerbate trade conflicts.

The shift in consumer preference will become more noticeable over the next few quarters, as economies around the world begin reopening, albeit with new safety measures in place.

Resilience will drive Covid-19 recovery

The recovery efforts from the fallout of the Covid-19 pandemic provides an opportunity for the EMEA region to make progressive changes that will ensure sustainable development and a more resilient economy.

Companies are typically responding by changing their capital allocations, reducing shareholder distributions, and suspending expansionary investments and M&A.

Looking at their internal operations, consumer goods companies are revising supply chains and working capital management, reducing the number of stock-keeping units (SKUs), and renegotiating lease terms with landlords