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2024 consumer products industry outlook

A pivot to 'profitable volume'

Despite the contribution of product price increases, in 2024 consumer products businesses could start to see their margin recovery slow down as the benefits of easing input costs are offset by cautious consumer spending. With pricing running its course, companies may need to turn to volume, but not all volume is equal. To grow both revenue and margins, companies should consider profitable volume. For our 2024 consumer products industry outlook, we have created a profitable volume playbook which includes strategies to boost both volume and profitability together. This year, businesses in the sector will also be confronted by other challenges including Generative AI, weight-loss drugs, or increasing regulations. Find out more in our 2024 consumer products industry outlook.

A new playbook for consumer products companies

 

For the last few years, growth for consumer products companies—spanning food and beverage, household goods, personal care, and fashion—relied on product price increases. Input costs rose dramatically, so price had to follow—to near-unprecedented levels.

That strategy seems to have worked for several companies: Looking at the highest performers among the global top 100 companies in the consumer products industry by revenue, we see they were able to raise prices as much as, if not more than, others, with smaller hits to volume and more margin growth. The larger group of these ‘Profitable Growers’ reveals important lessons about pricing power, revenue growth management (RGM), innovation, supply chain resilience and a willingness to constantly rationalise and refresh their business portfolio and product set.

Those lessons will likely be as important in 2024. However, further significant price increases might not be possible in an uncertain economy where retailers are pushing back and consumers are unwilling to pay more, and often trade down. Last year, we reported that eight in 10 executives surveyed had planned to increase prices in 2023. Today, only 2% said their company’s profitable growth approach would focus on raising prices.

If price has run its course, companies may need to turn to volume. But not all volume is equal. Companies that aspire to ‘Profitable Grower’ status in 2024 should consider profitable volume. That means executing a plan that carefully grows volume with an innovative and more profitable product mix while retaining as much pricing as practical.

For our 2024 consumer products industry outlook, we’ve created a profitable volume playbook, derived from financial performance and earnings transcript analysis, subject-matter specialist interviews, and a global survey of 250 consumer products executives. Its components include moves to boost both volume and profitability:

Volume

  • Targeted advertising and promotion
  • Precision growth management
  • Opportunistic M&A

Profitability

  • A rebalanced mix
  • Strategic innovation
  • Enhanced operations and supply chain

Of course, these factors are intertwined: product mix affects price, price affects volume, and so on. The key is finding the right balance among them to drive profitable volume. Each leadership team in the C-suite should own part of the agenda to hit the mark (see role-based questions provided in our ‘agenda for actions’ section in the report).

Our 2024 consumer products industry outlook also includes a series of additional perspectives including:

  • A macro-economic outlook
  • A view from the industry’s subsectors
  • Executive perspectives on Gen AI and GLP-1
  • A review of emerging regulations
  • The mega trends affecting the industry’s long-term future

Download our full report to learn more about profitable volume and these trends and hot topics.

Economic outlook for the consumer products industry

The year 2024 will likely be characterised by slower economic growth than in 2023 and slower consumer spending growth. Yet it will probably be the last year of monetary policy tightening by major central banks. It is reasonable to expect a rebound starting in 2025. For global consumer products companies, it may make sense to focus on the longer term.

Dr. Ira Kalish, Chief Global Economist, Deloitte

About the report

 

Deloitte analysed a worldwide set of the largest 100 public consumer products companies by revenue, drawn from S&P Capital IQ and filtered for industry definitional fit, e.g., excluding high-end luxury, tobacco, conglomerates with less than 50% of revenue from consumer products, etc. The team then used a five-year composite percentile index of both top-line growth and efficient use of assets (measured in return on assets) to assess relative success.
Deloitte also conducted a global survey of 250 consumer products executives spanning food & beverage, household goods, personal care, and fashion. All respondents were senior decision makers at companies with over $500M in revenue (most over $5B). They were sourced proportionally to roughly match the geographic markets and subsectors in the top 100 global consumer products company financial analysis.

Survey questions were developed through an analysis of trending topics found in company reports, earnings call transcripts and analyst reports, as well as through exploratory surveys and interviews with financial analysts, investors and Deloitte leaders. The team also deployed many of these same methods to determine what high-performing companies (on revenue and ROA indexes) were doing differently from the low-performing companies in our financial analysis.

Authors: Nick Handrinos, Leon Pieters, Dr. Jacob Bruun-Jensen, Justin Cook, Céline Fenech, Jagadish Upadhyaya

Get in touch

 

Please contact us if you’d like to discuss any of the future consumer trends mentioned in the outlook or how your organisation can drive growth this year, we also welcome your feedback.

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