The consumer goods industry is going through something of an identity shift at present. After decades of steady growth, 2012 was the year when a number of industry leaders started slowing down. In fact, as per a study conducted by Bain, between 2012 and 2016, a staggering 85% of consumer goods companies had lost money. There exist several key reasons for this decline, beginning with a stagnation in the previously booming developing world countries such as China, India, Mexico, Russia and Brazil. China in particular has seen the market reduce by three-fifths from the 2012 high. Another reason was the high frequency of M&A (Mergers and Acquisitions) activity, leading to consolidation o the market by a few top players alone. Some categories in particular have been hit very badly by market disruption. Only two-fifths of FMCG categories saw volume growth greater than population growth this decade. The rise of local incumbents has been the final coffin for many. This has led to increased pressure on the market leaders. Companies will thus need to adapt alongside business innovations in the retail formats. Developing markets are now increasingly unpredictable, but still the key source for growth. Data warehousing and its subsequent management is proving now to be the key differentiator between companies. The cost base thus needs to be realigned to match consumers’ growth expectations. The innovation machine too will need to be pepped up so disengaged consumers may be brought back into the field.

Source:http://www.bain.com/publications/articles/overcoming-the-existential-crisis-in-consumer-goods.aspx

Uploaded Date:20 July 2018