LIVE MARKETS-Staples stuck: HSBC warns 2026 won't be a picnic for consumer giants

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STAPLES STUCK: HSBC WARNS 2026 WON'T BE A PICNIC FOR CONSUMER GIANTS

Global consumer staples are set to face another year of muted growth in 2026, HSBC said in its latest report, as persistent weak demand and lingering inflation continue to drag on recovery prospects in developed markets.

While 2025 marked an incremental improvement versus a difficult 2024, the brokerage described the year as "better but not good," and cautioned that "little relief is in store for 2026."

Consumer staples companies are traditionally seen as defensive investments, relied upon for steady returns even in downturns. However, persistent demand weakness, limited pricing power, and ongoing margin pressure are raising questions about their ability to deliver on investor expectations.

HSBC analysts wrote, "The fundamental issue is the state of the consumer in so many key markets. Sadly, there is little to suggest that 2026 is going to be much better."

The brokerage said companies with heavy investment in digital demand creation and fulfilment, such as AB InBev ABI.BR, Beiersdorf BEIG.DE, Coca-Cola Europacific Partners $(CCEP)$CCEPC.L, Hershey HSY.N, Monster Beverage MNST.O, Nestle NESN.S, Procter & Gamble PG.N, and the Coca-Cola Company KO.N, are best positioned.

The brokerage also noted an uptick in management churn, M&A activity, and portfolio reshaping across the sector as companies adapt to polarized consumer trends.

Regionally, China and India offer pockets of optimism, with China improving outside alcoholic beverages and India benefiting from Goods and Services Tax $(GST)$ reforms, while North America and Latin America remain challenged.

HSBC expects revenue management and operational efficiency to be key themes as companies contend with a slow start to 2026.

The brokerage adds that a continued divergence between premium segments—characterized by higher-priced, branded products catering to affluent consumers—and value segments, which focus on affordable, private-label offerings for cost-conscious shoppers, will remain a defining trend.

(Akriti Shah)

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