Consumers remained resilient despite the inflationary environment, but the leading brands will be keeping a close eye on costs, writes Will Collins
Global fast-moving consumer goods brands tracked by Argus saw continued volume growth in the third quarter. But they also continued to warn on inflationary pressures, with indications that they would be strictly controlling costs, which may concern recyclers looking for indications on demand for premium packaging-quality recycled materials.
Consumers broadly resilient
Seven of the eight brands that we track regularly have now reported their third-quarter sales volumes, or nearest equivalent measure. All but one continued to see year-on-year growth, although the average growth rate across the group declined slightly to 2.16pc, from 2.58pc in the second quarter.
Several firms noted that consumer behaviour had remained broadly resilient during the quarter, despite the higher-cost environment:
Danone chief executive Juergen Esser:We increased prices selectively in the US, we increased prices selectively in Europe. To date, we have not seen any significant price elasticities. When you look at our performance over the last quarters in the US or Europe, there's no significant impact from that.
Nestle chief financial officer Anna Manz:Looking at our performance in a bit more detail, we delivered another good quarter of real internal growth [RIG] led growth, and within RIG, the majority is coming from volume rather than mix, meaning that consumers are eating and drinking our products more.
Procter & Gamble chief executive Andre Schulten:In aggregate, the consumer is resilient. We see 2-3pc, 2.5-3pc value growth across all categories globally. That is unchanged, maybe a little bit better than what we saw and reported last quarter.
But Pepsico, which saw volumes decline by 1pc year on year in the quarter, and Coca-Cola, which saw 5pc volume growth, both noted pressure on consumers owing to inflation and the geopolitical situation:
Pepsico chairman Ramon Laguarta:Now, overall, the consumer is, I would say, stressed all over the world. We see the consumer making very choiceful decisions in many parts of the world.
Coca Cola chief executive Henrique Gnani Braun:Geopolitical disruptions affect several parts of the world, cost pressures have accelerated, and all of this has an impact on many consumers. I think the underlying pressure across the consumer landscape is there, and I think it will be there for the rest of the year as we go into 2027.
Price isn't right
While volumes were largely resilient, several firms gave clear indications of the impact of rising prices for oil-based feedstocks — and other commodities such as agricultural product and palm oil — on their businesses. They noted that they would be keeping a close watch on costs in the near term:
Unilever chief financial officer Srinivas Phatak: You will appreciate that crude has continued to be high over the past few months. Our current view for full inflation for this year is about €900mn… from a 2027 perspective, we expect inflation to be somewhere in the range of €700mn-1bn [$780mn-1.1bn]. So I would say give or take about 2.5-3.5pc of the cost base.
Schulten: This outlook [for the June 2026-May 2027 financial year] includes a cost headwind of approximately $1.4bn after tax, driven by higher raw material, energy and transportation costs, and other premiums resulting primarily from the conflict in the Middle East. Due to the duration of higher oil prices, we now expect materially higher cost headwinds in [the 2026 fourth quarter].
Manz: As we look forward to 2027, it is an inflationary environment. It is likely we will see more pricing. While there may be a short-term consumer reaction, because there occasionally is in the quarter that you take the price, we are confident that over the medium term, that we can sustain both real internal growth and price. Obviously we are in a substantially more inflationary environment than we were. That said, you will see us continue to drive cost savings hard.
One element that definitely affected the companies' bottom line is higher costs for packaging materials. Argus' key virgin PE, PP and PET prices have been 16-36pc higher on average — dependingon grade — so far this year compared with January-October 2026.
On one hand, this has narrowed the differential to high-end recyclate prices, which may make them more attractive. But tighter cost control may also increase the chance of firms looking to realise savings in negotiations for 2027 recyclate offtake. All the companies for which data are available have reported incremental percentage increases in recycled plastic in their packaging during the past 5-6 years. Their average reported recycled content usage was just over 20pc in 2025, or a total of 1.6mn t across all the firms combined. Recyclers will hope they want to keep this momentum going in the coming year.
A bonus, primarily for European recyclers, will be recent legislative changes that could mean firms can save money by using more recycled content in certain markets. The Dutch producer responsibility organisation Verpact will offer bonuses of up to €775/t against extended producer responsibility fees for using recyclates in non-beverage contact-sensitive PET packaging, and up to €650/t for contact-sensitive polyolefin packaging from next year. In the UK, packaging producers will only be able to use post-consumer recyclates to reach the 30pc content threshold needed to avoid the UK Plastic Packaging Tax, as post-industrial material will be excluded from 1 April. Based on this year's tax level, the implied cost advantage for recyclates would be a little over £760/t ($1,013/t). Recyclers are likely to be making these points to their customers, to position themselves as a cost-saving option for the year to come.
