CPG Brands Follow the Money

Consumer goods companies last year cut costs, kept a close watch on cash, and shed underperforming and non-essential brands to cope with the recession. Now, they’ll have to focus on growth coming out of the downturn, per a new study released today by PricewaterhouseCoopers.

The study, “Forging Ahead in the New Economy,” which was conducted in conjunction with the Grocery Manufacturers Association, found that innovation and untapped emerging markets are major opportunities for companies.

Innovation, such as new product technologies, will be a key factor for growing revenue, especially in “mature” or well-established product categories, per the study. That growth will also come from “tailoring products for local consumer tastes in emerging markets,” including China, Russia, Brazil, India and Southeast Asia. Companies will use these emerging markets to test the success (or failure) of new product launches.

“As a number of structural obstacles have tempered North American CPG sales growth, including the impact of the recession on the baby boomers and population at large, more value-oriented consumers and the potential for unemployment to remain high, adjusting to today’s new market realities is a must for these companies,” said Jonathan Sackstein, partner at PwC’s retail and consumer unit.

The packaged-goods industry, which spans companies like Procter & Gamble, Kraft, Heinz and Unilever, will likely place an emphasis on “understanding customer priorities,” as consumers are now “buying more carefully, buying different pack sizes, taking advantage of volume discounts and trading down to non-premium brands,” the study stated.

Other growth strategies, according to PwC, include creating new promotional programs for retailers, rethinking media spending and targeting demographic groups like Gen Y with social networking campaigns.