Consumer packaged goods industry in USA resists tough economic climate
The consumer packaged goods (CPG) industry (in the USA) performed significantly better than the rest of the market in 2008, as measured by the S&P 500 and Dow Jones Industrial Averages, besting both by at least ten points, according to a report released today by the Grocery Manufacturers Association (GMA) and PricewaterhouseCoopers LLP (PwC). The study also found that CPG manufacturer median sales grew approximately 10 per cent last year, down just slightly from 2007 median sales figures.
The 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow is the latest installment of the annual industry report issued by GMA and PwC and is compiled from research, interviews and financial data on 157 companies in the food, beverage and consumer products sector.
“Given the CPG industry’s laser focus on delivering value, innovation and investment in the future, it’s no surprise that it appears to be weathering this economic cycle better than other sectors,” said GMA President and CEO Pamela Bailey.
“This performance is testimony to the fact that CPG companies are fulfilling their core mission, which is giving consumers the quality products they need at an affordable price.” Additional key findings from the 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow include:
-The food sector experienced sales growth of 10.2 per cent, evidence that consumers are increasingly cooking and eating at home. The beverage sector followed with 9.9 per cent sales growth, and household products with 9.1 percent growth.
-Overall CPG company median shareholder returns for 2008 were down slightly more than 25 percent, which actually constituted a significantly better performance than the rest of the market.
-The food sector was the performance leader among the major CPG sectors, with 2008 median shareholder returns in down just 21 per cent.
-Selling, general and administrative (SG&A) spending relative to sales remained steady from 2007 to 2008, indicating that companies are actively marketing and innovating existing product portfolios and investing in the future marketplace.
“There are lessons to be learned from the CPG top performers, which are well positioned to emerge from this recession stronger than ever before, as they continue to invest in their core brands, take advantage of scale to produce healthy margins, and manage down debt,” said John Maxwell, consumer packaged goods and retail industry leader, PricewaterhouseCoopers.
“Finding new and better ways to sustain cost reductions, manage IT related risks, invest strategically to capture market share, and take thoughtful approaches to tax credits and incentives are a few recommendations for CPG companies as they prepare for the recovery.”
“Although the CPG industry fared better than other industries, it cannot be complacent and must remain focused on the constantly evolving consumer purchase behaviors,” Maxwell continued.
“This is critical as suppliers, retailers, and restaurants continue to be impacted by the liquidity crunch. There are opportunities for CPG industry companies that can capitalize on the trend of consumers focusing on product value within categories, on the move from eating out to eating in, and as consumers that have de-loaded the pantry begin to re-load”.
“The report also reveals that despite the economic downturn, CPG companies are not backing off of their sustainability initiatives. In fact, many view it as a differentiator and opportunity in the marketplace. The report shows that companies reporting on sustainability efforts have substantially outperformed companies that don’t,” concluded Bailey.
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