Global sales of consumer products grew more slowly in 2024 as price increases ran their course and volume growth remained minimal. With a 7.5% year-over-year sales increase in 2024, down from 9.3% in 2023 and 9.8% in 2022, the industry continues to face headwinds as consumer spending patterns shift and economic pressures mount. Bain & Company explores this and more in its Consumer Products Report.
“The challenging dynamics of 2024 have placed disproportionate pressure on the biggest CPGs,” said Richard Webster, head of Bain & Company’s global Consumer Products practice. “As inflation recedes, it’s clear that the old, large-scale CPG growth model is not fully fit for the new normal that’s emerging. The industry is at a turning point and the traditional reliance on price-driven growth is no longer enough to sustain long-term growth. For those CPGs ready to embrace the opportunity, this is the time to sharpen their agendas and make strategic choices that will enable them to thrive in the generative AI era.”
Emerging markets accounted for most volume growth in 2024
In developed markets, sales growth for consumer products dropped from 7.7% in 2023 to 4.5% in 2024, with disappointingly flat volumes despite more moderate price rises, Bain found. This weaker growth reflects the cumulative impact of many months of high inflation: prices in the US and the European Union in late 2024 were more than 20% higher than in the first quarter of 2020. Bain’s Consumer Lab found in its latest consumer surveys that cost of living was still the top concern for US and European consumers, with about 80% of respondents saying they are cutting their spending.
Meanwhile, emerging markets remain the primary growth engine, posting an 11% year-over-year increase in retail sales value. This is broadly in line with recent years and more than twice the rate of developed market growth in 2024. The 3% volume growth recorded in emerging markets—against a backdrop of smaller price increases—equated to almost all the volume growth recorded by the consumer products industry globally.
Consumer preferences are shifting away from mass-market offerings
The challenging dynamics of 2024 place disproportionate pressure on the biggest CPGs, particularly as insurgent brands gain market share and consumer preferences shift away from mass-market offerings. The 50 largest CPGs globally posted just 1.2% of revenue growth in the first half of 2024, while insurgent brands capture up to 40% of total US consumer product growth, Bain found.
At the same time, consumer health trends such as rising concerns about ultra-processed foods and the increased uptake of GLP-1s have the potential to create lasting disruptions in the industry. Profound shifts will also emerge where changing consumer behavior combines with macro trends such as migration, the redefinition of family units, and aging populations.
The consumer goods industry is shifting rapidly as both shopper behaviors and the retailer landscape evolve. Shoppers are becoming more polarized and exhibit increasingly divergent spending habits: some seek value and affordability, while others are willing to pay premiums for high-quality items. Our recent study also indicates that they are busier and seek more convenient consumption methods (on-the-go, snacks, etc.). The retail landscape is becoming more modern, consolidated, and diverse with the emergence of value formats, the proliferation of e-commerce platforms, and the rise in foodservice spending. For CPGs, small, incremental improvements won’t be enough to regain lost ground. To stay competitive, they must revamp their portfolios, invest in digital capabilities, and integrate AI throughout their operations,” said Faisal Sheikh, partner and leader of Bain’s Consumer Products practice in the Middle East.
Top of Form
Bottom of Form
AI remains a missed opportunity for many CPGs
Despite 90% of CPG executives acknowledging AI’s importance, only 37% rank it among their top five priorities. Only 6% say they have a plan for using AI to create business value, signaling a critical gap in execution.
Advances in enterprise resource planning (ERP) and AI are reshaping what digital technology can do. For many CPGs, this creates a once-in-a-lifetime chance to achieve a technology-fueled transformation. Bain found that advanced retailers already leverage AI to optimize supply chains, automate content creation, and hyper-personalize marketing—but most CPGs have yet to catch up.
AI adoption is no longer optional, yet many CPGs are falling behind in integrating digital tools at scale. Companies that fully integrate AI into their business models will lead the industry’s next wave of growth, and successful CPGs won’t be impeded by perfectionism; they’ll build cohesively toward big bets via near-term digital uses, while always testing and learning.
An opportunity for reinvention
To win back investors, top CPGs must get the basics right, rediscovering volume growth to regain ground lost to smaller insurgents and local incumbents that have done a better job of appealing to consumers. They must also invest in productivity programs that improve margins and free up cash to support further investment in priority areas such as technology, advertising, and promotion. To achieve deeper transformation, CPGs must:
- Rethink their sustainable growth algorithm, by maximizing current profit pools through superior execution and making bold portfolio moves that expand categories or open up new profit pools;
- Reinvent themselves to achieve continuous productivity gains, by simplifying today’s portfolio and operations to generate growth and finding a distinctive focus for tomorrow’s business; and
- Redefine an AI-led and technology-driven model, by honing their ability to roll out value-generating digital tools at scale today and reimagining their entire business for tomorrow.