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Informist, Wednesday, Jun. 24, 2026

MUMBAI – The outlook for the global consumer products industry is stable but the operating environment remains difficult as consumers turn cautious amid rising costs, Moody's Ratings said in a report Wednesday. It expects the operating profit of these companies to either remain flat or improve up to 3% in the next 12-18 months. 

"Pressures on the consumer industry have shifted rather than intensified. Geopolitical uncertainty is increasing volatility and weakening already strained consumer sentiment, particularly for lower income households," it said. However, consumption continues to improve, even as lower demand is affecting companies' ability to pass on higher costs. As a result, they are resorting to absorbing these costs--a move weighing on their margins.

The cumulative inflation seen in recent years has made consumers more cautious and selective about how they spend, Moody's Ratings said. "Low unemployment and rising wages will continue to drive moderate consumer spending growth and profit gains for companies. A pullback in employment which reduces income, while not our base case, would be more damaging to companies' revenue and profitability," it added.

Consumers' global spending patterns are not improving due to uncertainties stemming from geopolitical developments, which are eroding their confidence. "We do not expect the inflationary effects of the Middle East (West Asia) conflict to be as extreme as during the post-pandemic period, because supply chains are not facing the same shortages and bottlenecks, and the percentage of costs of goods sold (COGS) likely to rise is smaller than in the last commodity cycle," the agency said. "However, consumers are already stretched because spending is outpacing wage growth," it added. 

Beverage companies globally are expected to report a profit growth of 1-4% in the next 12-18 months, with sales of soft drinks and beer offsetting weak demand for spirit. Packaged food companies are expected to report flattish bottom-line performance. The ratings agency expects companies with geographical diversification in faster-growing emerging markets and a more balanced product portfolio to see better profit growth. 

The operating profit of consumer durables firms is expected to range between a fall of 2% and a rise of 2% because of constrained discretionary spending even as recovery in the housing market remains elusive. Tobacco companies may report a modest 1-3% growth in their operating profit, Moody's Ratings said. This is because of price increases and growth in non-combustible products. "Competition and declining cigarette volumes will make profit growth more difficult," they added.  End

Reported by Anand JC

Edited by Akul Nishant Akhoury

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