Fast-Moving Consumer Goods (FMCG) companies are increasingly relocating production to Central and Eastern Europe to mitigate rising global shipping and manufacturing costs. This strategic shift is driven by several factors, including cost efficiency, skilled labour availability, and proximity to key markets (CE Interim, 2024).

Key Drivers of the Shift

• Cost Efficiency: Eastern European countries offer significantly lower labour and operational costs compared to Western Europe. For example, the average gross monthly salary in Romania is approximately €1,000, whereas in Germany, it exceeds €4,000. Additionally, energy and property expenses in Hungary and Slovakia make them attractive for manufacturing investments (CE Interim, 2024).

• Government Incentives: Many Eastern European governments actively encourage foreign investments through tax breaks and financial incentives. Poland’s Special Economic Zones (SEZs) offer tax exemptions and reduced land prices, while Hungary provides investment grants covering up to 50% of eligible costs (Emerging Europe, 2024).

• Strategic Location: Eastern Europe’s proximity to Western markets reduces transportation costs and delivery times. Being part of the EU allows manufacturers access to the single market, facilitating tariff-free trade and streamlined logistics (CE Interim, 2024).

Impact on Local Economies

• Job Creation: Establishing new production facilities will generate employment opportunities across manufacturing, logistics, and research & development.

• Capital Investment: Industrial real estate in Central-Eastern Europe is expanding, with 3.8 million square metres of industrial space developed in the first half of the year (The Telegraph, 2023).

• Enhanced Supply Chains: Nearshoring is reshaping Central Europe’s economy, with large-scale industrial parks and upgraded logistics ensuring swift access to key markets (Emerging Europe, 2024).

Strategic Planning for the Future

Companies are implementing long-term plans to restructure their production models by localising manufacturing. This approach aims to cut costs, enhance resilience against economic fluctuations and improve sustainability by reducing carbon footprints

What This Means for the FMCG Industry

The shift of FMCG production to Central and Eastern Europe marks a transformative period for the sector. Businesses that adapt effectively will gain a competitive edge through improved operational efficiency and greater market responsiveness.

At Vivid, we understand the challenges and opportunities that come with such a transition. Our expertise in sourcing top talent across key European markets ensures businesses have the right people in place to drive growth and innovation.

If your company is navigating this complex shift, that’s where we come in.

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