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Sales fall more in February and second brands grow

Sales fall more in February and second brands grow
February 22, 2024 – 00:00

After a decline of 3.8% in January, the projections of the specialized consulting firm Scentia anticipate a greater drop for February. Faced with the pocketbook crisis, second brands are back.

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The recession is beginning to impact mass consumption. After a slight decline of 3.8% in January, the projections of the specialized consulting firm Scentia anticipate a drop of around 9% in February. Consumer habits are changing, companies in the sector are projecting a difficult year and focusing their strategy on cost reduction and the growth of second brands. In addition, there is alarm due to the rise in informality.

With some delay, the liquefaction of income moves to the shelves of supermarkets and self-service stores. This is reflected in the latest Scentia report, which showed a drop in mass consumption of 3.8% year-on-year in January. The category that showed the greatest decline was alcoholic beverages with a drop of 11.3% and was followed by hygiene and cosmetics with a drop of 7.3%.

The rest of the categories: general food, breakfast and snack products, perishables, non-alcoholic beverages, clothing and home cleaning, were also in the red, except for the impulsive consumption category, which grew by 8.4%. Estimates for February are no better. According to preliminary data, the specialized consulting firm expects a drop of between 8% and 9% for the second month of the year.

Mass consumption companies have already taken note and are rethinking their strategy. Cost adjustments and focus on second brands to sustain volume: “We are seeing growth in Tier 3 brands,” they warned from an important firm in the sector and explained that “as in any crisis context, informality is gaining market share, especially in cleaning products.”

On this point, the Argentine Chamber of Medium Enterprises (CAME) also expressed its concern. Its president Alfredo González considered that “The only survival alternative for many SMEs is to move to informality”. The entity’s latest report indicated that “January was a month of very low sales, where even the highest-income sectors turned to second and third brand products.”

When it comes to food, manufacturers anticipated the trend last year and launched alternative brands in products such as milk, yogurt, spreadable cheese and butter, among others. This way They channel the volume into alternative brands and the bulk of the profitability into traditional ones.

Another phenomenon in the gondolas is the own brands from each of the points of sale, be it supermarkets, pharmacies and perfumeries. One of the big players in that game told Ámbito that they are registering increases of up to 40% in volume in personal care products and makeup.

In any case, the scenario is dynamic. For example, with the elimination of the Fair Prices program, local self-service stores once again gain competitiveness over large supermarkets. The change in macroeconomic conditions will also bring new strategies within companies.

Source: Ambito

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