Manufacturers need to be agile to meet the changing consumer needs around health, safety and income, as they look to economize amid the expected global economic recession.

Euromonitor International senior research manager Camilla Butler said non-discretionary industries will weather 2020 better than the previous forecast, with coronavirus lockdown resulting in a surge in home eating, drinking, and cleaning, all boosting retail sales.

“However, in the longer term, value growth is not assured, and as recessionary effects impact, consumers will look to maximize value by shifting to private label, seeking out discounts, and deprioritizing premiumization, as well as looking for a new set of values in their products,” she said in a report.

Butler said some fast-moving consumer goods (FMCG) ¬fresh food, hot drinks, packaged food, retail tissue, hygiene, and home care¬ will substantially outperform their pre-coronavirus disease 2019 (Covid-19) expectations.

Others, such as alcoholic drinks, will grow but at a slower rate; while luxury goods and apparel and footwear, sustaining exceptionally heavy losses, she said.

“Their defining characteristics are both their level of exposure to non-discretionary spend and that they are benefitting from work, social, and eating occasions moving into the home. However, 2020 will be a tricky year even for those industries that are seeing a surge in demand as they face headwinds from the expected global economic recession,” she added.

Butler said eating occasions have shifted into the home, with consumers cooking using local produce with a focus on healthy nutrition, benefiting retail sales of both packaged and fresh foods.

She said sales of packaged food and fresh food are thus set to increase by 3 percent and 4 percent, respectively, on their pre-Covid-19 forecasts.

“However, the longer-term poses risks to value sales as consumers look to economize on food spend by trading down and searching out discounts as the recessionary effects impact,” she added.

Butler said more consumers are also stocking up on staples of tea and coffee, with value sales of hot drinks are expected to increase by 6 percent in 2020, a 4-percentage point increase over the pre-Covid-19 forecast, as drinking occasions are brought into the home.

She identified categories which are likely to respond well, including coffee pods as consumers view these as an economizing way to replace takeout coffee; and the fruit/herbal tea category as they look to boost their immune systems.

“Overall, the hot drinks industry should be resilient to volume drops as impending recession impacts consumer spending, but consumers are likely to trade down, reversing the premiumization which most developed countries have been reliant on to drive growth in their coffee industries. It remains to be seen to what extent coffee pods will be able to stabilize value sales,” she added.

Butler also underscored an initial uptick in sales of the home care industry, noting these “threat-based” cleaning behaviors are likely to continue in the long term.

“Despite a generally encouraging picture for larger companies offering traditional products, smaller companies, especially those trading on sustainability, may feel the pinch, and in the longer term, companies will need to think about how to marry efficacy with sustainability,” she said.

Butler further said value sales of retail tissue and hygiene are anticipated to grow by 5 percent in 2020 due to consumer stockpiling of household staples and antibacterial products.

Other categories, such as nappies, diapers, pants, and sanitary protection, will see any initial uptick quickly normalize, but may face pressure from consumers trading down, she added.