- ECONOMIC IMPACT -

Geopolitical tension is increasing the risks involved with investment and trade, as well as affecting consumer demand. The prolonged conflict between Russia and Ukraine has hit global growth in terms of production, trade, and employment. Major economies are adopting tighter monetary policies to tame inflationary pressures. 

Against this backdrop, GlobalData forecasts the world economy will grow at a slower pace of 2.9% in 2022 following a 5.9% growth in 2021. It estimates the global inflation rate will rise to 8% in 2022 from 3.5% in the previous year due to the pressure on energy and raw-material prices sparked by the conflict, which has also exacerbated disruption throughout supply chains worldwide. 

GlobalData anticipates the Middle East and north Africa will be the most buoyant region in 2022, with real GDP forecast to grow by 5%. 

The research and intelligence group estimates real GDP will rise by 3.4% in both Asia-Pacific and Africa. It forecasts 2.7% growth in western Europe, an increase of 2.4% in Latin America and a rise of 2% North America. Unsurprisingly, real GDP is predicted to fall in eastern Europe, where GlobalData estimates it will decline 1.6%. 

44%

More than four in ten employees report an increase in productivity while they’ve been working from home, according to a GlobalData survey.

43%

The percentage of employees still working at home on a full-time basis, GlobalData research shows. Some 27% of survey respondents said they are now working at the office all week.

All major economies are expected to bounce back in 2021

- SECTOR IMPACT -

Inflation and consumers

Cost inflation throughout the supply chain and disrupted trade flows continue to squeeze drinks manufacturers, many of which have sought to pass on costs in the form of higher prices. 

A number of beverage groups are looking to do so again in the coming months. However, in recent weeks, some executives have indicated inflation is starting to affect shopping habits, which manufacturers will be monitoring closely as they enter the key Christmas selling season. 

The Coca-Cola Co. CEO James Quincey said the company was starting to see trading down in water and fruit-based beverages. Some consumers, he noted, were switching to “some private label or smaller packages”. 

He added: “You can clearly see that beginning to happen in a number of places. Europe is probably the most obvious example, where, in the at-home channel, you can see some growth in private label across a number of categories. In beverages, you could see it tick up a little in water and juices.” 

Countries worldwide have reported eye-catching inflation in recent weeks, including the UK, the US, Germany and Australia.  

Some manufacturers speak of inflationary pressures moderating but remaining high and more price increases are being prepared as we enter 2023. 

Selected drinks companies’ Q3 results

Monster Beverage Corp. defends price hikes, cites spiralling operational costs 

Monster Beverage Corp. defended rolling price increases, insisting the hikes “should be able to be tolerated by the consumer” and are necessary to mitigate against its own rising costs. 

Carlsberg: European consumer sentiment is low but “very little evidence” of trading down 

Danish brewer Carlsberg upped its full-year earnings forecast and insisted it was seeing “very little evidence” of consumers trading down. 

European consumers are trading down, Coca-Cola Co. CEO says 

Inflation persistently running ahead of wages is starting to cause downwards pressure on consumer spending in Europe, according to the CEO of The Coca-Cola Co. 

Rémy Cointreau beats Q2 expectations, outlook remains “tinged with caution” 

Better-than-expected second-quarter sales failed to stop a slide in Rémy Cointreau’s shares after the French spirits maker predicted a normalisation of consumption habits following two “outstanding” years of sales.   

Royal Unibrew issues profit warning amid “unprecedented inflation” 

Royal Unibrew cut its forecast for annual EBIT as the Denmark-based drinks group felt the sting of inflation and changing consumer behaviour. 

Nestlé’s “cut the tail” inflation strategy weighs on underlying sales 

The Swiss giant trimmed the number of “underperforming” SKUs at the start of the second quarter as a hedge against the continuing rise in input costs and longer-than-anticipated supply-chain pressures. 

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