The consumer products (CP) industry is seeing a shift in focus among top performers this year towards innovation investment, portfolio changes, enhancing consumer demand, and finding efficiencies. Deloitte Consultancy conducted a survey of 250 global CP executives from food and beverage and other industries for its 2025 Consumer Products Outlook. The survey included senior decision-makers at companies with more than $500 million in revenue, with most above $5 billion.
The report highlighted three priority areas where top performers excelled: product portfolio and mix, demand generation, and transformative efficiency. Companies are expected to address product portfolio and mix to attract consumers, invest in a broader range of demand-generation capabilities, and create transformative efficiencies to fund these investments.
Ed Johnson, principal at Deloitte Consulting, noted that recent developments in the economic environment have influenced the CP industry. Factors such as inflation and changing consumer preferences have led to reduced marketing spend, increased prices, and challenges in innovation. To combat these challenges, companies have been focusing on catching up with inflation and making other cost improvements to offset the impact of rising prices.
Innovation has been a longstanding challenge for consumer packaged goods (CPG) companies, exacerbated by increasingly diverse consumer preferences. Companies are now focusing on developing truly novel products rather than minor enhancements or changes to existing ones. Many companies are working on new product concepts that will be ready for discussion with retailers in the near future.
Artificial intelligence (AI) tools are proving to be valuable in unlocking analytics for CP companies seeking to innovate. Through AI, companies can utilize consumer preference data to test products with digital twins, simulate manufacturing processes, and derisk innovation investments. Precision analytics are expected to be utilized by 62% of food and beverage executives to identify new brands and growth opportunities.
Regarding mergers and acquisitions, the report suggests that there may be increased activity in 2025 after a period of decreased levels. Companies are looking for strong brands to drive growth and accelerate digital transformation through M&A deals. Efficiency and business simplification are also a priority, with 96% of executives planning to improve productivity and 82% investing more in this area.
While cost reduction remains on the agenda for CP companies, there are risks associated with cutting costs too aggressively. Companies must be cautious of short-termism and avoid sacrificing future performance for immediate savings. Despite these challenges, Deloitte remains optimistic about the outlook for the CP industry and the growth potential for companies that leverage data, marketing strategies, and employee resources effectively.
In conclusion, 2025 is expected to be a promising year for the CP sector as companies continue to invest in innovation, portfolio changes, consumer demand, and efficiencies to drive growth and success in a competitive market landscape.
