Profit margins for consumer-packaged goods (CPG) players are shrinking, battered by such forces as price volatility and channel disruptions, including shifts to e-commerce and direct-to-consumer sales. BCG helps CPG companies fight back by revolutionizing their approach to revenue growth management.
In a hypercompetitive market, 20% to 40% of the CPG profit pool is at risk. Many CPG and fast-moving consumer goods (FMCG) players are turning to revenue growth management to boost their top and bottom lines. They’re also striving to build the capabilities essential for strengthening net revenue on their own.
So what is revenue growth management? Revenue growth management—also known as net revenue management—isn’t just another pricing program. Rather, it’s a savvy way to handle net revenue, which is essential for funding operations and production. Successful revenue growth management hinges on taking an approach that is holistic and specific to both CPG and FMCG.
BCG’s approach to revenue growth management is uniquely comprehensive. It enables clients to uncover valuable opportunities by answering such questions as, Who are our customers and shoppers? What role do our brands play in their purchase behaviors? How can we and our retailers both maximize benefits from the value generated?
Our framework hinges on three key elements:
Our net revenue management consulting teams work shoulder-to-shoulder with clients to design and implement new methodologies and tools and to rapidly deploy revenue growth management actions to deliver bottom-line impact. And from day one of each engagement, we focus on enabling clients to build the capabilities that are vital for maximizing net revenue—long after the engagement ends.
To achieve this, we bring deep industry knowledge and unparalleled data analytics capabilities to each engagement. Our qualifications for net revenue management in FMCG and CPG include in-house expertise in digital technologies, advanced analytics, and artificial intelligence. Lead by BCG X, BCG's tech build and design unit, offerings such as Growth AI—recognized in POI’s 2023 Enterprise Planning Vendor Panorama Report—combine historical data and consumer insights with world-class machine-learning algorithms.
A Global Food and Beverage Company. A leading player in the food and beverage business wanted to strengthen its revenue growth management capabilities. We helped the company launch a phased program across the five value-driving levers: brand portfolio pricing, pack price architecture, active mix management, promotion management, and trade terms management. Our revenue management consulting teams focused on enabling the client teams to learn how to execute the analytics themselves. The program produced a triple-digit increase in the company’s profitable top-line growth, along with the codification of reusable net revenue management playbooks, differentiated by country and market.
A Food and Beverage Business. A leading global food and beverage enterprise wanted to unlock new value by deploying next-generation revenue growth management solutions, including partnering with a key retailer to use AI to drive value for both companies. Our revenue management consultants helped the client activate an AI-driven analytical engine, which featured automated promotion recommendations and calendars tailored to each company’s strategic and business constraints. Close collaboration and data sharing, along with savvy change management (such as training on the new ways of working that the partnership required) helped deliver impressive results—including a 3% to 5% uptick in category retail sales and an improvement in margins of 300 basis points.
We augment our core approach to revenue growth management with next-generation capabilities. For example, through the sophisticated use of AI and advanced data and analytics, we help clients develop decision support tools that enable frontline teams to tackle their toughest net revenue challenges.
CPG companies that excel in net revenue management can move from merely identifying net revenue challenges and opportunities to predicting them and taking action. And as AI enablement and machine autonomy increase, the need for manual intervention decreases—boosting efficiency and effectiveness.
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