Growing in an age of authenticity and transparency

Consumers are more conscious of brand values and purpose than ever before. And at the same time more engaged, better informed, and suspicious of corporate spin. Every good consumer brand knows that trust and loyalty aren’t things that can be bought or won, but that they have to be earned, nurtured and protected.

With this in mind, consumer packaged goods (CPG) companies are trying to connect with consumers in a more authentic way than before, and not just at the product or brand level. The findings from KPMG’s Organic Growth Barometer 2019 suggest top performing CPG companies are embedding authenticity in every part of their business, even in ways not visible to consumers. We’re seeing this emerging in the top performers through their focus on building - and executing - strategies in line with the following four themes to win the hearts and minds of consumers:

  • The (genuine) societal purpose of the brand, and the company behind it
  • Supporting consumer health, wellbeing and self-esteem from the product experience
  • Building consumer trust through authentic brand ambassadors and endorsements
  • Connecting personally with the consumer, through customisation and experience

Key findings

  • Over the last financial year, the median annual growth rate has increased from 2.5% in 2017, to 3.0% in 2018.
  • The median compound annual growth rate (CAGR) has decreased from 3.2% from 2013-2017, to 3.0% from 2014-2018.
  • Companies that are achieving a CAGR of 2.7% or higher from 2014-2018, offer food, beverage and tobacco products, and household and personal goods.
  • The health and wellness trend continues to drive innovative product offerings and experiences. An increase in popularity of ‘self-care’ brands has been observed. Brands that cater to this demand are in the top quartile for growth.
  • Personalisation is emerging as an important feature for consumers. Top-ranking companies are focusing on increasing their efforts towards personalisation by providing customised offerings unique to an individual’s needs and preferences.
  • Top performing companies are also luring consumers through brand endorsements. They are seeking deeper engagement and authenticity while advertising their brands, and are leveraging new engagement models and digital solutions to reach consumers.

Growth trends in consumer packaged goods

Company 2018 organic growth
1. National Beverage Corp 18.0%
2. Royal Unibrew A/S 9.0%
3. Carlsberg A/S 6.5%
4. Pernod Ricard SA 6.0%
Company 2018 organic growth
National Beverage Corp. 18.0%
The Estée Lauder Companies Inc. 13.0%
Royal Unibrew A/S 9.0%
Rémy Cointreau SA 7.2%
L’Oréal S.A. 7.1%
Constellation Brands, Inc. 7.0%
Carlsberg A/S 6.5%
Coca-Cola HBC AG 6.0%
Brown-Forman Corporation 6.0%
Pernod Ricard SA 6.0%
Heineken N.V. 5.9%
Beiersdorf Aktiengesellschaft 5.4%
Davide Campari-Milano S.p.A. 5.3%
Company 2018 organic growth
National Beverage Corp. 18.0%
The Estée Lauder Companies Inc. 13.0%
Royal Unibrew A/S 9.0%
Rémy Cointreau SA 7.2%
L’Oréal S.A. 7.1%
Constellation Brands, Inc. 7.0%
Carlsberg A/S 6.5%
Coca-Cola HBC AG 6.0%
Brown-Forman Corporation 6.0%
Pernod Ricard SA 6.0%
Heineken N.V. 5.9%
Beiersdorf Aktiengesellschaft 5.4%
Davide Campari-Milano S.p.A. 5.3%
Ten year upper quartile performance

The median compound annual growth rate has decreased from 3.2% from 2013-2017 to 3% from 2014-2018 showing a continual slowdown in growth.

A year on year comparison shows that the median growth rate stagnated at 3.0% from 2015 to 2016 and then decreased to 2.5% in 2017, before rising back to 3.0% in 2018.

The median annual growth rate for the top-performing CPG companies was 6.5% in 2018.

All the new entrant top performers for 2018 organic growth are beverage companies.

Companies in the top quartile (CAGR)

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Growth Barometer

Strategies for growth

Key words from the top performers' purpose statements

In the current global geopolitical and economic landscape, it is clear consumers are starting to look towards business leaders and large corporations to help address the world’s societal and economic issues, and certainly avoid contributing to them. Whether that’s to tackle the climate change emergency, gender pay equality or eliminating waste and emissions, the eyes and ears of consumers are on industry, and CPG in particular, to ‘do better’.

71% of CEOs feel responsible for ensuring that their company’s environmental, social and governance policies reflect the values of their customers1.

The link between purpose and profit is becoming clearer, and trust is at the heart of it. Trust has a clear impact on both top and bottom line performance, but also extends to employee culture, relations with suppliers and regulatory oversight too. So what steps are we seeing CPG companies take? And how are they communicating with consumers that they can be trusted?

45% of UK CEOs are struggling to link their growth strategy to a wider societal purpose, compared with 47% of global CEOs1.

Successful companies have always had a clear purpose on which they build their company and brand values; however, consumers today are looking for this purpose to be stronger, clearer and more meaningful to society. Although the top performers may not have felt the full benefit of improved purpose just yet, they are certainly addressing critical issues to build trust, and ultimately attract and retain consumers.

51% of UK CEOs surveyed in 2019 agreed they should look beyond purely financial growth to achieve long-term sustainable success, compared with 40% in 20181.

How is purpose driving performance for consumer packaged goods?

  • Coca-Cola aren’t absorbing the cost of the ‘sugar tax’. Companies that produce, package or import soft drinks into the UK with added sugar are required to register for the Soft Drinks Industry Levy, informally known as the ‘sugar tax’. The revenue is invested by the Government to help decrease (rather than add to) the rising levels of obesity in the United Kingdom. Instead of absorbing the cost of the tax, Coca-Cola are passing the price of this tax on to their consumers – who will see a clear price difference in classic Coca-Cola in comparison to their zero-sugar alternatives2. Every single one of Coca-Cola’s major brands now also has a no-sugar version on the market in addition to the full-sugar version. Coca-Cola achieved growth of 5% in 2018.
  • Estée Lauder are re-designing their packaging portfolio, without sacrificing aesthetics. They have a strong focus on caring for both people and the environment by ensuring that only the best ingredients and packaging materials are used in the production of their products. With the packaging the first thing consumers see, it’s important to Estée Lauder to maintain a high quality of design and aesthetic. But they also understand that long-term success depends on respect for natural and human resources which is why they embed creativity and innovation within the development of products and packaging. This is underpinned by their commitment to responsible practices such as Green Chemistry, Lifecycle Analysis (LCA) and Raw Materials Assessment. Estée Lauder achieved growth of 13.0% in 2018, showing that a sustainable approach can perhaps lead to sustainable growth3.
  • Carlsberg are driving towards ‘ZERO’. Brewing billions of beers each year and being one of the largest brewery companies with a 2018 growth rate of 6.5%, Carlsberg recognises the potential direct and indirect environmental impact of its brewing. Its focus on reducing harm is one that’s been in place for over a decade, but with the scale of environmental challenges ramping up, they’ve also accelerated their efforts in a drive to ZERO carbon footprint to reduce the risk of waste, CO2 emissions, and reliance on fossil fuel-based packaging. However, their ‘ZERO’ approach doesn’t stop at their carbon footprint. Carlsberg are also working to achieve ZERO water waste, ZERO irresponsible drinking and a ZERO accidents culture, showing that to grow, you need to care about more than just the environment4.

Read more on non-plastic based alternatives in To ban or not to ban: The complex challenge posed by plastic and its alternatives here.

1. UK CEO Outlook: Agile or irrelevant 2. Why isn’t Coca-Cola absorbing the cost of the tax? 3. Estée Lauder Companies 4. Carlsberg Group Annual Report 2018

Consumer attitudes towards health and wellbeing have propagated in the last few years, and now heavily influence consumers when it comes to what they will buy. And with the overall global wellness economy valued at over $4 trillion5, it also presents a massive growth opportunity for CPG companies. We now see brands offering ‘healthier’ options from dairy-free to zero alcohol and reduced fats and sugars. The global market for healthy eating, nutrition and weight loss alone is estimated at more than $700 billion annually6, so there are benefits here for both consumers and CPG companies alike.

But consumers don’t just want products that promote physical health, they want brands that make them feel good too. We’re seeing an increase in popularity of ‘self-care’ where consumers are focusing more on their general wellbeing – both mental and physical. Whether this is through personal care, beauty and anti-ageing (valued at over $1 trillion a year globally7), or through mindfulness, exercise and weight loss, consumers are gravitating towards brands and products that support and enhance this modern mentality and lifestyle.

With rising media attention on health and wellbeing amongst other factors, consumers want to know that businesses are authentic in their response. They want to know they can trust the products they are using or consuming – both in terms of avoiding unhealthy ingredients (such as elevated levels of salt and other additives to prolong shelf life) as well as where and how these products are sourced and produced. To add to the surge of media around health and wellbeing, food, beauty and health information activists are abundant online. As consumers increasingly care about what they buy and where their product has come from, finding out this information is just a click or two away.

How our top performers are creating products that make healthy and happy consumers

  • Constellation Brands keep up with carbohydrate-cutting and changing consumer behaviours: With younger consumers not remaining as loyal to beer brands or one type of alcohol in comparison to older generations, this has created a challenge for beer companies who historically have relied on the strength of their brand to build consumer loyalty. Companies such as Constellation Brands, who grew by 7% in 2018, are staying close to consumer trends and offering lower carbohydrate options across their portfolio of alcoholic beverages8.
  • Heineken are providing a drink for every experience – both boozy and alcohol free. We mentioned the launch of Heineken’s alcohol-free beer contributing to volume growth in Europe’s volume growth in the 2018 edition of the Growth Barometer, and the company continues to grow overall achieving growth of 5.9% in 2018. With 69 calories per 33cl bottle, it is opening up consumption for occasions where alcohol would not typically be consumed. Heineken’s vision going forward is to bring together technology and marketing to better understand their consumers, and also strengthen partnerships and drive online sales with retailers in markets. They’ve seen some success with their ‘Dry January’ promotion of 0.0 where the collaboration of marketing and sales has led to results in online activation9.
  • L’Oréal are reinventing ageing products in response to preventative regimes: A regular top quartile performer, L’Oréal achieved growth of 7.1% in 2018. 54% of consumers globally associate beauty with looking healthy, and an increased focus on health is dictating a rise in preventative skincare regimes for both women and men10. This is opening up a new market with younger consumers who want to prevent anti-ageing, rather than cure it. In addition, L’Oréal have teamed up with the Prince’s Trust to deliver ‘All Worth It’, a training course for 10,000 young people to help boost their confidence11.

5-7. Wellness Trends To Watch In 2019 8. How to Invest When Americans Are Drinking Less Beer 9. Heineken: We don’t understand our shoppers well enough to succeed online 10. L’Oréal Q3 2018 Results Reflect Steady Growth of Premium Health-Conscious Solutions 11. The Princes Trust: L’Oréal Paris

We’ve witnessed both business and consumer engagement models evolve considerably in CPG, with companies needing to look beyond the traditional retail model in pursuit of customers and growth. From ‘flagship stores’ to ‘direct to consumer’ models and platforms, brands are starting to look at how to engage consumers in an increasingly digital world.

Brand ambassadors and endorsements aren’t a new phenomenon, but the power of ’influencers’ who share experiences of products and brands through social media platforms has reached new heights. Internet celebrities such as Huda Kattan (beauty), Michelle Lewin (fitness), and Chiara Ferragni (fashion) each have more than 10 million followers on Instagram and more on other channels. Of the top 50 most followed Instagram accounts in 2018, there are only two brands represented (Nike at #16 and Louis Vuitton at #45) 12, and the likes of Cristiano Ronaldo and Kim Kardashian have well over 100 million followers each.

And now these influencers are creating and launching their own brands, from Rihanna’s make-up line Fenty Beauty, promoting ‘beauty for all’ to Jesse Lingard’s clothing line, JLingz, encouraging people to ‘be yourself’, it’s clear consumers are trusting the advocacy of these influencers far more than the brand messages delivered through traditional advertising channels.

To remain relevant to consumers, CPG companies are jumping on board with new engagement models and digital channels, and above all delivering authentic messages and commitments to consumers.

  • Beiersdorf are tapping into the male market through football partnerships. Their partnership with NIVEA MEN and Real Madrid enables them to express their values such as confidence, togetherness, passion and mastery. They state that NIVEA MEN can help men to unlock their full potential by preparing themselves for the challenges in everyday life. The partnership also allows Beiersdorf to penetrate the male market as 71% of men say that they have more trust in the quality and performance of products or brands when they know that they are being used by professionals. 79% also say that the preparation routines of sports professionals are a valuable source of inspiration to enhance their own preparation and performance13. Engagement models such as these are helping Beiersdorf to achieve 5.4% growth for 2018.
  • Estée Lauder gives influencers free-reign to drive consumer engagement. They provided a group of 60 influencers with 37 products from across their brand portfolio, and were given creative control to select the products they wanted to post about. As a result, Estée Lauder generated 120 pieces of new online content with a collective reach of over 3.3 million users and an overall engagement rate of 3.8%, overachieving its targets of 1.5 million and 3.0% respectively14. It seems that these engagement statistics have translated into both the highest compound annual growth rate from 2014-2018 (8.3%) and second highest year on year growth in 2018 (13%) of the top performing companies.
  • Davide Campari focuses on celebrity endorsement. From Madonna to Chelsea Handler, Davide Campari have looked to celebrities to promote their brands. Aperol, deemed to be an ‘instagrammable’ drink, has also featured on Netflix’s second series of ‘Master of None’, where Aziz Ansari is seen to be making and drinking an Aperol Spritz. Furthermore, the Aperol brand has capitalised on the rise of ‘brunch’ amongst millennials, and created an Aperol Brunch Society where people upload content to various social media platforms to become the ultimate ‘Chief Brunch Officer’. As well as an increase in user content, engagement on a leading social media platform tripled, the campaign received 200 million social media impressions, and sales of Aperol increased by 45%15.

12. The 50 most followed Instagram accounts in 2018 13. Real Madrid: Nivea Men 14. Case Study: Estée Lauder looks to Instagram influencers on multi-brand campaign 15. How Instagram-friendly Aperol spritz became the drink of the summer

As consumers increasingly seek to express individuality, we’ve seen CPG companies respond by providing products that are unique to an individual’s needs and preferences. With a plethora of choice across crowded markets, brands are doing what they can to increase personalisation of products and experiences to draw consumers in and differentiate from competitors.

To deliver this successfully, CPG companies need to demonstrate their ability to understand consumers more intimately. The power of advanced data and analytics will help them to understand what consumers want, but also to design tailored, specific products that serve their needs more effectively.

However, personalisation doesn’t end at physical goods. With consumers now parting with a greater share of their wallet on experiences rather than products, brands are also focusing on finding new ways to engage consumers in exciting and meaningful ways that enhance loyalty. For example, the beauty sector is ahead of the game when it comes to immersive, interactive formats. We’ve seen cosmetics brands create pop-up nail, hair and make-up bars where shoppers can also indulge in food and drink and enjoy live music at the same time. This helps to generate a sense of spectacle and ‘buzz’ around new products on the market. Beauty festivals are also enabling CPG companies to showcase their offerings outside of the usual store environment, giving consumers another way to access their goods and a reason to choose them over their competitors.

Connecting personally with consumers through both products and experiences can help CPG companies become top performers by focusing more closely on consumer expectations to create a strategic advantage and increase sales.

How our top performers are providing personalised experiences to consumers

  • Estée Lauder are allowing consumers to personalise their pout. They have provided the option for consumers to create their own lipstick in Selfridges in both London and Manchester. Customers can blend their own custom lipstick shade rather than having to choose from ready-made options. This enables consumers to create a bespoke product but also enjoy a new, interactive experience with family or friends while they’re shopping16.
  • Coca-Cola build upon existing marketing campaigns to provide unique experiences to consumers. The ‘Share a Coke’ campaign is one of Coca-Cola’s best performing marketing campaigns in its history, due to the personalised nature of it. As the campaign grows year on year, different elements of customisation become available from names to song lyrics, and even new removable stickers that can be attached to clothing, mobile phones and notebooks17.
  • L’Oréal are using emerging technologies to get the perfect match. L’Oréal uses augmented and virtual reality to allow consumers to create unique shades of foundation that match their skin tone and complexion more seamlessly. They are also leveraging technology to disrupt the hair-care market by developing a virtual consultation platform where consumers can access bespoke hair colouring advice and create a unique formula blend specific to them18.

16. Craving a Lipstick Shade? Create Your Own Custom Estée Lauder Lipstick at Selfridges 17. 5 Summers of Share a Coke: How the Team Behind the Hit Campaign Keeps Things Fresh Year After Year 18. Interview: L’Oréal On Using Technology To Enable Personalized, At-Home Hair Coloring


KPMG Organic Growth Barometer Highlights

An analysis of growth in top-ranking consumer packaged goods companies.

About the KPMG Organic Growth Barometer 2019

The KPMG Organic Growth Barometer is a unique database analysed on an annual basis. It compares the organic revenue growth of 50 of the largest consumer packaged goods companies listed on the US and European stock exchanges. The barometer is in its fourth edition and the information is based on externally reported company data.

Organic revenue growth is defined as the percentage of year-on-year changes in revenue at a constant foreign exchange rate, excluding the impact of acquisitions and divestments. Only data for 50 of the largest companies reporting organic growth in 2018 has been published.

Our previous edition, published one year ago in 2018, measured year-on-year changes in organic revenue growth from 2016 to 2017 on the basis of a five year company annual growth rate (CAGR) from 2013 to 2017.

Our 2019 edition measures year-on-year changes in organic revenue growth from 2017 to 2018, on the basis of a five year compound annual growth rate (CAGR) from 2014 to 2018.

The KPMG Organic Growth Barometer enables CPG business to benchmark their performance against other companies in the industry and top-quartile performers. It also offers KPMG’s insights on strategies for growth.