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Agile Business Models

How to increase CPGs' growth: New paths

March 19, 2021

RESEARCH REPORT

In brief

  • Consumer expectations and behavior have turned the CPG landscape upside-down.
  • CPG businesses now need to search for growth in new and unfamiliar places, with data and partnerships being key to success.
  • Four key principles can help shape the journey to grow market share in the future.

In the next five years, the top 20 consumer packaged goods (CPG) companies are estimated to grow five times slower than their smaller category competitors.

We've reached a tipping point. Consumer expectations and behaviors are disrupting category norms. The CPG landscape has changed forever. And the "peer" of yesterday is the "competitor" of today.

Relying on traditional business models in core markets is no longer enough.

Listen to Oliver Grange discuss how consumer goods companies can position themselves for future growth.

Oliver Grange

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How CPG leadership can drive growth
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Oliver Grange

How CPG leadership can drive growth

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View Transcript

The consumer industry trends are clear

The new reality

Predictable growth and margins are increasingly rare.

Retail reinvention

Retail models are reinvented to meet changing consumer behaviors.

Liquid expectations

Industry lines blur, and expectations outpace experiences.

Purpose first

Leaders need a purpose that aligns with consumers’ values.

Financial success is only part of the story

Consumers are redefining what they value. To meet the demand, the most forward-thinking CPGs are beginning to measure environmental and social progress with a similar level of scrutiny as they would apply to cash, margin and profit.

>50%

Of consumers say they’re making more sustainable choices during COVID-19 and will continue to do so beyond the pandemic.

60%

Of companies reported focus was on financial performance in 2020 – down from 90% in 2015.

Growth is increasingly found in unfamiliar places

Historically, the largest CPG companies turned to geographical expansion as a reliable avenue of growth. Now, investment is flowing away from moving into new markets towards developing flexible business models or even entirely new categories.

16%

Of total spend is made up of geographic expansion, down from 67% in 2015.

35%

Of M&A spend in 2021 was on adjacent categories and new business models.

Don’t go it alone

Businesses must look broader and wider to find the right partners to help drive innovation. In this fast-paced, complex and expensive environment, operating within a wider ecosystem has become essential.

60%

Of executives are now trying to drive growth through building ecosystems.

75%

Of global executives say that innovation stakes have never been higher.

Data shows the way

The ability to access and extract insights from different forms of consumer data will separate the leaders from the followers. But it isn’t easy. To succeed, companies must capture deep insights about customers and demand.

89%

Of CPG executives view data and artificial intelligence as an enabler of their strategic priorities.

76%

Of executives agree that organizations need to dramatically reengineer the experiences that bring technology and people together.

How to start

The path to growth has never been so complex. Face with myriad choices, it’s time for businesses to make deliberate choices.

Pressure-test your purpose

Authentically and systematically. This cannot be top-down, but must be organization-wide.

Choose partners wisely

It’s not about transactions but shared incentives. HR, finance and procurement have to change accordingly.

Rely on data

Redefine data’s role and be clear about the true potential of insights you can glean from consumer touchpoints.

Tap into the power of human + machine

AI, cloud and machine learning capabilities are essential. So, too, are evolving human-machine combinations.

Oliver Grange

MANAGING DIRECTOR – ACCENTURE STRATEGY

Oliver helps executives in the consumer goods and services industry address major disruptive trends and transformational issues.

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