UBS Flags Pricing Power Leaders in EU Consumer Staples

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: April 20, 2026

Key Moments

UBS viewed the European food and household and personal care sector as attractive due to relatively low valuations and limited direct exposure to the Middle East, at about 3% of sales.
The broker argued that strong pricing power and the ability to pass through higher commodity costs supported defensive earnings visibility despite consumer affordability pressures.
Reckitt Benckiser and Danone were identified as UBS’s top picks, backed by category strength, efficiency initiatives, and exposure to health and wellness trends.

Sector Overview: Valuations and Risk Profile

UBS said the European food and household and personal care (HPC) sector remains appealing for investors, pointing to what it described as relatively low valuations compared with other areas of the market.

The broker also noted that the sector’s direct exposure to the Middle East is limited, estimating it at around 3% of total sales. According to UBS, this constrained regional footprint, combined with the industry’s ability to pass on higher commodity costs to customers, supports the investment case.

At the same time, UBS acknowledged near-term headwinds. It cited pressure on consumer affordability and potential timing mismatches between input cost movements and pricing adjustments as risks. Even so, the firm argued that the sector provides comparatively defensive earnings visibility in a macroeconomic backdrop it characterized as uncertain.

UBS Preferred Names: Reckitt Benckiser and Danone

Within this landscape, UBS highlighted Reckitt Benckiser and Danone as its favored stocks in the group.

Reckitt Benckiser: Discounted Valuation with Earnings Support

UBS said Reckitt Benckiser trades at a valuation that remains below that of its peers, estimating that the shares change hands at roughly a 20% discount to the broader sector. The broker suggested that this gap could narrow, given the company’s fundamentals.

The firm pointed to what it described as solid like-for-like sales growth and ongoing revenue momentum, underpinned by strength in key categories. UBS also emphasized that Reckitt Benckiser’s direct exposure to the Middle East is limited, which it viewed as another supportive factor for the stock.

In addition, UBS referred to internal efficiency initiatives and an increase in marketing expenditure as potential drivers of future earnings expansion and improved visibility around the company’s performance trajectory.

Company	Key UBS Views
Reckitt Benckiser	Roughly 20% valuation discount to sector; solid like-for-like sales growth; revenue momentum, category strength, and limited Middle East exposure; earnings support from efficiency measures and higher marketing spend.
Danone	Positioned to benefit from demand for health and wellness products; gains in China’s infant milk formula, expansion in medical nutrition, and growth in high-protein dairy; margin improvement expected to underpin steady sales growth.

Danone: Leveraging Health and Wellness Demand

Turning to Danone, UBS said the company is well placed to capture growing consumer interest in health and wellness-focused products. The broker highlighted several business segments that it believes are underpinning this story.

UBS pointed to market share gains in China’s infant milk formula market as one of the main contributors to Danone’s growth outlook. It also cited expansion in the medical nutrition segment and increasing traction in high-protein dairy products as additional growth engines.

The broker indicated that these trends, combined with efforts to enhance profitability, are expected to support margin improvement. UBS said that this, in turn, should underpin consistent sales growth and contribute positively to the company’s overall performance.

Conclusion

UBS’s assessment of the European food and HPC space focused on the combination of relatively low valuations, constrained Middle East exposure, and robust pricing power. Within this framework, the broker singled out Reckitt Benckiser and Danone as top ideas, highlighting their respective growth drivers, operational initiatives, and exposure to resilient consumer demand segments.