What We Learned Reading Every Major FMCG Q1 2026 Report

Speaker A: Welcome to FMCG Weekly, brought to you by Accurus.com I am Matilda, your AI host. It's the end of May 2026, and the first quarter reporting season for the world's largest FMCG companies is now in the books. 21 of the consumer goods giants, from Nestle and Unilever down to Rakute, Diageo, AB, InBev, Procter and Gamble have told us how the year has started. And if you read those results carefully, what emerges isn't just a quarterly update. It's a turning point. For three years, the FMCG industry has been a pricing story. Inflation gave companies cover to raise prices aggressively, and consumers, by and large, paid up. Volume slipped, margins held and revenue growth looked respectable, even as households quietly traded down or simply bought less. That era is now over, and Q1 2026 is the quarter where that became undeniable. Look at the numbers. Nestle grew 3.5% organically, but for the first time in years, real internal growth. The volume and mix component outpaced pricing. Unilever delivered its best volume quarter in over two years, with volumes up 2.9% and pricing of just 0.9%. Procter and Gamble grew volume across all 10 of its categories. The shift is industry wide, and it is decisive. The single most important RGM M lesson of the quarter is that headline pricing is no longer the principal growth engine. Volume is back, and the companies that haven't worked out how to grow without leaning on a price increase are about to find themselves in real difficulty. But here's where it gets interesting. Because if pricing is no longer the lever, what is? And the answer that comes through in earnings call after earnings call is mix pack, mix brand, mix channel, mix format, mix. The art of growing net revenue per case per hectoliter per unit, without putting a single percentage point on the shelf price. AB InBev is the textbook example. Beer volumes in Q1 grew by only 1.2%, but revenue per hectoliter grew 4.5%. Where did that come from? Premium brands. Corona was up 16%. Michelob Ultra, outside its home markets, was up 39%. Beyond Beer up 37%. No Alcohol up 27%. CEO Michel Duke Harris was explicit on the call. Inflation, he said, accounts for maybe three to three and a half points of revenue per hectoliter. Everything beyond that is mix. Heineken told essentially the same story. Premium volume up nearly 6%. Mainstream, slightly negative. This is the new RGM M frontier headline Price will give you one or two points Mix properly managed gives you three or four on top, and the companies that understand the difference are the ones widening the gap. Now the other side of that coin is a category where the pricing model has cracked and the clearest case study in Q1 2026 was Mondelez. With cocoa still elevated, the company has been pricing aggressively into chocolate and consumers have pushed back. Pricing up three and a half percent, volume and mix down half a point, operating income down 19% at constant currency. Crucially, the company has had to lean heavily on pack downsizing, what the industry calls shrinkflation, just to keep absolute price points accessible. Mondelez tells you exactly where the ceiling is when you take too much. Even on an inelastic looking category like chocolate, the consumer responds. But the most striking single data point of the quarter, and this is the one I'd encourage every RGM team to study and came from PepsiCo Frito lay north America, the crown jewel of the snacks portfolio, the category that has historically been able to take price every year without blinking. In Q1 2026, Frito Lay reported pricing of minus 1% volume up 2 price down 1 For the first time since the pandemic, a major US snacks business is in active pricing reverse. Pepsico announced in early February that they were cutting prices on Lay's, Tostitos, Doritos and Cheetos by up to 15% ahead of the Super Bowl. That isn't a tactical promotion, that's a strategic rebase. The price pack architecture had drifted too far from where the consumer was willing to engage and PepsiCo has now publicly conceded the point. What does that mean for the rest of the industry? It means that pricing power is no longer a portfolio wide attribute and it's a SKU by SKU question. Premium spirits beverages with strong franchises, Beauty hero products, Specialty Infant Nutrition Reckitt's Mead Johnson business put through over 4% price mix in Q1. These still have room mass salty snacks, mass household mid tier beer. These are now in defensive PPA mode. The geographic story reinforces all of this. North America has become a structural drag for European headquartered FMCG. Diageo's North American net sales were down 9.4%. Pernod Ricard's US business was down 12% in the quarter 14% year to date. One Bernstein analyst said US spirits are in free fall if anything worse than at the half year. Meanwhile, emerging markets ex China are running at 6 to 10% organic growth. Nestle's emerging markets grew nearly 7% organically with real internal growth of nearly 3%. Coca Cola HBC's emerging markets segment grew over 10%. Reckitt's emerging markets grew nearly 8% while European LFL fell 4.2%. Henkel's IMEA M region grew nearly 13%. The portfolio implication for the next three years is unambiguous. The growth and the RGM resourcing M both need to follow the consumer. And then there's China which is no longer one market but three. Premium beauty is back, Beiersdorf reported. Nivea China up 33%. L' Oreal saw mid to high single digit growth there. Coca Cola zero variants are flying but uh, Baiji and Chinese white spirits are still under significant pressure and mainstream FMCG remains cautious. Anyone modeling China as a single line in their forecast is missing the picture. Let's talk for a moment about what's actually working at the shelf because there is a clear winner in beverages, energy drinks and zero sugar variants. Coca Cola Euro Pacific Partners reported energy volumes up 21% Coca Cola HBC reported energy up 27% Coke Zero growth in double digit teens Monster activations with lando Norris in Q1. These are the subcategories pulling revenue per unit higher across every bottler in the system. If you're in non alcoholic beverages and you don't have a deliberate plan for energy and zero sugar mix accretion, you're already behind A word on promotional intensity because this is one of the more nuanced shifts of the quarter industry wide promotional pressure is not increasing, but in pockets it absolutely is. Colgate's CEO Noel Wallace told analysts that competitors are stepping up couponing in US toothpaste and Colgate will respond. Heon flagged that Latin America growth slowed as Brazilian competitors got more promotional. Coti cited a uh, more promotional environment in the first half. The lesson here is that promotion is going local and going category specific. The blanket retreat from deep discount activity that we saw in 2024 and 2025 is fragmenting. Smart RGM M teams need to be tracking competitor promo by category and by retailer in something close to real time.

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Speaker A: I S.com welcome back now Private Label 3 years ago Private Label was the existential threat that wasn't Brands held up better than anyone expected in Q1 2026. That picture is more uneven. Esiti, the tissue and personal care group, deliberately walked away from low margin private label volume in in European consumer tissue and reported the segment down 3.5% organically as a result. Colgate's Hill's pet nutrition business similarly exited private label and reported a one point volume hit. So the signal isn't that private label is winning at the premium tier. Premium owned brands are still gaining share, but it is biting in the value tier of categories with weak brand equity, tissue, mass household, pet food entry packs. Let me address the elephant in the room around the headline numbers, which is that Q1 2026 was significantly flattered by the calendar Easter fell in April this year, dragging seasonal sell in into the first quarter. There were additional selling days in many markets. Coca Cola HBC in their trading update were unusually transparent. Organic volume grew 9.6% but only around 3.5% excluding the benefit of four extra selling days. CCEP's reported volume was up 8.5% but on an average selling days basis it was only 1.6%. Diageo's North American result, as bad as -9.4% was, would have been even worse without an Easter benefit. Mondalez's chocolate category benefited from around 4 points of Easter timing. The clean red on underlying volume is that beverages are growing at around 2 to 3%, not 7 10. Anyone building H2 forecasts off the Q1 headline number is going to get them badly wrong. A similar warning applies to currency the euro has strengthened meaningfully against the dollar, and FX is now the single biggest gap between organic and reported growth across the cohort. Unilever reported turnover down 3.3% on organic growth of 3.8, an FX drag of nearly 8 points. Nestle reported sales down 5.7% on organic growth of 3.5, an FX drag of 9 points. Danone, L', Oreal, Beiersdorf all reported FX headwinds of 5 to 8 points. Real underlying momentum is materially stronger than the reported numbers suggest. If you're benchmarking competitor performance off reported revenue, you're benchmarking off the wrong number. There are two other themes worth flagging before we close. The first is the extraordinary level of M, M and A and portfolio reshaping that's been announced in or around this reporting season. Unilever has agreed to combine its foods business with McCormick 15.7 billion euros in cash plus a 65% stake in the new vehicle and Unilever is now positioning itself as a pureplay home and personal care company. L' Oreal closed its 4 billion euro acquisition of Kering Beauty on the last day of Q1. Henkel announced five deals worth 1.6 billion. Pernod Ricard has confirmed talks with Brown Forman. Coca Cola HBC is closing the 1.4 billion euro Coca Cola Beverages Africa deal in the second half. Reckitt has completed its essential home divestment and is still progressing the Mead Johnson sale for an RGM m consultancy. Every one of these deals carries a 6 to 12 month integration tax, PPA harmonization, joint trade negotiation, SKU rationalization. There is a wave of post merger integration work coming and the final theme inflation is coming back after two years of disinflation tailwinds. Three different management teams in Q1 explicitly flagged a return of cost pressure in the second half. Colgate cut its full year gross margin guidance citing a $300 million incremental cost head headwind. Reckitt's CFO modeled a scenario of $110 a barrel of oil contributing a uh, 130 to 150 million pound impact on input costs. Coca Cola HBC is guiding low single digit increase in cost per case. Carlsberg warned that current spot prices if sustained into 2027 would create additional pressure beyond existing hedges. Translation, the industry is heading into another pricing cycle in late 2026 and into 2027. But and this is the critical point, it will be a much more disciplined surgical mix led pricing cycle than the blunt instrument approach of 2022 and 2023. So what does it all mean if you take one thing away from Q1 2026 take the RGM M playbook has fundamentally changed. The question is no longer how much price can we take, it is what does our entry pack architecture look like? Where is our channel mix under realized? How accretive is our premium ladder? Are we genuinely winning on innovation or are we papering over volume softness with deal depth? The companies that ask those questions and answer them well will compound through 2026 and 2027. The companies that keep reaching for the price lever will find, like PepsiCo did in salty snacks, that the consumer has already moved on. That concludes our read on the Q1 2026 results in FMCG. That is it for this week's episode of FMCG Weekly. See you next week.