Consumer Analyst Group of New York (CAGNY) conference 2022 | Deloitte UK has been saved
Limited functionality available
Earlier this year, several of the world’s top consumer packaged goods (CPG) companies presented their recent results and long-term strategies at the annual Consumer Analyst Group of New York (CAGNY) conference. Here is the big picture on the most important topics discussed this year, along with insights on how 2022 priorities compare with 2021.
The hot topic at CAGNY 2022 which most people could anticipate was ‘Inflation’. After essentially being off the radar at last year’s conference, inflation came up in almost 9 out of 10 CPG company presentations. Phrases like ‘unprecedented’ and ‘uncharted territory’ were quite common. Inflation as a theme came in second only to sustainability, which was covered universally in both 2021 and 2022.
Rising costs of inputs, packaging, labour, and transportation pose a problem for the industry, but CPG companies said they have a few ways of managing it. Continued dedication to core innovation is one approach. Companies are creating new, premium offerings that can command higher prices. They are also taking the opportunity to innovate costs out of (and more sustainability into) current offerings.
With price inflation, real wages will suffer their biggest fall in more than a decade, while household spending will receive some support from low unemployment and consumers using the savings accumulated during the pandemic, in general, the pattern of price rises also means the inflationary squeeze will hit lower-income households harder than wealthier ones . In addition to their premium offerings, many companies emphasised the breadth of their product portfolios. As a result, companies mention the importance of keeping lots of different pack sizes with both high and low-end offerings to facilitate trade-offs within a company’s brands―so that as prices go up (or consumer financial viability goes down), they do not lose the consumer completely.
Many companies believe their consumers are willing to absorb even higher prices, to a degree that breaks with what even their own historical models would have predicted.
Improved revenue growth management (RGM) capabilities were discussed to get the most from those portfolios and generate effective price increases. Premiumisation and revenue management were featured in three out of four presentations and, as a trending topic, jumped 25 percentage points over last year.
Of course, companies will also have to do what they can on the costs. Improving margins and cost reduction rose 10 percentage points to become a top five trend in 2022. Relatedly, supply chain problems are a key contributor to increased costs and more companies this year say supply chain and operational efficiency are a focus for them. But companies may have their hands somewhat tied on labour costs. Winning the war for talent is becoming critical. It will take more than higher wages, including creating a sense of belonging and pursuing diversity equity and inclusion (DEI) initiatives, but paying more will likely be part of the equation.
CPG companies are looking for even more growth in emerging markets and in pursuing offerings associated with the health and wellness consumer trend. These topics rose 17 and 25 percentage points respectively over 2021.
But not all topics are trending up. COVID-19 was part of every company presentation last year. In 2022 it featured primarily in reference to the early challenges of the pandemic and did not play heavily in company going-forward narratives. Similarly, while the ‘E’ in environmental, social, and governance (ESG) factors received substantial attention, direct discussion of social responsibility fell off somewhat from last year’s highs. Instead, some companies focused more on ESG awards and recognition than they did on taking specific stands relative to social issues.
For more insights on the Consumer Products sector, see Deloitte’s 2022 Consumer Product Industry Outlook.
Céline is a research expert with over 20 years of market intelligence and consumer research experience predominantly focused on researching trends in the consumer industry. At Deloitte, she provides insights through the origination of research in the form of briefings, POVs and white papers. She is the lead author of the Deloitte Consumer Tracker, Deloitte’s own consumer confidence survey.