Why CPGs Are Looking Beyond Pricing
There is a cost to this decade's constant focus on price. That’s one takeaway from the 2024 consumer products outlook from Deloitte.
According to the consulting firm’s latest report, only 2% of 250 CPG executives polled by Deloitte said they are emphasizing price this year and half do not believe they can count on price as a source of growth. Deloitte identified the factors behind that sentiment, noting that shoppers are less willing to pay, retailers are more reluctant to raise prices again and inflation has resulted in growing competition from other channels, like fast-food restaurants and QSRs.
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With pushback from consumers and grocers, CPGs are hence focusing on other growth drivers. For example, 72% of consumer product leaders said that they are looking to increase their unit volume to meet their 2024 goals and nearly two-thirds (62%) are changing their product mix to more profitable items and pack sizes.
Creative marketing is another focus as pricing for growth takes a backseat for now. According to the survey, 68% of execs said their organizations will increase advertising and marketing spending as a percentage of revenue and 64% will do more promotional spending.
While they are shifting priorities, manufacturers are also integrating more and different technologies to connect with consumers and bolster their performance. Half of those surveyed said that deploying generative AI applications is a top priority this year and 70% report that they will take action to add GenAI capabilities over the next 12 months.
On a more granular level, Deloitte’s comprehensive outlook delved into different product sectors within the consumer product landscape. Responses from food and beverage leaders, for example, suggest that products with sustainable, natural, organic and healthy attributes will be a focal point. Those in the household goods and personal care business are similarly zeroing in on sustainable products and packaging and pursuing novel product innovation.
