Chris Butler’s Post

From McKinsey Insights: Rescuing the decade: A dual agenda for the consumer goods industry The consumer goods industry, once a top performer, is now facing unprecedented challenges. McKinsey’s latest article, “Rescuing the Decade: A Dual Agenda for the Consumer Goods Industry,” explores how companies can navigate a future shaped by slowing growth, rising costs, and shifting consumer preferences. Here are the key insights: 1. Declining Growth and Investor Confidence: Over the past decade, the industry has seen a steep decline in revenue growth—from 9% annually in the early 2000s to just 2% in recent years. This, coupled with the impact of the pandemic and inflation, has eroded margins and investor confidence. 2. Four Disruptive Megatrends: Macroeconomic Slowdown: Global consumer goods growth has halved, and future growth is expected to come from developing markets and premiumization. Consumer Fragmentation: Digital platforms have enabled smaller brands to thrive, forcing established companies to rethink marketing and innovation. Mass-Merchant Squeeze: Traditional grocery retailers are losing market share to e-commerce and discount stores, putting pressure on CPG companies. Escalating Costs: Rising commodity prices and the impact of climate change on food production are increasing input costs, challenging the industry’s cost-management strategies. 3. Dual Agenda for Success: Agenda 1: Portfolio Reshaping: CPG companies need to invest in high-growth areas, including mergers, acquisitions, and new business sectors. Reallocating resources to promising categories and geographies is essential for sustainable growth. Agenda 2: Performance Optimization: Improving commercial capabilities, such as market expansion and premiumization, while increasing productivity through automation and AI, will be crucial for future competitiveness. 4. Innovation and Premiumization: As consumer preferences evolve, companies must innovate for premium segments and expand into new categories, particularly in developing markets where consumer wealth is growing. 5. Digital Transformation: CPG companies must catch up with other industries in embracing digital transformation. From marketing automation to supply chain optimization, leveraging AI and digital tools will unlock new levels of efficiency. To thrive in this new era, CPG companies must embrace bold strategies for growth and transformation. Read the full McKinsey article here for a deeper dive: #ConsumerGoods #Innovation #DigitalTransformation #Growth #Efficiency #McKinsey #CPG #BusinessTransformation #Premiumization https://lnkd.in/dUk3RsZS

This is What CPG Companies Will Do To Win the Decade: The glory days of the Consumer Packaged Goods (CPG) industry, known for steady growth and high margins, seem to be fading. An article by McKinsey explores the challenges the industry faces and proposes a two-pronged approach for revival: Agenda 1 focuses on portfolio management and growth strategies, while Agenda 2 emphasizes performance improvement. The Struggles of CPG Companies Today Macroeconomic slowdown: Population growth is stagnant, and consumer spending is down. Consumer fragmentation: Digital marketing has empowered niche brands, making it harder for established CPG companies to reach their target audience. Mass-merchant squeeze: Supermarkets, a crucial sales channel for CPGs, are losing market share to discounters and online retailers. Escalating costs: The cost of raw materials is on the rise due to factors like climate change. Agenda 1: Portfolio Revamp for Growth Reshaping the portfolio: CPG companies need to strategically allocate resources to high-growth categories and geographies. This might involve mergers and acquisitions (M&A) and divestments. Building a "second leg": Exploring new business models beyond core products, such as services or ecosystems, can open new revenue streams. Agenda 2: Performance Improvement Commercial excellence: Optimizing sales strategies and distribution channels to win market share. Marketing revolution: Leveraging digital marketing tools and artificial intelligence for more effective campaigns. Innovation for premiumization: Focusing on developing premium products and expanding categories in developing markets. Productivity reinvention: Embracing automation and other technologies to streamline operations and reduce costs. Who Will Thrive? The CPG industry is at a crossroads. The companies that can successfully implement a combination of growth-oriented strategies and performance improvement initiatives will be best positioned to weather the storm. Those that cling to outdated models may struggle. The coming years will reveal which companies can adapt and prosper in this new landscape, but one thing is certain: the industry will NOT remain the same. #CPG #ConsumerPackagedGoods #FMCG #ConsumerTrends #DigitalMarketing #Ecommerce #Innovation #BusinessTransformation Source: https://lnkd.in/dPpFHbXX

🌟 Rescuing the Decade: Must-Read for Consumer Goods Professionals As someone deeply involved in the consumer goods sector, I found McKinsey's article particularly insightful. It highlights essential strategies to drive growth and manage costs, emphasizing innovation, digital transformation, and effective marketing. These insights align perfectly with our industry's current challenges and opportunities. I highly recommend this read for anyone looking to stay ahead in the consumer goods industry. #ConsumerGoods #GrowthStrategy https://lnkd.in/gRr7sTJk

One-third of consumer-packaged goods (CPG) executives call innovation the top lever for growth. Yet, 75% of industry innovations fail.      It’s a symptom of a sector that has seen fading top-line growth over the last ten years. But CPGs can break the cycle with tactics like:   Targeting premium markets.   Driving category expansions.   Reinvesting in consumer-centric product design.   Upgrading innovation models for faster time to market and effective test-and-learn strategies.     My colleagues Jessica Moulton, Pavlos Exarchos, and Warren Teichner have more on how the CPG sector can recapture consistent growth, steady margins, and its ‘investor darling’ status – follow the link.        #CPG #B2B2C #Innovation #Leadership #Growth   

For Dutch and international companies aiming to launch CPG brands in the US, the key to success is a dual approach. By strategically reshaping your portfolio and enhancing performance, you can position your brand for success in the competitive US market. Focus on targeted growth through M&A and divestitures and leverage digital transformation to boost productivity. The US market presents unique challenges, from consumer fragmentation to cost volatility.  For more insights, read the full article by McKinsey: https://lnkd.in/gZ9Sc9aE Gel specializes in guiding Dutch companies through these complexities, ensuring a successful market entry through strategic brand positioning, sales development, and management for CPG ventures. https://lnkd.in/g7yEaAN6

The consumer goods industry was an investor darling for decades, delivering a reliable formula of more than 5 percent growth at healthy, stable margins. Over the past ten years, however, topline growth has faded away. In the 3rd edition of McKinsey's State of CPG report, my colleagues Jessica Moulton, Pavlos Exarchos, and Warren Teichner dive into how CPG companies can rally around an ambitious change agenda on both portfolio and performance. https://lnkd.in/gbtgt4SW

The consumer goods industry was an investor darling for decades, delivering a reliable formula of more than 5 percent growth at healthy, stable margins. Over the past ten years, however, topline growth has faded away. What are the six big moves CPGs can make to rekindle growth and reduce cost? In our latest perspective on the consumer goods industry, we dive into how CPG companies can rally around an ambitious change agenda on both portfolio and performance. More here on how CPG companies can respond to industry changes: https://lnkd.in/dxkt_Eyj #mckinsey #consumer #CPG

Must read piece from McKinsey & Company about CPG Macro-trends focussing on two main areas. 1. Optimizing Core Operations: -Efficiency: Automate processes and digitize operations to reduce costs, particularly in selling, general, and administrative expenses. -Growth Management: Use advanced analytics for better pricing, promotions, and assortment strategies. 2. Expanding Growth Opportunities: -Adjacent Categories: Expand into related product categories and new markets to diversify growth -Digital Innovation: Invest in digital tools to accelerate product development, improve consumer insights, and streamline the innovation process ad thus reduce time-to-market by 50% #FMCG #CPG #trends #marketing #growth

Portfolio and performance: Priorities for CPG leaders: The consumer goods industry, once an investor darling, has underperformed in recent years. Companies can prioritize six actions to simultaneously revive revenue growth and reduce costs. http://dlvr.it/TF46SD #ConsumerPackagedGoodsInsights #Consumerpackagedgoods #Growth

The CPG industry must rekindle growth when it’s scarce and reduce costs when a lot has been done. Leaders will take on more portfolio changes and capability builds than in past decades.