CPGs Should Focus on Innovation and Emerging Markets

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July 20, 2010

Consumer packaged goods companies must employ different tactics than those used during the recession and focus on innovation to grow in the future, according to a report from the Grocery Manufacturers Association and PricewaterhouseCoopers.

Innovation is what it will take to encourage household spending, especially for products in mature segments, and to offset reduced spending by Baby Boomers who are nearing retirement, according to the report titled, “2010 Financial Performance Report.”

During the recession, many CPG companies divesting non-core brands, conserve cash, and cut costs, tactics that will not serve them well in the future as the economy improves.

Understanding customer priorities is central to innovation as consumers in the United States are buying more carefully, buying different pack sizes, taking advantage of volume discounts, and trading down to non-premium brands, GMA said in a statement.

Establishing a foothold in emerging markets –– especially China, Russia, Brazil, India, and Southeast Asia –– is critically important for CPG companies, the according to the report. The middle classes are growing in emerging markets and are rapidly forming attachments to new brands and products. Consequently, product growth cycles in emerging markets have accelerated and the success or failure of a product launch or brand introduction now can be determined in a matter of just 12 or 18 months.

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