Change is coming for consumer packaged goods

By 2027, half of all S&P 500 companies may no longer exist1. CPG companies must act now. How? By embracing the digital operations and analytics capabilities that are powering the industry’s transformation—not through wholesale adoption—but in a targeted way to answer very specific questions. And by building relationships with the small and medium-sized players that are rapidly eating up market share.

Many CPG leaders have delayed acting. But now the industry has reached an inflection point: change is non-negotiable.

Seventy-three percent of CMOs and sixty-seven percent of CEOs in CPG companies want to embrace disruptive growth opportunities, but they don’t know where to find them2.

Consumers have looked beyond “products” for years:

66%

Say a brand’s “great culture” and that “it does what it says it will do and delivers on its promises” are important/critically important3.

62%

Say it’s important/critically important that the brand has ethical values and demonstrates authenticity in everything it does3.

The big disruptions

Several disruptions are forcing CPG companies to think and work differently to survive in the digital age:

Previously CPG brand managers controlled the brand and brand management strategy experience. Now, consumers actively demand relevance.

Digital technologies and innovations are increasing touchpoints. CPG companies cannot think about the marketplace as a set of disparate channels.

CPG companies must aim to become data-driven enterprises, reimaging business and relationships with customers, employees and ecosystem partners.

Ecosystems of cross-industry players can work together to define, build and execute market-creating consumer solutions are emerging.

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Four winning strategies in the era of relevance

By following these four “winning strategies” CPG companies can identify opportunities to make a wise pivot and drive radical change:

  1. Balanced brand portfolio
  2. Growth will come from realigning the business model and balancing the portfolio to create products, services and organizations that consumers find relevant. Consumers value authentic brands built on trust, purpose and loyalty. There’s no “one size fits all” and brand preference will continue to vary by demography, category, mindset and brand lifecycle.

  3. Integrated marketplaces
  4. Successful CPG companies think about interaction in different ways. They’re creating an integrated “living” marketplace, offering consumers relevant products and experiences across an ever-expanding number of touchpoints. Using detailed insights into how consumers interact and what they need, employees in these companies operate on the front lines where their brands meet consumers: adapting content, offers, even packaging, across ubiquitous channels and experiential moments to stay relevant.

  5. Agile businesses
  6. CPG companies need to transform to become efficient, agile businesses—leveraging the power of the ecosystem, driven by a new operating model and inspired through cross-functional collaboration.

    By leveraging extensive ecosystems, companies will need to do much less in-house than ever before. Co-operation will increase, with companies that were previously competitors working together to deliver value that they cannot create/deliver on their own.

  7. Digital operations
  8. CPG companies must reinvent their operations to keep up with new consumer requirements ranging from faster purchasing in a “fluid marketplace” to increased desire for sustainability, greater demand for personalization, and localization. New technologies—IoT, AI and machine learning, robotics, blockchain and AR/VR—make it possible for companies to design and run operations in new ways, with the help of a liquid workforce.



How are companies reacting?

Traditional CPG companies are willing to change, but some challenges are holding them back. Large CPG companies still play an important role in consumers’ lives and, of course, in retail economics. Brand household penetration and repeat purchases are both high and a significant number of leading brands continue to grow. Overall, they’re maintaining market share.

Emerging, disruptive brands are stealing market share (primarily from mid-sized CPG companies) and growing more rapidly than the larger players. Consumers demand the new brands and, recognizing that retailers are willing to give them shelf space.

The priorities for established companies? Pivot their portfolios toward higher growth and a more profitable mix of businesses. Then, within each line of business, develop an evergreen portfolio of leading and emerging brands to make the overall economics work.

Source:

1. Scott D. Anthony, S. Patrick Viguerie, Evan I. Schwartz and John Van Landeghem, Innosight Strategy and Innovation Consulting, (11 February 2020), "Corporate Longevity Forecast: Creative Destruction is Accelerating".

2. Accenture CEO and CMO Global Insights Survey, 2018.

3. From Me to We: The Rise of the Purpose-Led Brand. Accenture Strategy Global Consumer Pulse Research, 2018.

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