The consumer products sector is entering 2023 with both optimism regarding financial performance and concern over ongoing disruption, according to Deloitte’s 2023 Consumer Products Industry Outlook.
The report is based on a survey of 150 consumer products executives from an industry proportional mix of food and beverage, household goods, personal care, and apparel companies, as well as Deloitte’s economic outlook for the industry. The 2023 Consumer Products Industry Outlook identifies key challenges in the year ahead as well as how companies pursuing profitable growth are differentiating themselves for continued success.
Key takeaways include:
• Consumer product executives have two minds about the year ahead. Eight in 10 respondents say they are neutral or leaning pessimistic about the global economy and geopolitical stability. However, despite these headwinds, executives are optimistic about both their company's performance (74%) and its strategy (80%).
• Labor concerns linger, but many see progress. This year, 42% of companies surveyed say that higher-than-normal levels of voluntary attrition is an issue, which is down 13 percentage points from 2022. More than half of executives either think labor shortages will be over in 6 months or are already no longer a problem for them. Only 8% think workforce issues will be extremely challenging for their company in the year ahead.
• Supply chain is still a top concern. Despite improvements from the height of pandemic disruption, 62% of CPG executives still expect supply chain issues to be quite or extremely challenging in 2023. Almost half (48%) of companies think just-in-time as a supply chain strategy will need to be replaced, and even more (57%) are worried about the reliability of supply from once dependable markets (57%).
• Inflation cannot be ignored. Despite record-high CPG prices, eight in 10 executive plan to raise their prices even further in 2023. And while those higher prices are helping boost revenue expectations (83% expect higher revenue in 2023), 56% still say sales growth will be a challenge.
• Amid these challenges, five priorities will enable profitability. Deloitte’s analysis found that profitable growth companies are succeeding due to investments in five primary areas: 1) embracing a changing consumer; 2) going for market share; 3) creatively transforming; 4) driving data through supply chains; and 5) prioritizing ESG.
