Core Insights - APAC consumers are cautious in their spending despite easing inflation, emphasizing trust, value, and confidence in their purchasing decisions [1][3] - The NIQ Consumer Outlook Guide identifies key trends for 2026, including heightened brand expectations, increased AI utilization, and evolving health and wellness priorities [1][3] Consumer Behavior Trends - Households are prioritizing essential items such as food, personal health, education, and home care, with even financially comfortable consumers planning purchases more deliberately [4][6] - Consumers are seeking clearer product information and reliable quality to make confident decisions in a changing environment [4][5] Brand Selection Influences - Trust has emerged as the most critical factor in brand selection, with consumers focusing on product ingredients, functional benefits, and the accuracy of claims [5][6] - Technology is playing a significant role in how consumers discover and evaluate products, with many using AI tools for searching and comparing brands [6] Market Forces - The growing use of anti-obesity medications (AOMs) may impact food, beverage, and wellness choices [7] - Ongoing commodity price fluctuations are affecting product pricing and formulation [7] Recommendations for FMCG Companies - NIQ outlines four key priorities for manufacturers and retailers to succeed in 2026, emphasizing the need for strong local insights, innovation, and clear communication [9] - Brands should simplify the shopping experience, deliver dependable value, and support consumers across both online and offline channels to achieve sustainable growth [9][14] E-commerce and Shopping Trends - The rise of omnichannel shopping is evident, with consumers transitioning seamlessly between online, offline, and social platforms [14] - Consumer expectations are increasing, with demands for clear product claims, quick access to accurate information, and dependable quality [14]

Consumer Spending - Consumer spending is a key topic of discussion [1] - Higher priced tickets are also being examined in relation to consumer behavior [1] Industry Analysis - Morgan Stanley's senior retail analyst provides insights [1]

Core Insights - The retail industry is evolving to align with consumer trends and demographic shifts, emphasizing the importance of understanding customer behavior in real estate investments [1][2][3] Group 1: Retail Real Estate Evolution - The session at the Apparel & Retail CEO Summit highlighted the need for retail real estate to adapt to a rapidly changing market [2] - A holistic approach that combines real estate analytics with consumer trends is essential for success in retail investments [3] Group 2: Retail-Landlord Relationships - A synergistic relationship between retailers and landlords is crucial, focusing on mutual growth rather than an adversarial approach [4] - Leveraging landlords' lower capital costs can facilitate faster expansion for retailers, with tenant improvements (TIs) identified as growth opportunities [4] Group 3: Industry Challenges - The retail sector faces a talent deficit, with 40% of commercial real estate professionals expected to retire in the next decade, creating a "talent cliff" [5] - CBRE is actively working on succession strategies to ensure sustainable growth targets amidst these challenges [5]

Newsletter Focus - The newsletter "Our Business of Food" analyzes the global food system, covering farming, supply chains, and consumer trends in a changing economy and climate [1] Subscription Information - Readers can subscribe to the newsletter via the provided link [1]

Core Insights - Goldman Sachs has added four new stocks to its Conviction List, which are expected to have double-digit upside potential and three of which offer reliable dividends [4][5][6]. Group 1: Goldman Sachs Conviction List - The Conviction List is a curated selection of stocks that Goldman Sachs analysts believe will outperform the market, focusing on themes like artificial intelligence and sustainability [2][4]. - The four new stocks added in October are Abbott Laboratories, Air Products and Chemicals, Hershey, and Madison Square Garden Entertainment [5][6]. Group 2: Stock Details - **Abbott Laboratories**: Offers a 1.74% dividend with a target price of $157, indicating a potential 17% gain [7][8]. - **Air Products and Chemicals**: Provides a 2.63% dividend and has a target price of $335, suggesting a 23% upside [9][15]. - **Hershey**: Features a 2.82% dividend with a target price of $222, representing a potential 19% gain [16][20]. - **Madison Square Garden Entertainment**: A live entertainment company with a target price of $52, indicating a 15% upside [21][23].

Earnings and Market Trends - Bank earnings are increasingly important due to the lack of economic data such as PPI, CPI, and jobs report [1] - Investors are expected to rely more on bank CEOs' commentary regarding consumer trends and market conditions [2] - Earnings estimates for calendar year 2026 show a 14% growth [3] - The market is considered to be priced to perfection, raising concerns about the departure from economic growth estimates and earnings growth [4] AI Impact and Investment - The expectation of strong earnings growth is contrasted with nominal GDP estimates, suggesting potential overestimation of firm performance [5] - AI is seen as a driver of earnings growth, particularly in communication services, technology, and financials [6] - There's skepticism about the near-term benefits of AI, as the investment phase precedes significant productivity gains [7][8] - Investors should be cautious about AI deals, considering the potential for revenue acceleration to meet deal obligations [11] Economic and Geopolitical Factors - Investors should be more cautious about new technology buildouts, considering the possibility of building in the wrong direction [13] - Commodity rallies, including gold hitting new records, reflect concerns about Fed credibility and a preference for real assets over financial assets [14][15] - International relations, particularly with China, are a factor influencing market dynamics [15]

Industry Trend - US chains added over 70 new spicy dishes to their menus this spring and summer [1] - Restaurants are modifying established dishes with spice to attract more customers [2] - Spice is particularly popular with Gen Z and Gen Alpha, and on social media platforms [3] Market Analysis - Adding spicy options is a strategy to entice more customers with something new [1] - Modifying dishes with spice is not expensive but has a potentially big impact on customer acquisition [2]

Industry Trend - Younger consumers are shifting away from hard spirits [1] Company Strategy - Suntory Holdings CEO Takeshi Niinami is addressing the trend [1]

Consumer Trends & Predictions - Gambling is becoming normalized and encouraged behavior [1] - Rapid proliferation of sports gambling and 0DTE (zero days to expiration) options is expected [1] - Long consumer gambling apps and synthetic replacements for human connection are key trends [1] - A product enabling gambling against debts using future physical labor as collateral is anticipated within 5 years [1] - Religion's resurgence as a betting opportunity is foreseen in 10-15 years [1] Investment Strategies & Platforms - Robinhood is a platform to express these bets [2] - Euphoria and Noise are relevant factors [2] - Fantasy sports, including parasocial fantasy sports like Fantasy Top, are significant [2] - Synthetic intimacy, such as OF (OnlyFans) and related parasocial relationships, are important [2]

Financial Data and Key Metrics Changes - In the first quarter, total organic sales increased by 2%, primarily driven by volume and product mix growth, partially offset by pricing [9][43] - Adjusted operating income declined by 5%, with a 3% decrease on a constant currency basis, primarily due to increased SG&A expenses [50][52] - First quarter adjusted earnings per share was $0.60 compared to $0.63 for the same period last year [54] Business Line Data and Key Metrics Changes - In the Global Consumer segment, organic sales increased by 1%, with a 3% volume growth offset by a 2% impact from pricing investments [44] - The Flavor Solutions segment saw organic sales growth of 3%, driven by a 2% volume increase and a 1% contribution from price [47] - In the Americas, Flavor Solutions organic sales increased by 4%, reflecting a strong performance with faster-growing flavor customers [48] Market Data and Key Metrics Changes - In EMEA, consumer organic sales grew by 4%, driven by a 2% increase in volume and a 2% increase in price [45] - Asia Pacific region saw consumer organic sales increase by 3%, with a 2% volume increase and a 1% contribution from price [46] - Flavor Solutions organic sales in Asia Pacific increased by 15%, with volume growth of 16%, driven by QSR customer promotions and new products [49] Company Strategy and Development Direction - The company remains growth-oriented, leveraging demand for flavor and the strength of its brands, with a focus on innovative brand marketing and category management initiatives [6][20] - The strategy includes expanding presence in growing channels such as mass, club, and e-commerce, while aligning with consumer trends towards healthier eating [20][21] - The company plans to continue investing in brand marketing and technology to drive volume growth and maintain competitive positioning [37][64] Management's Comments on Operating Environment and Future Outlook - Management noted increasing consumer uncertainty and concern over inflation, impacting consumer sentiment, particularly among lower-income consumers [15][16] - The company expects to deliver total volume growth across both segments for the year, with organic net sales growth projected between 1% and 3% [62][64] - Management remains confident in achieving the 2025 financial outlook, supported by strong sales performance and strategic investments [41][67] Other Important Information - The company plans to offset costs related to U.S. import tariffs on China with cost savings and targeted price adjustments [59][60] - Cash flow from operations for the first quarter was $116 million, down from $138 million in the previous year, primarily due to higher cash used for working capital [55][56] - The company is committed to maintaining a strong investment-grade rating while delivering strong cash flow in 2025 [57] Q&A Session Summary Question: Operating profit decline in Consumer segment - Management acknowledged the decline in operating profit was anticipated due to timing shifts in stock-based compensation and brand investments, but remains confident in full-year guidance [75][76][81] Question: Pricing dynamics in Americas Consumer business - Management indicated that pricing in the Americas is expected to be flat going forward, with some incremental pricing adjustments in EMEA to address commodity pressures [87][93] Question: Growth in Flavor Solutions and customer dynamics - Management highlighted strong performance from high-growth customers and QSRs, which offset weakness from larger CPG customers [103][110] Question: Reformulation efforts in response to consumer trends - Management noted an uptick in reformulation activity among customers, aligning with health and wellness trends, but emphasized that McCormick's portfolio has minimal use of artificial colors [111][113] Question: Key tariff risks and actions - Management confirmed that known tariffs on China are accounted for in forecasts, and they are prepared to manage potential future tariff impacts [117][120]