Bain & Company: Global consumer goods industry growth is expected to slow down in 2024, with sales increasing by 7.5% year-on-year.

Recently, Bain & Company released a report indicating that due to the peak in price increases and sluggish growth in sales volume, the global consumer goods industry will see a slowdown in growth in 2024, with sales increasing by 7.5% year-on-year, lower than the 9.3% in 2023 and 9.8% in 2022. With the shift in consumer spending patterns and increasing macroeconomic pressures, the consumer goods industry is facing numerous challenges. Richard Webster, Senior Global Partner and Chairman of Global Consumer Products at Bain & Company, pointed out that the consumer goods industry faces challenges in 2024, putting immense pressure on leading consumer goods companies. With inflation gradually easing, the traditional growth models are no longer sufficient to adapt to the new market dynamics. Currently, the consumer goods industry is at a critical juncture of transformation, as growth driven solely by price is inadequate for long-term development. Consumer goods companies must seize opportunities, take proactive measures, reshaping agendas and strategic decision-making, actively embrace generative AI, in order to stand strong and achieve longevity. Emerging markets become the main growth engine in 2024 The report by Bain indicates that the growth rate of the consumer goods industry in developed markets will decrease from 7.7% in 2023 to 4.5% in 2024. Despite relatively moderate price increases, sales growth is almost stagnant. The main reason for the sluggish growth is the cumulative impact of high inflation over several months: by the end of 2024, price levels in the US and EU regions have risen by over 20% compared to the first quarter of 2020. Bain's latest survey from the Global Consumer Insight Lab shows that the cost of living remains the top concern for consumers in Europe and America, with about 80% of respondents stating that they are cutting back on spending. At the same time, emerging markets remain the primary driving force of growth in the consumer goods industry. In 2024, retail sales in emerging markets grew by 11% year-on-year, similar to the growth levels in recent years, and twice the growth rate of developed markets. Price increases in emerging markets have also eased, with sales achieving a 3% growth, almost equivalent to the total annual growth of the global consumer goods industry. Consumers are moving away from traditional mass market products In 2024, the situation faced by leading consumer goods companies is particularly severe: emerging brands are rapidly capturing market share, and consumers are gradually moving away from traditional mass market products, leading to significant pressure on consumer goods giants. Bain's research found that the top 50 global consumer goods companies achieved only 1.2% revenue growth in the first half of 2024, while the contribution of emerging brands to the growth of the US consumer goods industry reached as high as 40%. Furthermore, the increasing health consciousness among consumers is bringing long-term impacts to the industry. For example, concerns about overly processed foods are rising, and the usage of GLP-1 drugs is increasing, which could lead to profound changes in the industry. Combined with other macro trends such as population migration, reshaping of family structures, and aging populations, changes in consumer behavior will also bring new challenges. Deng Min, Senior Global Partner and Chairman of Consumer Products in Greater China at Bain & Company, stated that the fundamentals of the consumer goods industry are evolving rapidly: consumers are becoming increasingly discerning, preferences are becoming more diverse, and due to price increases, their expectations for products are rising. In this changing landscape, emerging brands and local big brands are seizing opportunities to lead growth. For consumer goods companies seeking to revive growth momentum, making minor adjustments to growth strategies alone is not enough to address the challenges. Only by accelerating the deployment of digital capabilities, reshaping product portfolios, and fully integrating AI into operations can companies stand out in the fierce market competition and regain dominance. AI remains an untapped opportunity for many consumer goods companies The report points out that although 90% of consumer goods company executives recognize the importance of AI, only 37% include it in the top five strategic priorities of their companies. In addition, only 6% of executives indicate that they have a complete AI business value implementation plan, indicating a significant gap in the execution of AI. The advancement of Enterprise Resource Planning (ERP) and AI technology is reshaping the potential of digital technologies, providing numerous opportunities for consumer goods companies to leverage technology, accelerate transformation, and land. Bain's research found that leading retailers have begun using AI to optimize supply chains, automate content creation, and engage in personalized marketing for each individual, while most consumer goods companies lag far behind in this regard. The application of AI is no longer optional for companies but a necessary option, but most consumer goods companies do not yet have the ability to fully integrate digital tools. The full integration of AI with business models will be the winning strategy for companies to stand out in the next wave of growth. Successful consumer goods companies will not be constrained by perfectionism, but will gradually advance through short-term digital applications, continuously test and optimize, and ultimately drive overall business transformation. Transformation of consumer goods companies is timely In order to regain investor confidence, leading consumer goods companies must solidify their basics on one hand, regain sales growth to reclaim market share lost to emerging and local big brands, even though the latter are better at meeting consumer needs. On the other hand, they must focus on improving productivity, increasing profit margins, and releasing more funds for technology, advertising, and promotions. To further deepen transformation, consumer goods companies must: Reevaluate the path to sustainable development: Fully exploit existing profit sources through exceptional execution, while reshaping product portfolios, expanding into new categories and profit opportunities. Accelerate organizational transformation and continuously improve productivity: Leveraging growth opportunities by streamlining existing product portfolios and operations, establishing new directions for future business development. Build a new growth model led by AI and driven by technology: Actively build internal capabilities, implement current digital tools that bring business value on a large scale, and at the same time adjust business layouts comprehensively for the future. In summary, the consumer goods industry is undergoing significant changes and challenges in 2024. Successful companies will be those that are proactive in reshaping strategies, embracing digital transformation, and fully integrating AI into their operations to meet the evolving preferences and demands of consumers.