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How CPGs can improve on their performance



While the COVID-19 pandemic has negatively affected a lot of businesses across industries over the past two years, the consumer-packaged goods (CPG) sector is one of the few that has managed to weather the storm thanks to the continued increase in demand as more people have been shopping for essential items both in-store and online.


But that does not mean that the CPG sector is effectively insulated from the issues that lie ahead. Concerns about rising inflation and supply chain challenges brought by the ongoing crisis in Ukraine, alongside the persistent pandemic, are expected to take the sector to its limit, which may lead to a breaking point if not properly addressed.


Because of this, companies need to look inward and examine their approaches to pricing, discounting, data analytics and more. In particular, there are four steps CPG businesses can take to ensure and improve their performance in the year ahead.


1. Understand inflation’s impact

With inflation increasing by 7.0% year-over-year according to the latest data, the price of consumer goods has increased exponentially as well. As such, this puts pressure on CPG operators to raise their rates. However, companies cannot simply push prices higher along with inflation, so they must evaluate how increases will impact consumer demand for their different products. If price increases will have to be made, it is important to determine how much the increases should be.


2. Get more strategic with trade promotions

Some products will perform better than others, especially in the wake of events like the pandemic which has caused a shift in consumer preferences. As such, now is a good time to reexamine sales and promotions. With interest in other items picking up as the economy opens, it is important to determine whether it makes sense to promote a product or invest more in marketing it instead. Companies should also think twice about increasing demand for an item that can’t be quickly replenished on store shelves.


3. Examine pricing elasticity

Price elasticity, or how a change in price can impact demand, is also an important element to be mindful of. A variety of factors from the weather in a particular area to supply chain situations to changing consumer tastes to shifting buying habits, resulting from COVID-19, can all have an impact on prices and volumes. It is important to have an accurate model that can clearly illustrate how certain elasticities can affect the pricing of goods by certain percentages.


4. Dig into data

As the CPG industry gets increasingly more competitive, having a more effective data analytics tool is more crucial than before to ensure greater operational efficiency. This entails the need to figure out how to leverage data in a meaningful way, that is to increase efficiencies and grow revenues, as well as using information to make decisions and act quickly on competitors who may be low on stock.



Despite the ongoing challenges and crises that many are facing, the economy remains moving forward in earnest. As such, it is an opportune time for businesses to take a close look at their operations. For businesses that are equipped to take a deep dive into their data and understand the key economic and industry trends impacting the business and structure their operations around these data and trends, then they can be assured of continued growth in such challenging times.

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