Organic growth for consumer packaged goods (CPG) businesses remains challenging, according to the latest analysis by KPMG in the UK. However, those shaking off the shackles are increasingly focusing their efforts on the health and wellness trend; added personalisation for customers, as well as building a deeper and more authentic connection with consumers.
The latest KPMG Organic Growth Barometer 2019 analysis reveals that over the past financial year (FY), the median annual growth rate among CPG businesses rose slightly but remained low, shifting from 2.5% in FY 2017/18, to 3.0% in FY 2018/2019. Looking longer-term to remove volatility, the median compound annual growth rate (CAGR) decreased from 3.2% from 2013-2017, to 3.0% 2014-2018 – highlighting that times still remain tough for these businesses.
Those achieving a CAGR of 2.7% of higher, mainly offer food, beverage, tobacco, household and personal goods. Meanwhile, looking more closely at the commonalities among the strongest performing businesses, health and wellness, personalisation and brand authenticity were all found to be key drivers backing growth.
Commenting on the findings, Linda Ellett, UK head of consumer markets, said: “It’s no secret that consumer businesses have got their work cut out to win favour with increasingly fleeting and demanding consumers. Shoppers are holding back their spend in this economic and geopolitical climate. What’s more, in light of being more engaged, better informed and suspicious of corporate spin, consumers are also reconsidering their relationship with many brands, making growth an incredibly difficult nut to crack.
“A closer look at those bucking the overall low growth trend highlights that in order to gain traction, brands must be more authentic and clear about their purpose. Customers are increasingly calling for brands to address societal and economic issues, whether it be protecting the environment or reducing sugar content of a product. Despite this, our recent CEO Survey found that as many as 47% of global CEOs are struggling to link their growth strategy to a wider societal purpose.
“Health and wellness is certainly climbing the consumer’s agenda these days, so unsurprisingly many brands have very visibly moved into this space. But beyond providing ‘healthier’ options, customers are also seeking a ‘feel-good factor’ from the brands they engage with, and are digging deeper into how authentic brands actually are.
“To remain firmly on the radar of fleeting consumers, strong performing businesses are engaging more with brand ambassadors or seeking endorsement, whether it’s via influencers or partnerships. Connecting personally with the consumer remains vital in such noisy times, and those achieving high growth are clearly making headway with personalisation, reengaging prospective consumers with more tailored products and more specialised experiences.”
NAM Implications:
- In other words, meeting consumer needs, if you can get them to listen…
- …and providing your offering appeals more vs available alternatives.
- See kamshop for details of our Buying Mix Analysis tool
