RBC Capital's Outlook for Consumer Markets in 2025

Challenging Year Ahead
RBC Capital foresees a difficult year for consumer markets in 2025 due to financial pressures stemming from high inflation, rising interest rates, and unemployment, as noted in their recent research.

A Challenging Consumer Environment
Analysts at RBC believe that global consumers are under significant financial stress because of elevated inflation and rising unemployment. They expect these challenges to persist in the near future.

Value-Oriented Behavior Dominates
As economic pressures continue, consumers are increasingly turning to private-label products and discount channels, opting for value-based spending, which includes at-home dining and budget-friendly restaurant options.

Focus on Volume Growth
RBC anticipates that organic growth will be driven more by volume rather than pricing, especially as inflationary pressures begin to ease. This shift is expected to greatly affect stock performance in the sector.

Geopolitical and Regulatory Challenges
The potential for new tariffs under a second Trump administration could add cost pressures that may hinder growth. Furthermore, geopolitical issues, particularly in China and Latin America, are expected to negatively impact consumer sentiment.

Margin Pressures
RBC stresses the importance of balancing profitability amidst fluctuating demand and input costs. Increased promotional activities and higher marketing expenses will also strain margins.

China’s Trajectory
Despite facing ongoing challenges, consumer sentiment in China remains weak, with trends not meeting expectations. Analysts predict slow improvement but note that it may take time for the region to drive significant growth.

Potential for M&A Activity
With organic growth becoming elusive, RBC anticipates that mergers and acquisitions may gain importance, particularly if interest rates improve in the latter half of 2025.