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Added focus on authenticity sees consumer packaged goods companies improve their growth, KPMG finds

Added focus on authenticity

Organic growth for consumer packaged goods (CPG) businesses remains challenging, according to the latest analysis by KPMG in the UK. However, those shaking off the shackles are increasingly focusing their efforts on the health and wellness trend; added personalisation for customers, as well as building a deeper and more authentic connection with consumers

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Linda Ellett

Partner, UK Head of Consumer Markets, Leisure & Retail

KPMG in the UK

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— The median growth rate for consumer packaged goods companies has increased slightly from 2.5% in FY 2017/18, to 3.0% in FY 2018/19, but still remains hard to achieve.
— The median compound annual growth rate (CAGR) has decreased from 3.2% in 2013 -2017, to 3.0% in 2014-2018
— Those achieving above average growth are considering their brand’s societal purpose, with a view to building trust through increased authenticity
— Health and wellness and greater personalisation are also identified to be key drivers for growth

Organic growth for consumer packaged goods (CPG) businesses remains challenging, according to the latest analysis by KPMG in the UK. However, those shaking off the shackles are increasingly focusing their efforts on the health and wellness trend; added personalisation for customers, as well as building a deeper and more authentic connection with consumers.

The latest KPMG Organic Growth Barometer 2019 analysis reveals that over the past financial year (FY), the median annual growth rate among CPG businesses rose slightly but remained low, shifting from 2.5% in FY 2017/18, to 3.0% in FY 2018/2019. Looking longer-term to remove volatility, the median compound annual growth rate (CAGR) decreased from 3.2% from 2013-2017, to 3.0% 2014-2018 – highlighting that times still remain tough for these businesses.

Those achieving a CAGR of 2.7% of higher, mainly offer food, beverage, tobacco, household and personal goods. Meanwhile, looking more closely at the commonalities among the strongest performing businesses, health and wellness, personalisation and brand authenticity were all found to be key drivers backing growth.

Commenting on the findings, Linda Ellett, UK head of consumer markets, said:

“It’s no secret that consumer businesses have got their work cut out to win favour with increasingly fleeting and demanding consumers. Shoppers are holding back their spend in this economic and geopolitical climate. What’s more, in light of being more engaged, better informed and suspicious of corporate spin, consumers are also reconsidering their relationship with many brands, making growth an incredibly difficult nut to crack.

“A closer look at those bucking the overall low growth trend highlights that in order to gain traction, brands must be more authentic and clear about their purpose. Customers are increasingly calling for brands to address societal and economic issues, whether it be protecting the environment or reducing sugar content of a product. Despite this, our recent CEO Survey found that as many as 47% of global CEOs are struggling to link their growth strategy to a wider societal purpose.

“Health and wellness is certainly climbing the consumer’s agenda these days, so unsurprisingly many brands have very visibly moved into this space. But beyond providing ‘healthier’ options, customers are also seeking a ‘feel-good factor’ from the brands they engage with, and are digging deeper into how authentic brands actually are.

“To remain firmly on the radar of fleeting consumers, strong performing businesses are engaging more with brand ambassadors or seeking endorsement, whether it’s via influencers or partnerships. Connecting personally with the consumer remains vital in such noisy times, and those achieving high growth are clearly making headway with personalisation, reengaging prospective consumers with more tailored products and more specialised experiences.”

To view KPMG’s Organic Growth Barometer 2019 in full, please click: here

-ENDS-

For media enquiries, please contact:
Simon Wilson, KPMG Corporate Communications
T: 020 7 311 6651
M: 077853 73397
E: simon.wilson@kpmg.co.uk
KPMG Press Office: +44 (0)207 694 8773

Further reading:

• For the 2018 edition of KPMG’s Organic Growth Barometer, please click: here

About the KPMG Organic Growth Barometer 2019:

The 2019 edition of the KPMG Organic Growth Barometer compares the organic revenue growth of 58 of the largest packaged goods companies listed on the US and European stock exchange. 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. 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 analysis enables Consumer Packaged Goods (CPG) businesses to benchmark their performance and also provides insights on strategies for growth.

2019 Organic Growth Barometer (companies achieving growth above 2.7% in FY 2018/18):

COMPANIES IN THE TOP QUARTILE (CAGR)    OG CAGR   (’14-’18)   Market Cap (GBP, bil)  Organic Growth   (2018)

 The Estée Lauder Companies Inc. (NYSE:EL)

8.29%

45.4

13.00%

 Constellation Brands, Inc. (NYSE:STZ)

7.24%

25.7

7.00%

 Philip Morris International Inc. (NYSE:PM)

5.73%

104.6

3.40%

 Chocoladefabriken Lindt & Sprüngli AG (SWX:LISN)

5.47%

13.5

5.10%

 L'Oréal S.A. (ENXTPA:OR)

5.12%

115.1

7.10%

 Brown-Forman Corporation (NYSE:BF.B)

4.99%

19.3

6.00%

 Heineken N.V. (ENXTAM:HEIA)

4.80%

45.5

5.90%

 Anheuser-Busch InBev SA/NV (ENXTBR:ABI)

4.64%

124.9

4.80%

 Beiersdorf Aktiengesellschaft (XTRA:BEI)

4.32%

18.2

5.40%

 McCormick & Company, Incorporated (NYSE:MKC)

3.67%

15.1

2.70%

About KPMG in the UK

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and territories and has 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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