“Managing to grow sales and profit margins while chasing the changing consumer in an inflationary and challenging economic environment is no easy feat.” That’s a mouthful, but it’s just one citation from a Deloitte report, just published today (Jan. 12), that surveyed 150 consumer packaged goods (CPG) executives, including those in food & beverage.
There’s probably nothing in there you don’t already know. For example: “In almost any direction you look, the squeeze is on. Record inflation, supply chain issues, labor shortages, global conflicts, climate change and a potential recession — each in isolation is challenging. Combined, they could be overwhelming. Industry executives surveyed think many, if not all, of these challenges will be with us in some form throughout 2023, and new surprises are now the norm.”
But it is a good pulse of the current state of affairs. Some bullet points:
- Executives have two minds about the year ahead: Eight in 10 say they are neutral or pessimistic about the global economy and geopolitical stability. Despite that, they are optimistic about their company’s performance (74%) and its strategy (80%).
- Labor concerns linger, but many see progress.
- Supply chain is still a top concern.
- Inflation cannot be ignored.
“As consumer product companies struggle to obtain the inputs and commodities they require, they also face a changing geopolitical and business environment,” said Ira Kalish, Deloitte’s Chief Global Economist. “This involves governmental restrictions on technology transfer, fraught relations between the world’s greatest powers, and increased regionalization of supply chains. It also involves new efforts by global companies to reinforce supply chain resilience and redundancy, partly by diversifying supply chain processes and no longer depending on just one country or supplier. As a result, we may begin to see a consumer products industry emerge that is, in many ways, more diverse than before.”
Back to the report: “Consumers' heads are likely spinning. Their context keeps changing and with it their behaviors. Major demographic, political, environmental, technological, and cultural shifts are underway that forecast more change to come. Executives in our survey think keeping up with the changing consumer will be one of their greatest challenges.”
Nevertheless, there are some prescripts for success. The report concludes, “What sets these leading companies apart? We find that profitable growth leaders act and invest differently in five distinct areas:
- Embracing the changing consumer
- Going for market share
- Creatively transforming
- Driving data through supply chains
- Prioritizing ESG"
The report is heavily weighted toward the C suite, but there are some insights that impact the entire CPG landscape, including food & beverage companies. Click here to get the full report.