It has been a tough year for the consumer goods giants, and Unilever PLC (LSE:ULVR) finds itself squarely in the crosshairs of a nervous market.
JP Morgan thinks investors should brace for a choppy reporting season, with slowing demand and waning pricing power weighing on sentiment across the sector.
The bank’s analysts expect “a heightened level of volatility” in third-quarter results as depressed valuations clash with lingering earnings downgrades.
The European staples sector has drifted out of favour. Shares trade at about 18 times forward earnings, a two-decade low outside the global financial crisis, even though many household names now sit on multiples closer to 12 to 16 times.
Investors, the analysts say, are starting to question the long-term growth model of these once-reliable groups.
Unilever remains one of JP Morgan’s preferred picks. It is rated 'overweight' alongside Anheuser-Busch InBev, Heineken, Coca-Cola HBC, Kerry and Imperial Brands PLC (LSE:IMB).
The team argues that companies with solid visibility and lower valuations offer the best shelter in what they call the “eye of the storm”.
It has also placed Danone on positive catalyst watch, suggesting scope for better news ahead, while Nestlé and Pernod Ricard move to the negative side of that ledger.
Regional trends tell a mixed story. Latin America looks weakest, with demand slipping, while Europe is also showing signs of strain.
The United States remains a brighter spot for now, helped by tariff-driven pricing and pre-holiday stocking, but 2026 is already looking more uncertain.