EY report: consumer products industry battling relevance as structural behaviors test ability to grow Global

Therefore, during times of economic uncertainty, investors often turn to defensive stocks as a strategy to protect their portfolios. Consumer staples, also known as “consumer non-cyclical stocks,” tend to maintain more price stability in a down market than cyclical stocks. During an economic decline, consumers still need staples, such as cereal and milk, and they may even increase their use of so-called “sin stock” products, such as cigarettes and alcohol. Knowing this, some investors buy defensive sector funds, such as Vanguard Consumer Staples ETF (VDC), when they think a recession will occur.

As discussed already, the demand for the products and services of defensive stocks tends to remain consistent, as they are necessities irrespective of economic conditions.
Companies in defensive sectors often have steady and predictable cash flows.
Companies engaged in telecommunications services are an industry group included in the communication services sector.
However, while consumers are buying less at retail, it doesn’t appear that they are drinking materially less overall.

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When investors suspect that the economy is headed for a decline, many begin to pad their portfolios with defensive sector funds. This allows them to perform better than the broader market during a market correction or a bear market. Furthermore, the resilience observed in KVUE suggests that defensive positioning in the healthcare segment remains attractive, particularly during tumultuous economic periods. This differential performance within sub-sectors highlights that competitive dynamics are far more nuanced than a simple flight to traditional safe havens. Instead, investors now need to consider the underlying strategies and innovations that drive performance within each segment.

Consumer Defensive Analysis: Key Companies & Insights

To regain investor confidence, companies must prioritize a future-forward operating model fueled by technology, enhanced and granular commercial practices, and accelerated product innovation to capture and shape consumer trends. Companies engaged in telecommunications services are an industry group included in the communication services sector. Since telecommunication companies provide essential communication services, including phone and internet services, historically it was considered a defensive sector. For instance, biotechnology is an attractive sub-sector of the health sector because of its movement; this is a field with constant innovation.

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Upcoming corporate events are expected to serve as critical catalysts for rebalancing investor sentiment.
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Defensive stocks are favored by risk-averse investors seeking stability and consistent returns, especially during economic downturns.
The stock could be expected to lose only about 1% if the market drops 2% in a week.
Companies that produce or distribute consumer staples or goods that people tend to buy out of necessity are generally thought to be defensive.
However, to provide diversification of funds and investment for investors, these types of stocks and ETFs would prove beneficial.

But a 2% price gain in the market for one week leads to an expected increase of just 1% for a defensive stock with a beta of 0.5. Defensive stocks tend to perform better than the broader market during recessions but they often perform below the market during an expansion phase due to their low beta or market-related risk. Finder US is an information service that allows you to compare different products and providers. We do not recommend specific products or providers, however may receive a commission from the providers we promote and feature.

Consumer Staples

By understanding the critical shifts in consumer expectations, retailer dynamics and capital market demands, leaders can act boldly to rebuild relevance to lead with confidence.” We use our ACTION plan to develop a low-cost, tax-efficient, globally diversified, factor-capturing Base Portfolio. We then personalize it based on your goals and preferences resulting in a custom-tailored portfolio just for you. Vanguard’s Health Care (VGHCX) mutual fund is an example of a defensive sector fund. Professional-grade financial analysis tools for informed investment decisions. Similarly, SJM experienced a drop of -2.99%, which underscores vulnerabilities in the packaged foods segment.

On the bright side, I believe that after living through changing tariff policy in recent years, consumer staples businesses may be better prepared for tariffs now. Strengthening in the US dollar is another key issue I’m watching, as this could hurt staples businesses with international exposure. Looking ahead to 2025, I anticipate that the consumer staples sector could return to normal, against an economic backdrop that looks broadly stable, and with a somewhat stressed—but not severely strained—consumer environment. Overall, consumer demand is stable, consumer balance sheets remain strong, employment is healthy, and real wage growth is steady. With the Federal Reserve beginning to cut rates, I believe the sector’s outlook is positive.

By staying informed and proactive, investors can position themselves to not only survive current volatility but also thrive in the shift toward a more dynamic competitive environment. Looking ahead, the outlook for the Consumer Defensive sector remains a u s. dollar index futures study in contrasts. Upcoming corporate events are expected to serve as critical catalysts for rebalancing investor sentiment. Notably, PG is scheduled to deliver a webcast presentation on February 20, 2025, which should provide further clarity on its pricing strategies and tactical responses to inflationary stress. Similarly, KVUE will update the market with its webcast presentation on February 19, 2025, potentially offering renewed optimism about its turnaround strategy.

They include food, beverages, hygiene products, tobacco, and certain household items. Defensive stocks are also suitable for long-term investors looking for stability and consistent returns. While they may not offer the same high returns as growth stocks during economic expansions, they can provide a reliable foundation for a diversified portfolio. The consistent and often predictable nature of their cash flows allows them to maintain regular dividend payments, making them attractive to income-focused investors. This dividend-paying nature helps to provide a reliable income stream to investors even when stock prices may be under pressure. When picking mutual funds or ETFs for your portfolio, strive for diversification in your choice of stocks from the sectors and sub-sectors.

However, to provide diversification of funds and investment for investors, these types of stocks and ETFs would prove beneficial. Let us understand why investors invest in defensive stock etf and shares despite their performance being rather flat through the examples below. As the goods are a necessity in every consumer household, the consumer will buy the good regardless of the changes in factors affecting its demand. Hence, regardless of the changes in price, personal income, price of related goods, etc., lmfx review the consumer will purchase essential goods.

CHD is also set to present at the 2025 Consumer Analyst Group of New York Conference, where management is anticipated to discuss its strategic initiatives and operational adjustments aimed at mitigating cost pressures. These events are particularly important as they offer glimpses into how established consumer staples are planning to address persistent market headwinds. In addition to TAP’s strong earnings, PG is anticipated to deliver further insights during its forthcoming webcast presentation.

“The EY State of Consumer Products” report, which surveyed more than 500 CP manufacturers and retailers, more than 20,000 consumers, 190 CP CEOs across the globe, and conversations with 24 industry executives (report). The report offers a detailed analysis of the challenges and opportunities facing the CP industry and offers a roadmap on where to focus investment and innovation in today’s rapidly evolving market. The report calls for CP firms to act with urgency to build brand relevance with consumers, customers (retailers) and capital markets, and transition away from past reliance on pricing power strategies to drive growth. One well-known example of a defensive stock operating in the consumer staples sector is the Procter & Gamble Company (P&G). It is a multinational consumer goods corporation headquartered in Cincinnati, Ohio, United States.

If economic growth fails to meet the high expectations bar, defensive sectors like consumer staples could perform better. The consumer staples sector encompasses makers of everyday items like packaged food, toothpaste, and dish detergent. It’s considered to be a “defensive” sector because these items are necessities and consumers still tend to buy such products even when times are tight, and because the sector includes many mature dividend-paying companies. Additionally, the consumer staples sector has historically experienced lower price volatility compared to other sectors, which are more correlated to business cycles. The sector’s relatively steady sales and profits also provide a source of stability during volatile markets.

Founded in 1837 by William Procter and James Gamble, P&G has grown to become one of the world’s largest and most successful corporations, with a diverse portfolio of household, health, and personal care products. With a stable economic backdrop and a supportive Federal Reserve, I believe the consumer staples sector may be well-positioned for a return to normal fundamentals. My focus remains on core fundamentals and traditional industry drivers, with an aim of identifying equity in forex favorable market structures and strong growth profiles. Additionally, wide valuation spreads may present numerous opportunities to invest in turnaround stories and undervalued stocks, making this an exciting time for the sector. Hence, businesses that fall under defensive industries are regarded as defensive stocks in the investment sector. The most sought after defensive stocks are healthcare companies, discount retailers and utility companies.

Global IPO markets in the first quarter of 2025 have experienced profound uncertainty, shaped by significant geopolitical shifts and the rise of disruptive artificial intelligence (AI) models. Companies that make home maintenance products like detergents and dishwashing soap fall into this category. An in-depth analysis of yesterday’s close, overnight events, and sector shifts to guide today’s session.