US: CPG companies collaborate to improve performance

According to the latest research published by the Grocery Manufacturers Association and PricewaterhouseCoopers, as demands on the consumer packaged goods (CPG) industry intensify companies will increasingly collaborate to retain their competitive edge.

The CPG industry generates revenues of US$2.1trn and contributes more than $1trn to the overall US economy. PwC found that the overall CPG industry growth rate remains above 5% and overall productivity is increasing. In 2004, CPG manufacturers employed 14.7m Americans and contributed $2.1 trillion to the economy. In turn, employees were compensated $569bn and manufacturers paid $242bn in tax revenue.

“The impact of the CPG industry on the economy is not only increasing, but its recent growth rate has matched that of the overall US economy,” said John Maxwell, partner and global consumer packaged goods industry leader for PricewaterhouseCoopers. “The CPG industry clearly exerts an influence far beyond supermarket shelves and household kitchens.”

Slow population growth, discerning consumers and competition creates an intense business climate while issues such as rising commodity and energy costs, changing consumption patterns, globalisation and supply chain complexity are just a few of the trends affecting the CPG industry.

Throughout the 1990s, the GMA-PwC Financial Performance Report suggests, CPG companies focused on achieving internal productivity gains, but the newly released report indicates that CPG companies today are implementing targeted collaboration across the value chain to remain competitive.

“The most successful CPG companies are devising new strategies for growth by incorporating a greater degree of openness in their business models,” said Lisa Dugal, partner and North American retail and consumer packaged goods advisory leader for PricewaterhouseCoopers. “The boundaries between retail and CPG manufacturing are blurring. Some in the industry are developing a total experience for their consumers and forging partnerships with companies outside their core business.”