FMCG global outlook: Thriving in the pandemic's wake

The fast-moving consumer goods industry was severely disrupted during the pandemic, and the pace of change isn’t slowing. As people hunkered down at home, purchasing volume of FMCG goods skyrocketed, upending business as usual and forcing industry players to rewire supply chains, distribution strategies, and product priorities. The immediate post-COVID-19 environment presented another disruptive wave, with inflationary trends supporting price increases that outstripped input costs, leading to expanding margins. 

Today, customers are under pressure, influenced by a sustained period of higher costs and a host of uncertainties. Spending power isn’t the only concern. Sustainability, meaningful shopping experiences, and getting adequate bang-for-buck are issues weighing heavily on the mind of consumers. 

FMCG players must engage with an evolving consumer while juggling plenty of ongoing challenges. Since 2020, they’ve weathered the storm to deliver outsized revenue (6.8%) and profit (11.4%) growth. Still, supply chains remain in flux, retailers are seeking a bigger portion of the value-chain profit pool, digitization accelerated by AI is an urgent priority, and implementation of meaningful ESG initiatives is becoming increasingly urgent. 

A group of 15 companies (out of 104 public FMCG companies we evaluated) is consistently outperforming its peers via robust organizational capabilities and clear enterprise-wide governing objectives. This group delivered five-year total shareholder returns of 13.3% vs the 6.8% generated by the wider peer set. The top 15 performers are expected to grow economic profit at 10.35% vs. 7.8% for the overall FMCG market.

These companies are positioned to capitalize on trends and succeed in a volatile environment. Our recently published FMCG Industry Outlook takes a deep dive into what drives the success of these companies—with an average revenue of $14.7 billion. How do they deliver total shareholder returns (TSRs) twice those of their peers? What is the formula behind five-year economic-profit (EP) expectations that substantially exceed the overall market?

Lapping the competition requires rigor and intentionality. These top-performing players all have their unique roadmaps for success. Still, they tend to share common strategies for managing an evolving market, providing a framework for companies willing to invest in similar capabilities. 

Core to their strength is a deep understanding of what drives EP and where they stand vs. the competition. Understanding their advantage requires a deeper dive into how these companies handle their suppliers, expand private labels, grow digital channels, address ESG concerns, and harness AI.

Ultimately, long-term success will be determined by how well positioned FMCG players are to thrive in difficult capital markets. Winners use the right metric to manage their business. Near-term profit is leveraged to secure long-term advantages. Management’s time and resources are dedicated to a limited set of strategic initiatives. Shifting consumer preferences are addressed with offers focused on the top and bottom of the price spectrum. And non-value-adding costs and complexities are reduced so that “good costs” can be supported.

In coming weeks, AlixPartners will go in depth on the unique set of circumstances that have led FMCG companies into facing challenges on several fronts; the lessons that can be learned from 15 companies that are clearly head and shoulders above the competition and poised to thrive amid turbulent times; and the roadmap for winning in capital markets. A combination of data, step-by-step analysis of successful strategies, case studies, and commentary will illuminate the path to success for companies looking to sharpen their focus on value.