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Future Readiness Indicator

Consumer Packaged Goods 2023

Future Readiness Indicator

Consumer Packaged Goods 2023

Weathering the Storm: Two Charts Depicting the Top Future-Ready CPG Brands in 2023

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Inflation, recession, wavering consumer confidence—all these factors hit hard on spending. People switch to cheaper brands and buy less when times get hard. But like all crises, some companies get hit harder than others. The best ones may even turn threats into opportunities. So, in 2023, which brands in the consumer-packaged goods sector are most ready for turbulence?

 

At IMD’s Center for Future Readiness, we track companies’ future readiness. We do this through objective measures calculated as composite scores. Below is our latest ranking among the top consumer brands, spanning household goods, cosmetics, food, and beverages. Our objective is to achieve a balanced viewpoint of a company’s future readiness. You can learn more about our ranking methodology here.

 

 

Top players have successfully achieved scalable innovation that consumers find worth paying for. Companies like Coca-Cola, L’Oréal, and P&G have succeeded in both product innovation and end-to-end innovation, from material sourcing to social engagement. This dual strategy is driven by digital technology, automation, advanced analytics, and, increasingly, generative AI.

Laggards struggle because they fail to build these advanced systems. They stick to traditional approaches, focusing on growth through M&A and cutting costs. As a result, consumers lose interest in their stale offerings. Once a company gets stuck, it can’t attract top talent, leading to a downward spiral.

The contrast between top performers and underachievers is also reflected in their behaviors. Below is a chart that shows how likely a company is to develop new products, as shown on the Y-axis. Meanwhile, the X-axis depicts the extent to which the company is closely focusing on consumers.

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We’ve built an algorithm to analyze reports from major business news outlets and corporate press releases over the past decade. The results have helped us understand brand perception and evolution in the business community. Think of this as big-text analytics. More details on our computer-aided research can be found here.

So, What’s The Secret Sauce For The Top Perfomers?

It’s all about harnessing the power of AI and analytics. Top-ranking companies possess advanced capacities to analyze data such as sales, customer behavior, market trends, weather, and events. This enables them to generate accurate demand forecasts for various products. Coca-Cola, for instance, uses AI to predict beverage demand in 200 countries serving 20 million customers. It evaluates campaign effectiveness across diverse channels, platforms, formats, audiences, and messages. By identifying top-performing campaigns, measuring ROI in 40 markets, and allocating resources wisely, they optimize supply chain planning, inventory, production, and distribution. The result? A seamlessly efficient operation that runs like clockwork across channels, regions, and time periods.

L’Oréal similarly employs AI and analytics to create personalized beauty boxes based on customer preferences and profiles. It utilizes AI to develop new hair color shades inspired by social media trends. P&G’s Olay Skin Advisor app, powered by AI, similarly analyzes users’ selfies and skin conditions to recommend products.

The key here is to democratize all the data tools inside the company and broadly distribute them to every manager for use. Access to information must be ubiquitous. This ensures a deep sense of transparency. Some companies use a “low-code platform” to migrate their SAP applications to the cloud and create mobile-ready apps that can work offline. Others connect web applications and create automated workflows. The role of the headquarters is simply not to bar access. Their responsibility is only to ensure the accuracy, completeness, and timeliness of all data.

The result? No underperforming managers can hide behind their own Excel spreadsheets they refuse to share. Rather, all data points are automatically rolled into a central data nerve system, enabling different businesses to generate their own insights creatively and deploy them in the local marketplace.

That’s what transparency brings. It brings commercial discipline and evidence-based decision-making into the fold. Obviously, it goes beyond investing in technology infrastructure. What we are discussing, particularly for many traditional organizations, is a profound shift in corporate culture.

And when the backend is advanced and modern, companies can meaningfully go after new markets. Coca-Cola introduced Topo Chico Hard Seltzer, a low-calorie, low-sugar, gluten-free option. P&G introduced a new line of laundry detergents called Tide Simply Clean & Fresh that offer effective cleaning at a lower price point. L’Oréal’s campaign “By Garnier, Naturally” focuses on natural ingredients, eco-friendly packaging, and social initiatives.

In the world of CPG, it’s not just about what you sell or make. It’s about how you make your product and how you sell it. Otherwise, the brand won’t be worth it.