As inflation declines, major consumer goods specialists are prioritising innovation and marketing strategies to attract and retain customers. Here is an explanation and analysis from the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.
In the past two years, major consumer goods companies have been forced to navigate a significant increase in inflationary pressures. Consequently, sales growth has been predominantly driven by price increases. Against a backdrop of declining purchasing power, consumers have been making compromises, as evidenced by the recent findings published by experts in the convenience goods sector. Major brands have experienced a decline in performance, with discounters and store-branded products gaining ground.
Forecasts remain at half-mast
A number of mass-market brands have recently revised their sales targets to reflect a downward adjustment. This is particularly the case for specialists in the consumer hygiene sector. In France and internationally, no major company is currently forecasting double-digit growth. The Kimberly-Clark Group and French giant BIC have recently announced revised forecasts. Procter & Gamble and Unilever have set organic growth targets of between 3% and 5%.
Increasing competition
In addition to the decline in purchasing power, other factors have had a negative impact on the performance of the leading consumer goods businesses. Firstly, the breakthrough of store-branded products. In the context of rising prices across the board, supermarket chains have succeeded in maintaining their market position by offering a comprehensive range of own-brand products. During the peak of the post-covid crisis period, sales of store-brand products in supermarkets accounted for nearly a third of all consumer goods sales. Furthermore, the discounters have made significant inroads, with brands such as Lidl and Action becoming a preferred choice for French consumers. The Action group is now present in over 800 locations across France. Similarly, Germany’s Lidl, with its attractive offers, is stealing market share from established brand names.
Innovation as a strategic lever
Against this backdrop, consumer goods giants are refocusing their strategy on innovation. To regain consumer loyalty, they are developing new value propositions that differentiate themselves from the offerings of distributor brands. In the context of inflationary pressures, leading brands have succeeded in making a difference through innovation and enhanced communication strategies. This is particularly evident in the case of Bic, which has established a partnership with American singer Charlie Puth to promote its 4-colour pen. In addition, Unilever has increased its investment in brand development. In other sectors, the giant L’Oréal has positioned itself on Australia’s Aesop. This strategy allows them to justify premium pricing while differentiating themselves from competitors.
Our experts at your service
In order to accelerate their transformation, consumer goods industry giants are increasingly pursuing acquisitions. They are targeting innovative companies that can complement their offering or introduce disruptive concepts. A study published by PwC revealed that the consumer goods sector saw a 15% increase in mergers and acquisitions in the first half of 2024. This indicates that these strategies remain a crucial tool for market actors. AURIS Finance’s experts are specialised by sector. Our consumer goods team can provide assistance with structuring your operations. Whether you are an acquirer looking for a target or a seller looking for financial partners, our experts are at your side.
