In their survey of ‘The 50 FMCG Champions’, OC&C found that in 2004 overall organic sales grew 4.6% compared with 4.1% the year before, and total sales grew 6.3% compared with 2.1%.
Luke Jensen, director at OC&C, said: “Investors increasingly expect companies to deliver excellence and not to diversify and take risks, so these companies are investing in their core businesses, driving growth through marketing and R&D.”
Deflation in grocery and continued competition from own label has forced many companies into cost-cutting initiatives. These have been focused on manufacturing, sourcing, range rationalisation and head office costs, allowing core operations such as marketing and R&D to expand.
Competition for brand positioning has also intensified. Jensen added: “Companies realise that what they need is a leading brand, a category champion. Being number three or four is not an attractive option.”
SAB Miller, the South African brewer, recorded enviable sales growth of 39% and entered the top 50 for the first time. The best performer in terms of return on capital expenditure was Avon, the cosmetics group, although its 66% ROCE was down on the previous year. Imperial Tobacco recorded the highest operating profit margin of 40%.
>>p36 OC&C Global Giants Index