Against the Odds: Resilience in Consumer Subsectors Offers Prime Opportunities for Investors

By Russell Pointon, Director of Content, Consumer and Media at Edison Group

Headlines in recent months have painted a bleak picture for global consumers. Forecasts of slowing GDP growth, weak consumer sentiment across advanced economies and widespread profit downgrades suggest that the consumer sector is under sustained pressure. However, a closer look at the data reveals a far more nuanced story.

Edison’s latest ConsumerWatch report shows that, despite these challenges, many consumer subsectors are demonstrating resilience — and in some cases, outperforming their benchmark markets. For investors, this divergence between perception and reality offers important opportunities.

The UK: a rare bright spot

The UK consumer subsectors provided one of the clearest examples of resilience in Q2 2025. Out of 16 consumer subsectors, 12 outperformed the market, even as aggregate profit estimates were cut by 3%. Subsector leaders included automobile components, broadline retail, household products and leisure products, all of which enjoyed upgrades to estimates in Q2. This breadth of outperformance signals that investors are being attracted by the low valuations available across this space.

Consensus forecasts for UK subsectors now point to 2% revenue growth and 4% profit growth in 2025. Within this, discretionary subsectors are expected to deliver profit growth of 8%, compared with just 3% for staples. Key contributors include tobacco – supported by British American Tobacco and Imperial Brands – as well as household durables and major homebuilders.

Europe: weakness conceals strength

At first glance, European consumer subsectors appear to be struggling, with a headline profit decline of 8% forecast for 2025. However, removing the auto sector from the picture reveals a more positive trend, with strong profit growth forecast across a number of sectors including broadline retail and household durables, highlighting that selective resilience exists even where the aggregate numbers suggest weakness.

North America: tough benchmarks, underlying growth

In North America, the consumer subsectors underperformed the buoyant wider market in Q2. Even so, profit growth of around 5% is still forecast for 2025, driven by sectors including hotels, restaurants & leisure, tobacco and retail. For investors, this suggests there remain attractive opportunities in subsectors with strong fundamentals, despite the tougher comparative backdrop.

Together, these regional patterns underscore that headline figures alone can obscure pockets of value and the potential for selective investment.

Why forecasts matter

One notable shift across markets is that growth expectations have moderated. For 2025, revenue growth is forecast at 2–3% and profit growth at 4–5% in the UK and North America. While lower than previous forecasts, these levels remain relatively healthy given the challenging macroeconomic environment.

Opportunities ahead

Looking across regions, several themes emerge for investors:

• Discretionary subsectors are set to lead profit growth, particularly in the UK.
• Tobacco has a good growth forecast in both the UK and North America.
• In Europe, there are a number of subsectors that are expected to show growth despite the overall scale of downgrades in Q2.

Strength beneath the surface

The prevailing narrative of weak growth and subdued confidence overlooks the resilience in many consumer subsectors. For long-term investors, attractive valuations and improving earnings momentum for a good number of companies offer clear opportunities to deploy capital wisely. Importantly, the report also screens for companies that combine these two factors – undervaluation and upward earnings revisions – which should be a winning combination.

Even in a challenging macroeconomic environment, the outlook for the consumer subsectors is not uniformly bleak. It is a sector of contrasts — one where careful analysis can reveal value against the odds. For investors willing to look beyond the headlines, these resilient subsectors offer interesting investment opportunities, even when the broader market signals caution.