Promotions and price-aggressive competitors cost CPG firms dear, study shows

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Over three quarters (89%) of Consumer Packaged Goods (CPG) companies believe price pressure has increased over the last two years and will continue to do so, according to a study by global consulting firm Simon-Kucher & Partners.

Its Global Pricing Study found over half (57%) of all survey respondents (including CPG) felt pressure was due to a price-aggressive environment and customer demands for discounts – 57% and 23% respectively.

Hyper-competition and macro-economic pressure create a challenging environment for the CPG sector to increase profit. Pricing is a credible option as price increases were found to improve profit margins for 69% of sector respondents.

Mark Billige, UK managing partner at Simon-Kucher Partners, said: “Consumer Goods firms operate in an environment facing multiple pressures from customers and competitors. Intelligent pricing strategies would allow companies to defend and increase profits by getting the right price, for the right products for the right customers.”

Edward Lee, director, said: “Although around 60% of CPG respondents were able to successfully implement price increases, which is slightly above the survey’s overall average of 57%, the sector is beset by challenges.

“In order to improve, CPG organisations would benefit from a dedicated pricing function to navigate growing complexity and get the price and profits deserved by the sector.”