CPGs on the hunt for profitable growth
KPMG survey finds leading consumer packaged goods companies working to strike the balance between volume growth and healthy margins.
Consumer packaged goods (CPG) companies up against high fixed costs and the elasticity ceiling, and profitable growth is a challenge requiring new approaches and capabilities. KPMG surveyed CPG executives to understand how the industry is grappling with the price-volume tension.
Growing volume-profitably
US consumers are buying less and the volume decline is pervasive across categories, from grocery to personal care to household products. With pricing rounds exhausted, CPGs plan to take a more purposeful approach to growth through targeted promotions, extended price points and expanded packaging formats. Brand investments are being steered toward the core portfolio where CPGs have greater confidence in success.
51%
of CPGs say that increased marketing, advertising and promotional spending is their top investment priority for profitable volume growth
46%
of CPGs rank product portfolio calibration (shift mix) #1 among profitability expansion efforts
Investing in next-generation capabilities
After a year of experimenting and learning, CPGs are making more deliberate investments in AI, GenAI and advanced analytics where they see the greatest potential for value creation, including data and analytics for more precise investment decisions in brands and capabilities to spike demand.
> 50%
of CPGs have developed and are applying specific GenAI use cases, with the most promising applications in customer support, marketing content and market research
Understanding total delivered cost
Visibility around customer profitability and unit economics is more important than ever. While most CPGs have a general understanding their total delivered cost to customers, they do not have sufficient granularity of insight on where to act when cost is out of balance. Understanding product contribution margin can identify underperformers across customers, channels and products to drive prioritization, resource allocation and investment choices.
20%
of customer orders made lead to negative margins
To continue growth emphasis in the coming year with their desired margins intact, CPG companies are investing in next-generation capabilities, recalibrating their portfolios and doubling down on brand investments. For more insights and survey findings, download our infographic below.
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