2024 CAGNY conference highlights

Going for normal with ‘profitable volume’

“Normalization” could be the word of the conference, describing an industry moving past the shocks of the last few years. The term was applied primarily to normal long-term growth rates and pricing but also spans advertising and promotion, unit volumes, demand elasticity, and supply chains.

Overall, CAGNY companies discussed how they would try to make a big pivot. As the market returns to more normal conditions, continuing revenue growth through significant price-taking could be challenging. If companies can’t raise the price of the units they sell, they must sell more units. But those units better be profitable if they want to keep investors happy and the flywheel of reinvestment turning.

Continue reading for insights gathered from 28 companies on their pursuit of growth in what could be another year of surprises. And download our year-over-year comparative analysis chart for the top trending topics discussed at CAGNY 2024.

Where were they?

A handful of topics were heavily discussed in prior years or were expected to be hot this year but never fully materialized.

• GLP-1 – Despite being a favorite topic for analysts’ questions at conferences and earnings calls just a few months prior, GLP-1 diet drugs were rarely mentioned at CAGNY. Attendees speculated that there is just too much unknown right now, so it is a waste of a question. They also felt short-term impact won’t be significant relative to other headwinds. Among food and beverage survey respondents, only one in 10 say their 2024 sales are likely to be hurt by GLP-1, and only about a fifth say they are adjusting their overall strategy because of the drugs. Concern was a little higher for alcohol specifically, with about one in three (35%) adjusting their approach.
• ESG and DEI – Companies did discuss their environmental and social efforts, but both the detail and conviction of the content seemed reduced. Sustainability as a trend topic dropped 18 pp but still was covered by three in four companies. We heard less about products specifically developed to address sustainability, while other claims, such as clean label, seemed ascendant. Stronger support for sustainability can be found in survey data in which 75% of consumer product company execs said their company is interested in the circular economy. Perhaps we will hear more next year given SEC reporting requirements were just approved.  Discussion of diversity, equity, and inclusion (DEI) topics dropped by 30 pp. Companies also seemed to avoid using specific labels like ESG or DEI when discussing their programs and progress.
• Nontraditional competition – Over the last few years prices on many consumer products went up significantly to levels a consumer from 2019 may likely have a hard time comprehending. While consumers have kept spending so far despite higher prices, the stress of higher prices may get consumers to behave in new ways or choose to solve some of their needs in very different ways. While present, discussion of consumers trading down or competition from private labels was relatively muffled. However, survey data suggests almost two-thirds of executives (64%) expect more consumers to trade down, and 60% agree they will face more competition from private labels. And there is evidence price may be pushing consumers to fulfill old needs in new ways—creating unexpected competition. For instance, if a delivered pizza from a restaurant is as cheap as or cheaper than one from the grocer’s freezer aisle, spending may shift. Almost seven in 10 food and beverage executives (68%) expect increased competition from fast-food and quick-serve restaurants.
  

Companies may be expecting normalization, but they are not counting on it. With all the volatility and surprises over the last few years, execs do not seem too excited about making predictions to characterize the year ahead. They say “normalization,” at a whisper.

But they aren’t in a wait-and-see mode, either. Presenting companies give the impression that they are prepared to be more dynamic in their approaches. Like sailors, they are ready to tack with what the winds give them so they can get where they intend to go. It is not just resilience but commercial agility—essentially running their systems with dynamism and planned adaptability.

Authors

Justin Cook, US Consumer Products research leader

Donatella De ieso, partner, Financial Advisory

Ed Johnson, principal, Retail & Consumer Products, Consulting

Siddharth Mishra, Research Senior Analyst, Consumer Products

References

¹ All survey results are sourced from Deloitte’s 2024 consumer products industry outlook, published January 17, 2024.
² Eric Knachel et al., “Executive summary of the SEC’s landmark climate disclosure rule,” Deloitte Heads Up 31, no. 4, March 6, 2024.