A new model for the consumer-goods industry

Twelve trends, accelerated by the COVID-19 crisis, are disrupting the consumer-goods industry’s traditional success model.

The consumer-goods industry thrived for decades with a winning model: build mass brand equity, grow with grocers as they expand, and drive operating efficiencies. But in the past decade, that historic success model has been disrupted by 12 trends, most of which have now been accelerated by the COVID-19 crisis.

Large brands, particularly, are faltering and are often struggling to generate brand love among younger consumers. Millennials are four times more likely to avoid buying products from big-name food brands than their parents are. Further, e-marketplace giants are generating 65 percent of growth by the top 150 retailers, putting grocers under pressure and making them more difficult trading partners. As a result, the industry’s economic-profit growth has taken a nosedive. Additionally, consumer-goods companies face an investor-expectation gap. To meet current valuations, they need to add 100 to 150 basis points of annual organic growth to the industry’s precrisis growth rate, assuming constant margins.

Sidebar

Successful consumer-goods companies will need to meet the current growth challenge by adopting a new model for considering where to play and how to win—a model that gets their evergreen brands on the right side of the 12 trends and helps their small brands scale up more quickly. Accomplishing those shifts will require a host of new capabilities in areas such as data-driven marketing, the digital route to market, next-generation productivity, and programmatic M&A. Learn more about the where-to-play choices and how-to-win capabilities in the infographic below.

A new model for the consumer-goods industry
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