The Consumer Goods segment covers products such as consumer electronics, furniture, domestic appliances, food and beverage, personal care and cleaning products. Our specialty chemicals are either vital to the process that makes components (e.g. for making plastics used in consumer electronics), or they are key functional ingredients (e.g. chelates in dishwashing). As with the Transportation end-user segment, our coatings have an important aesthetic and design role (such as powder coatings on appliances), but are also used for protection, such as packaging coatings used inside cans to protect the can from the contents and the contents from the can. We recognize two sub-segments in Consumer Goods:
Consumer packaged goods
Percentage of AkzoNobel revenue
Examples of AkzoNobel products sold into this segment
In Consumer Goods, we see continued growth and a geographic shift to Asia in terms of demand, production and design. The growth outlook is fairly positive, due mainly to rising wealth levels in high growth regions. During the recession, there was a substantial drop in mature geographies for the Consumer durables sub-segment and so far the recovery has been muted, notably in furniture. The Consumer packaged goods sub-segment is more stable and global in nature, but has a lower growth rate. In both sub-segments, there are changes in demand patterns. For example, in mature markets, there is evidence of the “vanishing middle”, with consumers choosing either higher value premium products or basic alternatives. In high growth areas, as wealth increases, many new consumers are coming into the market, but often with demand for products that are more affordable than those sold into the basic market in mature geographies.
Future sustainability developments
The WBCSD’s Vision 2050 report foresees major changes in this end-user segment, due to increased pressure from resource scarcity. By 2050, it is forecast that people will only use five tons of non-renewable materials each, down from 85 tons per person being used in the United States today. Products will be expected to be longer lasting and recycling of durables and packaging for non-durables will be fully integrated into business models.
Implications for strategy and actions
Given the trends in this end-user segment, we need to have appropriate capabilities in high growth areas. This applies to manufacturing, distribution and technical support, but also to design and key account management, as the need for managing multi-level relationships becomes greater. For example, managing requirements and relationships with original equipment manufacturers and contract manufacturers will be increasingly important. Delivering better value for customers through innovation remains fundamental in Consumer Goods. So we must closely follow trends and be prepared for changes in consumer needs, as well as seeking opportunities to differentiate through color, design and/or customer process improvement. We must also continue to restructure in mature regions as manufacturing relocates and consumer demand patterns change.
Consumer electronics production1
Domestic application production2
Food and beverage production3
Sources: (1/2/3) Oxford Economics.
Selected Keyword: ‘End-user segments’