Geopolitical risks have become a structural challenge for FMCG businesses, driving the need for resilient supply chains, diversified sourcing and adaptive strategies. This report examines three key categories of geopolitical risks: Trade tensions, military and political tensions, and tightening national regulations. In response, it outlines strategic approaches including supply chain relocation, expansion into new consumer markets and the refinement of China-specific strategies.
Delivery
This report comes in PPT.
Key findings
Accelerated trade tensions to alter FMCG (fast-moving consumer goods) production dynamics
Trade tensions driven by US policy and economic rivalries are reshaping global production by raising import costs and pushing manufacturing toward markets with favourable taxes and closer to consumers. With up to USD3.4 trillion possible loss in global GDP over 2025-2026 under a renewed US tariffs scenario, uncertainty will remain high in future. It is no longer increased risk of a certain market, but rather persistent trade volatility threatening companies’ operations and sales.
Growing geopolitical risks reshape global operations and consumer markets
The shift of economic power to emerging markets continues to shape geoeconomic relations, with a direct impact on future business. The BRICS nations' share of global GDP has risen from 13% in 2000 to 25% in 2025, while the G7's share has declined from 70% to 47% over the same period. Ongoing geopolitical tensions prompt businesses to rethink their supply chain and brand strategy.
Nearshoring strategies are experiencing rapid changes due to increasing trade tensions and geopolitical risks
Traditional nearshoring is no longer enough amidst changing trade rules, geopolitical risks and rising costs. Companies must create flexible, diversified sourcing and manufacturing while managing expenses. This often means operating across countries, investing in supply chain agility and absorbing higher labour costs when shifting production closer to consumers, from developed markets with hourly manufacturing wages of USD4.2 to developed ones at USD24.1 (2024).
Emerging growth markets and China offer growth opportunities while also posing challenges
Growth opportunities are accelerating in developing markets, especially within fast-growing Asian economies, such as India, where consumer expenditure is expected to rise by 38% over 2025-2030. These countries benefit from large and expanding populations and also stand out for massive size and growth of segments such as affluent, middle-class, golden-age consumers. In many cases, these groups are among the largest globally and create an opportunity for value-added FMCGs.
Navigating Geopolitical Risks: Strategies for FMCGs
Key findings
Geopolitical risks redefine FMCG strategies worldwide
Rising geopolitical risks affect FMCG companies across the value chain
The risk of taking no action is high as uncertainty rises
FMCG strategies amid rising geopolitical risks
Nearshoring was driven by diversification beyond China over 2019-2024
Zara diversifies risks and shortens lead times by nearshoring
Rising trade volatility in 2025 accelerates near- and re-shoring strategies
Newell scales down production in China amidst tariff concerns
Companies will be investing in flexible solutions to mitigate future risks
Growth emerging markets offer opportunity for diversifying beyond China
Growing urban middle class opens new markets for a range of consumer goods
L’Oréal captures growing premium beauty segment while also maintaining mass
Demand for low-cost essentials remains high as the consumer base expands
Unilever secures low-income reach while addressing environmental concerns
Dual strategy for penetrating diverse consumer groups in emerging markets
FMCG companies relocate from China due to increasing risks and challenges…
… while relocation is limited by lack of supporting industries
Shein adjusts its business model to mitigate tariff impact
China’s diverse consumer segments require tailored, fast and digital strategies
Proya gaining ground with affordable premium skin care offer
Mitigating supply chain risks while precisely targeting consumer markets
Key strategies form FMCG strategies to navigate geopolitical risks
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