Business Mgmt

Top Fast Consumer Goods (TFCG) industry trends 2025

• sustainability

• customer experience

• digitalization

• FMCG E-commerce

• Big Data & Analytics

• AI

Agribusiness in the UK

• 4.1 million jobs in “food sector” - 13% national employment

• 220 billion GBP consumer expenditure on food/drink

• 50-60% UK food is UK produced

• 20.2 billion GBP is food/drink exports

• Current issues = animal welfare/disease, food security, wages, optimizing land use, policy

GVA

Gross Value Added

• how food goes from production to consumption

• high GVA in meats, beverages, bakery, fruit/veg

food inflation > overall inflation

CHANGE in the business environment

Change is normal & expected

• political

• cultural

• technological

• environmental

• economic

International agribusiness

• recent developments and long-term trends

• food import bills/agricultural export earnings

• changing patterns of agricultural trade

• current issues: Organic/low input food, transport/logistics, climate change, food security

Inflation

Change in prices of goods and services bought by households from one period to another

• measured by CPIH, CPI, RPI (Retail Price Index), OOH (Occupiers housing costs)

CPIH

Consumer Prices Index & Housing

• UK’s lead measure of inflation

• “shopping basket” containing goods/services bought by households. Movements in price indices represent changing cost of basket

• extends CPI to include housing costs associated with owning, maintaining, living in homes

• increased by 7.8% 12 mos to July 2023

What is CPI used for?

• CPI stats to measured economy’s performance - influences changes in wages, social services, business pricing

• Monetary policy analysis by Bank of England to control economy

• Interest rates = tool to control inflation by encouragement to borrow/lend money

**Inflation reduces purchasing power

Calculating CPI

1. Base year (100 for CPI)

2. “Basket of goods and services” based on how typical consumer spends

3. Current prices of items collected for base year

4. Use calculation formula to calculate CPI

CPI Formula

(Current price/base year price) x 100 = X% Inflation

Weightings

CPI Formula doesn’t account for difference in importance of each item for consumer (eg fuel vs shoes)

Weightings represent importance - share of expenditure on total budget

• changes inflation using CPI

• makes CPI more accurate

• weight may change over tim

RPI

Retail Price Index - longest standing measure of UK inflation

• sets yield rates on bonds

• calc’s effect of inflation on capital gains tax

Almost always higher than CPI

CPIH limitations

• “typical consumer” not always representative of all people

• new products = change in shopping habits

• new tech = improvement on “same” product

Nominal vs Real Values

Nominal - actual prices that exist at a time. Current monetary value.

Real - same price stats adjusted for inflation. Guide for actual purchasing power & opportunity cost of workers

*Allow for comparison w/o distortion of inflation

• does not account for improvement in quality of a good/service overtime

FTSE100 Index

Financial Times Stock Exchange 100 Index

• share index of 100 largest companies in London Stock Exchange - measured by market capitalization (Share Price x # of shares)

• indicator of prosperity of businesses regulated by UK company law

• Formula: Share Price of largest 100 companies X a weight

GDP

Gross Domestic Product

• entirely economic measure

• adding up al money spent by consumers/businesses OR adding up all money received by all economy participants = NOMINAL GDP

GDP limitations

• Unpaid work - reducing GDP

• Disasters - large costs cleaning oil spills/natural disasters raises GDP

• doesn’t account for quality of goods

• increasing GDP = increasing GHG

Natural Capital Committee

Advising body advising UK about natural capital

• claims GDP focuses on flows, not stocks

• recorded GDP growth rate overstates sustainable growth rate