During the COVID-19 pandemic, the FMCG sector has had to cope with fluctuating supply and demand, new shopper behaviours, and a constantly shifting legislative landscape.
This global ‘perfect storm’ has affected categories, suppliers and retailers in different ways. We wanted to know how last year impacted the FMCG sector directly from those who have lived through it, to assess not only what the “new normal” is for the CPG world, but also how companies are preparing for recovery and how they are re-writing the route to growth.
Global revenue growth management survey
To better understand what manufacturers have experienced in the wake of the global pandemic, we recently surveyed leading FMCG companies. The questions covered topics in Revenue Growth Management (RGM) and what changes they expect in the future.
While it is still too early to state which changes will be long-lasting for consumers, shoppers, and retailers, the participants of this survey agreed that maintaining and repeating “traditional” commercial practices is likely to prove inefficient and detrimental to brand, category, and value growth.
A positive performance
Two thirds of respondents said that their companies had either seen neutral performance or positive growth on key financial performance metrics during 2020 (67.1% on volume, 64.3% revenue, 64.9% profitability). The overall impact of COVID-19 was positive for most FMCG companies.
COVID-19 broke a growth trend in trade spend from previous years (and decades). Almost 80% of the companies stated their 2020 total trade spend was lower or the same as 2019. Lower trade spend contributed to higher margins. Most FMCGs were selling without needing to pay promotional or assortment incentives during the pandemic.
RGM capabilities are paramount, but not fully supported
There is a widely held belief among FMCG that a greater focus on revenue management processes and capabilities will be a key element for manufacturers and suppliers as they reassess and adapt their commercial practices. RGM capabilities are paramount to driving the optimal combination of assortment, pricing, promotions, and trade terms levers to deliver value and future growth.
Price Realisation (45%) and Increased Trade Promotion Effectiveness (43%) are cited as key growth drivers in the coming months. There is urgency around, and a willingness to invest in, Revenue Management capabilities. 50% of companies indicate pricing, promotion analytics, and planning as high priority investment areas. 43% of respondents said that Artificial Intelligence and Machine Learning are priority investment areas for Revenue Growth Management in the next 12-18 months.
60% of companies, however, report that they do not have full coverage and support against all the core levers, and 40% are still reliant on spreadsheet-based analysis to battle through, with significant manual effort, disconnected data sets and insights.
Revenue Management strategies must ultimately result in action with consumers and shoppers. Those organisations who can effectively embrace the capabilities, processes and technologies that deliver against this ambition will be strongly placed to win with the actionable insights to enable fact-driven decision making and successful collaboration with retail customers to create, capture and retain value.
Indeed, growth-oriented companies will fast-forward digital transformation programmes to deliver revenue management capabilities and achieve the needed speed, scale and repeatability to grow and win in the dynamic changing environment.
Download the key research outcomes
We invite you to read the key outcomes of our research about revenue growth management pre- and post-pandemic by filling out the form below.
The findings and recommendations will inspire you to consider your own situation and how you may be able to improve based on the experiences of these industry leaders.
Contact us if you wish to further discuss this study’s findings, revenue growth management related topics, or learn how Kantar can provide AI-powered technologies and best-practices to enable insights-to-action revenue management in your organisation.