Growth in the consumer packaged goods industry has been evasive, even several years after The Great Recession. Since 2012, CPG volume sales have been flat-to-negative even though CPG dollar sales are up, driven by pockets of growth across some branded categories. Pricing and innovation have played a large role.
In fact, CPG growth is mainly coming from price increases while promotional activity is being used to drive engagement. But, marketers have fallen victim to a vicious cycle: funneling more and more resources into trade to increase promotions and spur purchase behavior even though sales lift from these programs is on the decline. During the past year, merchandising lift fell across 58 percent of CPG categories (68 percent of categories in the grocery channel), including in most of the largest categories, yet merchandising activity is up across 40 percent of CPG categories as promotional programs are recycled year after year. The CPG industry is in trouble, and the time for change is now.
In this report, IRI explores the opportunities for CPG marketers to redeploy pricing and merchandising strategies to support dollar sales and margin goals versus pure volume growth.
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