09.01.10
Consumer packaged goods (CPG) companies will need to employ different tactics than those used during the recession—divesting non-core brands, conserving cash and cutting costs—to preserve shareholder value as the economy recovers, according to a new report from the Grocery Manufacturers Association (GMA) and PricewaterhouseCoopers LLP (PwC), titled “Forging Ahead in the New Economy.” To grow revenues in this new climate, companies will have to focus on innovation to encourage household spending, especially for products in mature segments and to offset reduced spending by Baby Boomers who are nearing retirement.
The study indicates that many CPG companies are looking to innovate by reaching consumers in more places or tailoring products for local customer tastes in emerging markets. Additionally, understanding customer priorities is central to innovation as consumers in the U.S. are buying more carefully, buying different pack sizes, taking advantage of volume discounts and trading down to non-premium brands.
The report found that establishing a foothold in emerging markets—especially in China, Russia, Brazil, India and Southeast Asia—has taken on a sense of urgency for CPG makers as capital flows faster than ever and new competitors can ramp up quickly. The middle classes are growing and forming attachments to new brands and products just as fast. Consequently, product growth cycles in emerging markets have accelerated and the success or failure of a product launch or brand introduction now can be determined in a matter of just 12 or 18 months.
The study indicates that many CPG companies are looking to innovate by reaching consumers in more places or tailoring products for local customer tastes in emerging markets. Additionally, understanding customer priorities is central to innovation as consumers in the U.S. are buying more carefully, buying different pack sizes, taking advantage of volume discounts and trading down to non-premium brands.
The report found that establishing a foothold in emerging markets—especially in China, Russia, Brazil, India and Southeast Asia—has taken on a sense of urgency for CPG makers as capital flows faster than ever and new competitors can ramp up quickly. The middle classes are growing and forming attachments to new brands and products just as fast. Consequently, product growth cycles in emerging markets have accelerated and the success or failure of a product launch or brand introduction now can be determined in a matter of just 12 or 18 months.