Revitalizing Consumer Packaged Goods in Latin America: A Focus on Commercial Excellence
Introduction
The consumer packaged goods (CPG) sector in Latin America is currently navigating a crucial transformation. After enduring a decade marked by economic fluctuations and stagnant growth, organizations in this industry are confronting the challenge of revitalization. As inflation stabilizes, companies are presented with an opportunity to enhance their operational capabilities and reimagine product portfolios for sustainable growth.
Evolving Landscape of CPG
Recent trends indicate a shift in market dynamics, compelling CPG companies to embrace innovative operational practices. According to insights derived from the 2023–24 Consumer Excellence Benchmarking (CEB) Survey, companies within the region are increasingly leveraging advanced analytics and digital tools, including artificial intelligence, to derive targeted consumer insights and optimize their channels. This evolution is particularly pertinent as consumers exhibit a growing preference for value-driven purchasing, emphasizing the necessity for adaptive strategies in a competitive marketplace.
Key Practices for Success
Leading CPG companies in Latin America are employing several best practices that set them apart from their competitors, specifically in the domains of net sales growth, marketing efficiency, and overall commercial performance. The following five practices have emerged as crucial for achieving commercial excellence:
- Defining clear product roles for renovation versus innovation.
- Collaborating strategically with retailers and distributors, utilizing data-driven insights.
- Utilizing in-house marketing focused on testing and measuring return on advertising spend (ROAS).
- Empowering revenue growth management through analytics for pricing, promotions, and innovations.
- Integrating e-commerce strategies into annual planning with a focus on e-merchandising.
Commercial Excellence: A Summary of Progress
The CEB Survey findings illustrate the significant advancements CPG companies in Latin America have made since the last assessment. Traditional shopping venues are rapidly embracing digitalization, with many companies exploring new B2B and B2B2C platforms that enhance service delivery and enable them to stay competitive. Data indicates that over 95% of surveyed companies are employing various best practices in revenue growth management and product development, showcasing a commitment to commercial excellence.
Approaching Product Portfolio Management
Successful companies are mindful of the distinct strategies necessary for product renovation and innovation. A structured stage-gate process is employed for renovations, while innovations follow a more agile, consumer-informed approach. The CEB Survey reveals that leading companies are nearly twice as likely to differentiate their management strategies between these categories and utilize specific investment roadmaps for product development.
Building Retail Partnerships
Strategic collaboration between CPG companies and retailers is essential in today’s landscape. According to survey data, top-performing companies are more than twice as likely to utilize long-term planning with retailers and develop joint key performance indicators (KPIs) to align their objectives. These relationships are fortified through comprehensive data analysis, enabling firms to harness insights for improved sales force and distributor performance.
In-House Marketing Optimization
The emphasis on data-driven marketing practices is another distinguishing factor for leading companies. With a focus on measuring digital engagements via ROAS, these organizations prioritize developing in-house marketing capabilities while still leveraging external agencies for traditional media campaigns.
Enhancing Revenue Growth Management
Leading CPG companies effectively equip their revenue growth management teams with granular data analytics to adapt swiftly to market conditions. This proactive stance allows them to manage pricing and promotion strategies effectively, contributing to consistent net price maintenance—a critical factor in the inflationary climate.
Integrating E-Commerce in Core Strategy
As e-commerce continues to reshape consumer habits, top CPG companies are embedding their e-commerce strategies into their overall business plans. The CEB Survey highlights that these leaders are significantly more likely to employ best practices in online merchandising, thereby ensuring a strong digital presence and optimized content for potential buyers.
Conclusion
Amidst the challenges of a volatile economic environment, leading CPG firms in Latin America are setting benchmarks through innovative practices and strategic collaborations. By clearly delineating brand roles and adapting their marketing investments to current trends, these companies can continue to achieve superior performance relative to their competitors.
