Bold moves made during last year’s uncertainty are paying off, as the year ahead for the consumer products industry looks to be one of strong economic growth. Yet, some challenges could stand in the way of continued progress. How can consumer packaged goods (CPG) companies outmaneuver of these obstacles? Explore Deloitte’s perspective and what 100 executives from apparel, household goods, personal care, and food & beverage companies think awaits them in the year ahead.
The global consumer products industry has faced its share of challenges since 2020, and the Australian market has been no exception. The leaders of 2021 were those who leaned into innovative solutions that allowed them to shift their businesses within the new landscape.
This imperative to evolve continues into 2022, and as we reflect on the challenges of the previous year, there are clear gaps where we as an industry can grow, improve, and deliver better to consumers – and this year, the key will be trust. Clarity and stability are in short supply, and businesses looking to lock themselves into not just resilient, but profitable positions, will take the opportunity to deliver by strengthening relationships and growing trust with stakeholders, end-to-end.
For the consumer products industry, the next 12 months will likely be one of strong financial performance. Like last year, driving greater revenue continues to be the top goal for 93% of executives in Deloitte’s 2022 consumer products industry outlook survey. The “no-regret moves” companies undertook amid 2021’s unpredictability are paying off.1 And despite rising costs, at least half of companies surveyed expect their operating margins to increase. This coincides with an environment conducive to raising prices for end consumers.
But 2022 will likely also come with some significant challenges. Supply chain struggles are unlikely to be resolved fully or quickly; labor is hard to come by and keep; costs of all kinds are increasing rapidly—and all are impacting the industry’s ability to achieve desired growth. As evidence, nine in ten executives surveyed rate supply chain issues as the greatest threat to growth. Additionally, 6 in 10 say labor shortages are already threatening growth this year.
However, in the eyes of consumers, retail partners, and employees, things may look different. These key stakeholders have a more fundamental lens for understanding the current barriers for the consumer products industry: Trust.
Trust means different things to the people—or in this case, the stakeholders—who hold it. Two-thirds of executives surveyed said that building trust was their company’s highest priority, and even more said it was their company’s most valuable asset. As a result, most executives said they are investing significantly in initiatives that prevent the erosion of trust. Explore how leading consumer products companies will work to rekindle trust in three primary ways this year.
In addition to insights derived from client work and prior research, Deloitte surveyed 100 senior executives from a mix of food & beverage, household goods, personal care, and apparel companies in November 2021. Most of the companies are multinationals, all with over $1bn in revenue.
Authors: Barb Renner, Justin Cook, Michael Bondar and Céline Fenech.
1Barb Renner et al., “2021 consumer products industry outlook: No-regret moves in the face of uncertainty,” Deloitte, January 2021.