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The ‘win-win’ scenarios for growth in the consumer-packaged goods industry

Winning in the upcoming years will require a personalised approach, deeply rooted in understanding shoppers’ preferences and habits. The times of ‘one size fits all’ are over. To succeed, consumer packaged goods (CPG) companies need to equip their commercial teams with the processes and insights that not only allow them to take real-time decisions but also to respond to the everchanging trade, consumer and shopper landscape.

UK consumers continue to reduce their overall expenditure across day-to-day and discretionary categories, due to the squeeze on their purchasing power. According to The Deloitte Consumer Tracker data, consumers are not only cutting spending on all non-essential goods, they are also trading down including buying cheaper brands such as supermarkets’ own labels and buying more on promotions or switching stores in favour of the discounters.1

The pressures on consumers are not distributed equally. Recent Office for National Statistics (ONS) figures indicate that the gap in the level of inflation between the richest and the poorest households is at its widest in over a decade. The IRI Inflation report shows that prices of premium and super premium categories have been growing at a slower rate than the lower price tiers, impacting the least well-off disproportionately.2

As a result, lower income households might be more likely to switch to discounters or own labels, while affluent consumers can withstand higher price increases. In addition, consumers are not cutting down as much on purchases seen as relatively inexpensive indulgences, such as items in the beauty and personal care categories. It is essential for the retailers to have a differentiated offering and approach depending on the price sensitivity of their key consumer groups.

Our view is that despite macroeconomic headwinds and contracting consumer demand, CPG companies have an array of options to protect their share and profit performance while delivering benefits to consumers and trade partners.

Know and help your consumers

Retaining consumers within the branded portfolio and protecting long-term value of the strongest brands are key to CPG companies’ short- and long-term success. These objectives can be achieved through a possible three-step approach:

  1. Use your branded portfolio by assigning roles to your brands based on their relative brand strengths and perceived differentiation. To support consumers looking for lower prices, position low brand equity and low differentiation products as brand fighters to protect premium brands in the portfolio by combating cheaper competitors, while reducing marketing spend. To extract value from less price sensitive consumers, invest in marketing spend of high brand equity and high differentiation products, while reducing promotional activity to protect value perception.
  2. Tailor your approach to price increases, based on the brand strength and price sensitivity. There is more headroom for profitable price increases for strong and least price sensitive brands than for products with low brand equity, low differentiation, and high price sensitivity.
  3. Extend your price pack architecture by creating new packs. This to cover not only key entry price points but also to meet different consumer occasions and mitigate risk of consumers switching to own label and discounters. Smaller packs with lower price points to address the affordability issue, will support different consumer occasions and reduce the risks of consumers trading down to own label or switching to discounters.

Back the partners and help them win

Although many UK consumers are switching to discounters, established grocers continue to innovate while protecting or growing their market share. CPG companies will need to assess carefully which trade partners are most aligned to their long-term strategies and balance their offering and investment accordingly. To achieve that, CPG leaders should consider:

  1. Reviewing and validating their channel strategy and trade investment allocation in the context of the current shifts in the trade landscape. CPG companies should aim to create even more transparent account prioritisation frameworks based on strategic intent and current positioning.
  2. Helping retailers to deliver their category objectives and value perception through tailored assortment and promotion strategies.

Accelerate commercial process and capabilities

The changing consumer and trade landscape requires a more tailored commercial approach. CPG companies will need to define and execute increasingly granular commercial plans (at a SKU, store format and postcode level) to deliver profitable growth. To achieve this ambition, CPG companies will need to consider doing more of the following:

  1. Leveraging store card data, syndicated sources data and consumer survey data better across all channels.
  2. Implementing tech platforms powered by artificial intelligence (AI) and analytics to convert gathered data into insights, to enable faster decision making for the commercial and marketing teams.
  3. Allowing real-time, collaborative, and tailored decision making across the commercial teams by not only giving them the tools to assimilate data faster, but also by improving ways of working with technology providers, insight and marketing teams.
  4. Using those enhanced insights, enable account managers to create business plans that deliver joint value growth supported by conditional investment.
  5. Empowering account managers to lead a cross functional team to deliver agreed commercial plans and financials.


1The Deloitte Consumer tracker Q4 2022 The Deloitte Consumer Tracker Q4 2022 | Deloitte UK

2 Understanding ‘imperfect inflation’ is key to rivalling the discounters | Comment & Opinion | The Grocer