Building Market Resilience: Applying Crisis Learnings to the Iran War

Delivery

This report comes in PPT.

Key Findings

A distinct crisis transmitted through energy and shipping

Unlike the 2008-style demand decline or COVID-era demand distortion, the US/Israel-Iran war constitutes a prolonged cost squeeze driven through energy prices and shipping disruption. Crude oil prices surged more than 50% within the first 20 days, while the Strait of Hormuz blockage affects approximately 27% of global oil production with limited rerouting alternatives. This comes at a time when consumers are already under pressure – household spending on foods has grown over 1.5 times faster than overall spending since the pandemic.

Trading down and value seeking feature in consumer crisis response

Historical data demonstrate that each successive crisis triggers rapid consumer migration from premium to mass-market, value, and private label alternatives. The 2008 "trading down" trend – when many consumers first became acquainted with discount stores or looking online for bargains, COVID-era shifts to e-commerce and discount channels, and Ukraine-driven value-seeking behaviour all became longer term features. However, there are often certain resilient “hero” categories that tend to defy financial constraints such as skin care and anti-agers specifically during the 2008 financial crisis.

Industry impacts display different patterns of vulnerability

The US-Israel Iran war creates asymmetric industry impacts. Travel experiences the greatest operational shock since the pandemic with surging fuel costs. Major food companies like General Mills and PepsiCo had already signalled prior to the war in Iran, that they were to refocus on volumes in response to consumer vulnerabilities. Those plans will be under threat due to renewed price hikes from transport inflation. Consumer health confronts acute OTC vulnerability as APIs cannot be substituted, and for all industries the impacts are compounded for consumers already recovering from previous market shocks. 

Crisis-driven behaviours should be treated as new baselines

As volatility becomes the new norm, it is becoming a strategic imperative for consumer-facing businesses to treat crisis-driven behaviours - localism, value focus, supply chain reconfiguration, and wellness prioritisation -  as potential new baselines rather than temporary anomalies. It is vital to recognise the emotional impact of crisis, which manifests in consumer behaviour that trusts authenticity, spiritual health and community and be prepared to demonstrate commitment to these.