It’s not just luxury that’s been slowing in the past year. New Bain & Company research reveals that global consumer product sales growth slowed to 7.5% last year, down from 9.3% in 2023 and 9.8% in 2022, “as price hikes lost momentum and volume growth stagnated”.
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‘Consumer goods’ takes in a huge range of everyday products and includes things like clothing and beauty. And we’re told that in developed markets, “growth fell even further to 4.5%, with consumer confidence still fragile — 80% of European and US consumers are cutting spending”. That was perhaps unsurprising as prices in the US and the European Union in late 2024 were more than 20% higher than in the first quarter of 2020. Volume growth was therefore driven by emerging markets (up 11%).
Bain also said that big brands were struggling and while “insurgent brands” captured up to 40% of US market growth, for instance, the 50 largest CPGs grew just 1.2% in early 2024.
The company believes that AI and digital transformation are key to changing this and “despite 90% of CPG executives recognising AI’s importance, only 37% prioritise it, and a mere 6% have a clear AI strategy”.
Richard Webster, head of its global Consumer Products practice, said: “As inflation recedes, it’s clear that the old, large-scale CPG growth model is not fully fit for the new normal that’s emerging. The industry is at a turning point and the traditional reliance on price-driven growth is no longer enough to sustain long-term growth. For those CPGs ready to embrace the opportunity, this is the time to sharpen their agendas and make strategic choices that will enable them to thrive in the generative AI era.”
Bain believes AI can help businesses maximise “current profit pools through superior execution and making bold portfolio moves that expand categories or open up new profit pools”.
It can also help to simplify portfolios and operations “to generate growth and find a distinctive focus for tomorrow’s business”.
