Economic Environment

General Economic Situation

Gross Domestic Product¹

Change versus previous year (in %)

Inflation Rate¹

Change versus previous year (in %)

The global economy only grew at a moderate pace in 2024. Following a phase of weaker momentum in the spring, the second half of the year saw a slight upturn, although this was primarily driven by the USA, where private consumption and corporate investment remained robust. In other advanced economies, however, particularly in the eurozone and Japan, growth was significantly more subdued. The picture in emerging markets remained mixed. While production in Latin America accelerated sharply, growth slowed in Asia, particularly in India and China, where persistent problems in the real estate sector and subdued domestic demand had a dampening effect. Inflation eased only slowly worldwide. While energy prices caused a decline, core inflation stagnated, particularly due to persistently high prices in the services sector. Overall, economic uncertainty remained high, influenced by geopolitical tensions and structural adjustments in various regions.

Economic development in the Eurozone was mixed in 2024. While there was moderate growth in 2024, overall momentum fell short of expectations. Developments varied from region to region, with some countries such as France and Spain surprising on the upside, while others, including Italy, showed stagnating trends. The Olympic Games in Paris in particular provided a temporary boost to growth, but this was not sustainable. The corporate sector gave mixed signals. Weak global demand and sluggish exports weighed on industry, while growth in the service sector increasingly stagnated. Inflation was at a more moderate level this year than in 2023, but remained a key issue. Rising labor costs and freight rates drove up prices, while pressure from energy prices eased.

The economic situation in Germany remained characterized by uncertainty in 2024. Despite an improvement in sentiment indicators, fundamental challenges remained. Industry in particular struggled with fluctuating incoming orders, and the construction sector also failed to record a sustained upturn. Residential construction was in a prolonged crisis, which further slowed economic momentum. The ECB’s interest rate cuts were slow to take effect and have hardly been able to boost economic activity so far. Although the trend in consumer spending was positive, it was not strong enough to noticeably improve the overall economic situation.

Economic development in the USA remained robust in 2024, driven by strong private consumption and solid corporate investment. Government spending, particularly in the area of defense, also had a supportive effect. Despite high key interest rates, financing conditions remained favorable overall, thanks in part to high share prices and low risk premiums. Inflation eased significantly overall, mainly due to lower gasoline prices. Core inflation, on the other hand, remained stable above the target value, in particular due to continued price momentum in the services sector. The US Federal Reserve gradually eased its interest rate policy from the fall. The aim was to stabilize the economy while continuing to control inflation without placing an excessive burden on the labor market.

In 2024, the Japanese economy did experience a temporary recovery, driven by the low value of the yen, which boosted both exports and the tourism sector. Nevertheless, the decline in private consumption and falling real incomes led to a weak domestic economy, causing gross domestic product to shrink slightly. A turnaround began in the summer, when rising real wages and extensive subsidies boosted purchasing power. The economic stimulus package adopted in autumn, which also provided extensive funding for key industries, helped to stabilize and modernize the economy.

Developments in the emerging markets painted a mixed picture. China’s economy remained under pressure in 2024. Despite fiscal and monetary policy measures, including support for the real estate sector and consumer vouchers, the domestic economy was subdued. While industry benefited from strong exports and targeted investments, structural problems such as local government debt and the real estate crisis prevented a broad-based recovery. In addition, geopolitical tensions and protectionist measures weighed on foreign trade. The Brazilian economy remained robust in 2024. Private household consumption, the increase in investments and stable industrial production in particular contributed to economic growth. The central bank tightened its monetary policy to take account of the stable economy. Economic development in the Middle East in 2024 remained subdued, characterized by geopolitical tensions, climate-related challenges and global economic uncertainties. The effects of the ongoing conflicts and reduced oil production were partially mitigated by the strengthening of the private sector and strategic reform initiatives. The Indian economy lost momentum in 2024. The potential to catch up after the pandemic appears to have been exhausted, while capacity limits became increasingly apparent. This was reflected in higher wholesale prices for processed products and noticeable inflation, which further curbed private consumption due to more expensive food prices. In contrast, momentum remained high in the emerging markets of South East Asia.

Sales Market Trends

The global economic environment remained dynamic and uncertain in 2024. While supply chain pressures eased, persistent geopolitical tensions and trade disruptions continued to impact material availability and costs. Inflation showed signs of moderation in key markets, yet elevated interest rates and currency fluctuations weighed on consumer spending power. The global cosmetics market displayed steady growth overall, driven by sustained demand in emerging economies and innovation-led product categories. However, performance in mature markets was tempered by cautious consumer sentiment and competitive pressures. In addition, China’s economy showed only moderate recovery in 2024 with consumer confidence remaining subdued, creating a more challenging environment particularly for the luxury segment. Globally Mass and Dermocosmetics markets continued to show mid to high single digit growth momentum respectively, notably led by year-on-year growth of Deodorant, Lip and Face Care categories.

Consumer Spending¹

Change versus previous year (in %)

In the financial year 2024, tesa’s business activities continued to be shaped by a challenging and volatile global environment. Despite falling inflation and an easing of monetary policy, global economic growth remains subdued due to geopolitical tensions, high interest rates, and production costs. After strong growth in the previous year, the automotive industry experienced a significant slowdown in 2024, particularly in Europe. The electronics market experienced a moderate upturn on the back of lower inflation rates and stable demand for smartphones, PCs, and tablets. Other industrial sales markets suffered from customer uncertainty, price pressure and high interest rates, particularly in Europe and North America. Following sharp price increases in recent years, the development of the consumer goods market in 2024 was also affected by increasing price pressure. Demand in developed markets, particularly in Europe, remained muted due to economic uncertainty, persistently high interest rates, and the rising cost of living.

Procurement Market Trends

The correction in important markets for materials and services continued in 2024. This was due in part to lower than expected growth rates in China and Europe, falling energy costs, and flattening inflation rates. The palm oil market was an exception, experiencing a shortage in the second half of the year due to lower harvest volumes in Southeast Asia caused by unfavorable weather, which resulted in higher prices for dependent raw materials. This overall better market environment than in the previous year, combined with our cross-departmental management of supply shortages and preferential position with key suppliers, enabled us to significantly reduce the supply difficulties for our production sites and distribution partners.

Overall Assessment of the Economic Environment

The global cosmetics market recorded positive development overall in 2024. In the mass market where NIVEA is active, growth was driven by both price increases and volume growth. The dermocosmetic skin care market behaved similarly, growing through both price increases and higher volumes, with price increases tending to make a greater contribution. Both Skin Care and Personal Care (deodorants, soaps, shower gels) achieved strong growth in the reporting year. The strategic focus within the Consumer Business Segment was once again on Skin Care, where our marketing expenditure is concentrated. All relevant Skin Care subcategories recorded positive growth in the financial year.

In both economic and geopolitical terms, 2024 was characterized by various uncertainties along with high volatility. Although inflation is declining, it continues to hamper economic recovery and curb private demand. The Executive Board of the tesa Business Segment considers the market environment to be volatile and challenging. Thanks to its innovative strength, adaptability, and strategic investments, tesa has managed to grow in economically challenging times (volatile global economy, industries in transition, e.g. automotive industry, slowdown in individual regions and supplier challenges). Additional sales growth is being achieved in particular through new products and strong customer projects in the Industry division.