How do winning consumer-goods companies capture growth?
For consumer-packaged-goods (CPG) companies, growth has become more elusive. The market segments that once represented the best bets are becoming increasingly competitive, with traditional companies and new players making aggressive moves. For example, retailers like Amazon are moving into private-label goods, logistics, and other areas of the value chain, and direct-to-consumer start-ups, such as Dollar Shave Club, are competing with established manufacturers by offering low prices and convenient services. In emerging markets, the landscape is even more tumultuous, with domestic players expanding locally and abroad. Faced with greater competition, some CPG companies have increased their M&A activity to capture market share.
In this challenging environment, what strategies have helped CPG companies drive growth? To find out, we analyzed data from 53 CPG companies over the past few years.1 Using our proprietary approach for disaggregating revenue growth, we quantified the impact of three major sources of growth: portfolio momentum, execution, and M&A. We found several commonalities among winning players. First—and perhaps most significant—they make big bets on emerging markets, which are still driving most revenue growth despite the increased competition. Winning companies also focus their resources on the best opportunities, quickly respond to market changes, and engage in a combination of large and small M&A deals. McKinsey – Read more…
