Sector Overview - CPG & Retail

Strategy& Training
CM - CPG & Retail
Confidential property
October 21, 2022
What brand can you not live without?
Strategy& Training - CM - CPG & Retail October 2022

Strategy& 2
Introduction
CPG encapsulates many brands and products that you would know
from your daily life, these are just a few examples

Strategy& 3
Introduction
CM products are brought to you via major retailers, many of whom

we also work with on strategy, distribution, and growth
APPAREL AND GENERAL GROCERY FOOD RETAIL
ACCESSORIES MERCHANDISE
CONVENIENCE/DRUG DISCOUNT SPECIALTY E-RETAILERS

Strategy& 4
Agenda
Let’s get started
0. Introduction 10 mins
1. Industry overview 15 mins
2. Market Trends 15 mins
3. Value Chain & the P&L 20 mins
4. Break 5 mins
5. Capabilities Driven Strategy 20 mins
6. Representative S& Projects (Revenue & Cost) 20 mins
7. Wrap Up and Q&A 15 mins
Appendix: Key Data Sources & Reference Material

Strategy& 5
Introduction
With you today...
Ed Landry Skanda Janakiram Ben Olsho Erin Ford Dimi Koumenos

Partner - Customer Dir. - Cloud & Digital S. Manager - Operations Manager - Customer Manager - ESV
Repping PwC/S& since: 1996 Repping PwC/S& since: 2014 Repping PwC/S& since: 2018 Repping PwC/S& since: 2020 Repping PwC/S& since: 2021
Hails from: New Jersey, USA Hails from: Bangalore, India Hails from: Philadelphia, PA Hails from: Sydney, Australia Hails from: Thessaloniki,
Now in: Vienna, Virginia Now in: Redondo Beach, CA Now in: New York, NY Now in: Chicago, IL Greece
Ask me about: Anything you Ask me about: LA/Chicago Ask me about: Restaurants, Ask me about: Skiing, Now in: New York, NY
do not ask the others Restaurants, Travel, Cricket The Sopranos, Ping Pong Sailing, Aboriginal Art Ask me about: Fitness,
Snowboarding, Travel

Strategy& 6
Introduction
The Consumer Markets Team
Barb Bukovac Ed Landry Katrina Carrizales Alberto Dent Josh Goldman Eric Shin
Sector Champion Transformation Cyber, Risk & Deals Cloud & Digital Tax Consulting
Regulatory
Kara Finley Sarah McNaughton Jennifer Hennessey Ciaran Morris Leon Trum
Managed Services Practice Director Marketing Leader Sector Sales Leader Sector Sales Director

Strategy& 7
Introduction
Course objectives
At the conclusion of today’s material, you will
understand the following:
• An overview of the CM industry including sectors,

categories, and size
• Current trends in the industry that are posing challenges

and opportunities for our clients
• The standard value chain of CPG manufacturers and

retailers, including key stakeholders and pro-forma P&Ls
• Our approach to help clients differentiate themselves in the

market: Capabilities-Driven Strategy
• Examples of successful engagements with our clients
• Data sources for your future reference

Strategy& 8
Introduction
Polling question #1
Can you guess the brand?
Body Glove
Tik Tok
Beats
Billabong

Strategy& 9
Introduction
Polling question #1
Body Glove
Tik Tok
Beats
Billabong

Strategy& 10
Introduction
Polling question #2
Best Buy
99 Cents Store
Tag Limited
Lowes

Strategy& 11
Introduction
Polling question #2
Best Buy
99 Cents Store
Tag Limited
Lowes

Strategy& 12
1
Strategy& Training CM
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
Industry overview
15 min
[REPLACE WITH IMAGE]
October 2022
13
Industry Overview
What is consumer markets?

Consumer Markets: A consumer market is where individuals purchase products or services for their own personal
use, as opposed to buying it to sell. PWC helps business strengthen their brand proposition from the start and deliver
results to redefine their future.
…CPG & Retail are our largest …Within CPG & Retail, there are
The Strategy& Consumer Markets practise
sectors and will be the focus for several sub-sectors which will be
covers 6 main sectors…
today’s discussion… familiar to you
Consumer packaged goods (CPG) CPG: Retail:

CPG Retail are items used daily by average • Apparel, Footwear & • Big Box
consumers that require routine Accessories • Club
replacement or replenishment. • Consumer Electronics • Convenience
• Food, Beverage & • Drug
Restaurants Hospitality Alcohol
& Wholesale & Gaming • Dollar
• Household & Personal • Grocery
Retail is the sale of goods to the public in Items
relatively small quantities for use or
• Food Service
• Luxury Goods • Supermarkets
Airlines
Transportation consumption rather than for resale. • Pet Care
& Logistics
• Tobacco

Strategy& 14
Industry Overview
Consumer markets are the heartbeat of the US economy
Economy Workforce Capital Innovation
68% 31% 20% 26%

Personal consumption Workforce employed across the Total revenue of Fortune 500 CM brands in Forbes Most
contribution to GDP growth1, CM sectors2 companies made up by CM Innovative Companies4
with over half related to CM brands3
clients
1) US Census Bureau, as of July 2022 2) Bureau of Labor Statistics, as of July 2022 3) Forbes and PwC Intelligence analysis, as of August 2022 4) Forbes and PwC Intelligence analysis, as of 2022
Strategy& 15
Industry Overview
Consumer Packaged Goods: Sector overview

Sector Size Sector Growth Key Segments
Beverage Food
Alcohol Beverage Personal Care
1
$~700B 4.8%² Household Tobacco
What makes the sector unique?

As the marketing power of digital grows,
barriers to entry continue to decrease
making the industry intensely competitive
for both large and small players
1)https://usintelligence.pwc.com/system/files/documents/2020-04/Consumer%20packaged%20goods_trends_FINAL_March%202020v2.pdf
2) CPG Growth from 2020 to 2022; PWC Analysis
Strategy& 16
Industry Overview
Retail: Sector overview

Sector Size Sector Growth Key Segments
Grocery Wholesale
Big Box Convenience
Apparel &
Department
Footwear
Specialty Luxury
$4.9TR1 6-8%² E-tail Drug
What makes the sector unique?

With the rise of ecommerce, barriers to
entry are low, creating more competition
and increased need for personalization
and convenience
1) Based on PwC Analysis & Ibisworld Data as of 08/2020

2) Forecasted retail growth for 2022; National Retail Foundation
Strategy& 17
Industry Overview NOT EXHAUSTIVE
Below depicts an illustration of the lifecycle from farm to table -

non F&B product lifecycle may differ
AGRIBUSINESS AND CONSUMER PACKAGED RETAIL

2% of the FOOD PRODUCTION GOODS
population may
have interaction
with agribusiness Crop Inputs: Seed, Wholesaler, Brokers,
Meat Products
Pesticides, Fertilizer Distributors
Grocery and
Machinery Confectionary
Supermarkets
Livestock Breeding:
Cereal Warehouse Clubs
Milk, Eggs, Animals
Plant Production: Convenience &

Bakery 98% of the
Cereals, Vegetables Specialty
population
interact with
Primary Processing: retailers or CPG
Beverages Restaurants companies
Dairy, Meat, Grain
through DTC
Source: Booz & Company analysis

Strategy& 18
Industry Overview
Polling question #3
Which of these is not considered a packaged good?
Gym shorts
Cat litter
A razor
A car
None of the above

Strategy& 19
Industry Overview
Polling question #3
Which of these is not considered a packaged good?
Gym shorts
Cat litter
A razor
A car
None of the above

Strategy& 20
Industry Overview
Polling question #4
What percentage of the workforce works in CM sectors?
11%
14%
25%
31%

Strategy& 21
Industry Overview
Polling question #4
What percentage of the workforce works in CM sectors?
11%
14%
25%
31%

Strategy& 22
2
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
Market Trends
15 mins
October 2022
23
Market Trends
Consistently strong performance has been elusive for an industry

so tightly tied to the overall health of the economy
Boom and Bust (2000-2009) Activist era (2010-2016) Balancing era and COVID (2017-2022)
Huge growth fueled by M&A followed by Cost-cutting programs pushed by activist Winning CPGs had started to reinvest in
the Great Recession investors yielding dramatic margin expansion differentiating capabilities and find the
but decline in revenue for large players while balance between growth and margin
small brands start capturing growth increase before COVID hit
2023-+:
Industry is looking to
determine how much of
the COVID disruption is
here to stay
2000-2007: 2008-2009: 2010-2013: 2013-2016: 2017-2019: 2020-2022:

Winning CPGs follow Major disruption across
Revenue growth fueled Great recession: Post recession: with a Activist era: cost FFG programs where
by M&A and global slowed growth with return to growth but at cutting to drive margin the business due to
cost reduction is rein- COVID-19 pandemic (e.g.,
expansion margin expansion the cost of margin expansion at the vested in differentiating
capabilities (e.g., RGM, capacity constraints, supply
expense of growth chain disruptions,
innovation) to push
growth commodities headwinds)
Revenue CAGR 4.3% -1.0% 3.9% -1.4% 2.5% 4.8%*

Δ EBIT Margin +189bps +48bps -40bps +103bps +4bps -9bps*
*Capital IQ
Δ SG&A/REV +214bps +3bps +35bps -42bps -171bps --
consensus
US GDP CAGR estimates
5.0% -1.8% 3.8% 3.8% 4.7% 5.5%
Source: Capital IQ, Strategy& Analysis, World Bank Data in current $
20 CPGs selected from the top 70 biggest global CPGs in revenue in 2020. All the selected CPGs have operations in the US and have data available for the entire time period. There are 10 Food, 6 Household/Personal Products, 3 Beverage, 1 Tobacco CPGs. Includes:
Nestle, P&G, PepsiCo, Unilever, Tyson, Coca Cola, BAT, Danone, Mondelez, Kraft Heinz, Henkel, KC, Diageo, GM, Estee Lauder, Colgate Palmolive, Kellogg, Conagra, Campbell, Hersheys
Strategy& 24
Market Trends
Players within Consumer Markets are challenged with five key

trends which we will explore in greater detail in the following pages
Changing Digitalization End-to-end Environmental, Transformational

Consumer Value-chain Social & Mergers &
Behavior Transformation Governance (ESG) Acquisitions
Consumer spend is Companies are trying to offer To drive improved ROIC ESG continued to be top of With deleveraging in the
increasing but companies privileged insights by within increasingly mind as a differentiating rearview, M&A strategy
have limited control over the improving digital connected global factor to appeal to socially shifted to growth-accretive
most talked about challenges experiences, while investing value-chains business and environmentally bolt-ons and some
linked to consumer behavior in “phygital” interaction leaders build operational conscious consumers. transformational deals
changes pre and post COVID (combining digital and resilience. Dynamic value Companies need to get on
(polarization of demand, physical experience into chains, digital operations, their front foot with respect to
increased demand for unique interactive strategy-linked planning food transparency,
convenience, communication channels) and workforce resilience technology-enabled
personalization, and placing consumer trust are key challenges for sustainability, data collection
contextualization, front and center companies and reporting, including
gamification) employee, investor and
regulatory stakeholder
communications

Strategy& 25
Market Trends - Changing Consumer Behavior
Purchase patterns seem to have changed ‘for good’, with some

pre-COVID era trends accelerating and new ones emerging
Health & Wellness Accelerating Post COVID Emerging Post COVID Limited Return to Office
• Consumers continue to purchase products for a clean • RTO has been limited, with many executives believing
home along with preventative products (e.g., vitamins) that a full return will not be needed
• Demand for H&W products is 2-3x stronger that of • Cooking fatigue emerging, driving consumers towards
conventional4 ready-made, snacking and eating out alternatives
Health & Limited

Wellness RTO
Digitalization Big Brand Embrace
• Media patterns are changing; gaming outpacing TV for • Consumers have continued to embrace big brands as
younger generations, more time spent on social media scale and supply chain dynamics favor larger players vs.
platforms Consumer Big Brand smaller brands
Digitalization
• A global survey revealed that 41% of shoppers prefer a Trends Embrace • Relevance brought back to previously stagnant
mix of online/in-store shopping2 categories and brands (e.g., sparkling, cereal)
Sustainability Spending Spending Choices

Sustainability
Choices
• In the US, consumers care about sustainability more than • Consumers say they will spend more across categories,
ever before but price and convenience still matter more with 41% predicting increased spending on groceries in
H1 20225
• In Europe, data shows that ESG initiatives are truly
impacting consumer decisions, with +60% of shoppers 1. Sourced from CAGNY 2021 presentations
• However, this spend will likely be split between just two
choosing alternatives with better environmental impact 2. Sourced from Colgate CAGNY 2022 presentation; WARC data price tiers at different ends of the spectrum: premium and
3. Sourced from Nestle CAGNY 2022 presentation value
4. Sourced from Unilever CAGNY 2022 presentation
5. Sourced from PwC Consumer Insights survey
Strategy& 26
Market Trends - Digitalization
There is continued investment in digital capabilities to support

omni-channel service & execute data-driven, personalized marketing
2021 E-Commerce Sales as a Percentage of Total Sales Examples of Targeted Digital Marketing Campaigns
Kraft’s insights generation engine,

Kraft-O-Matic, allowed it to develop
ad customizations for their mac and
cheese depending on whether a HH
E-commerce has continued to grow had children or not
across the industry; companies that did
not share specifics of their
revenue/channel breakdown still reported General Mills was able to target in
growth in the e-commerce channel along on meal prep fatigue and dynamically
with more digital engagement optimized Pillsbury messaging in real
time, leading to a 25% increase in
sales and 5% increase in HH
Other Alternative Revenue Generation penetration
Hershey’s leveraged data to

B2B Conversions Subscriptions Ads understand whether a consumer was
buying for a family or just themselves
Omni-channel delivery continues to grow to provide a more personalized and and tailored content accordingly for
seamless between the brick & mortar and online experience their snacks ads
Strategy& 27
Market Trends - End to End Supply Chain
Changing consumer preferences have created new supply chain network

requirements outside of the traditional fulfillment model
Market trends Company requirements
Flexible, resilient, and localized supply chain that can get the right
Heightened consumer Fx:Fulfillment expectations:
product to the right place, and the right time using tech and
product availability, service levels, transparency
automation of physical operations
Customer-facing
Clear omnichannel strategies and corresponding inventory and

Online assortment expansion and growth of the
fulfillment strategies to enable growth while managing costs and
endless aisle
complexity
Innovative solutions (e.g., last mile delivery using contractor

Increased expectations for fulfillment speed and
model) to increase shipping speed and offer new services like
convenience
same-day delivery
Enhanced inventory levels, resulting in reduced holding costs,

Increasing input costs and resource scarcity (e.g.,
reduced storage space requirements, and increased throughput
labor, transportation, materials)
and efficiency
Internal
New nodes and flows to serve e-commerce demand utilizing

various fulfillment methods (e.g., ship from store, ship from
Accelerated non-traditional channel growth
RDC/FC; store pickup) and digital upskilling to improve
employees’ ability to serve
Strategy& 28
Market Trends - ESG
Many companies touted commitment to ESG, sharing recent

achievements and specific, measurable goals for the future
Pr
od c t
u
In ct/ pa
01 no Pa
va ck ta
l Im 02
Key innovations included reformulated products and tio ag ie Purpose driven brands and commitment to
eco-friendly packaging n in Soc community impact
g
Relaunched Sanex Zero% body wash with 0% Showcased growth of Lily’s Kitchen, a certified
soap, microplastics, and sulphates, allowing B-Corp pet food brand that was acquired in
them to take price 2020 in the UK
Committed to 100% recyclable, reusable, or Targeting to reach 2B people with sustainable
compostable packaging by 2025, with nutrition options by 2030; 80% of portfolio
information on how to recycle on each product already delivers positive/balanced nutrition
ESG Commitments
03 04
Pursuit of Carbon neutrality, better water usage, Diversity and representation in leadership positions
and sustainable sourcing and business relationships
Targeting to be 100% carbon neutral via offsets Pursuing goal to have PoC representing 30% of
by 2025 and to reduce water use by 10% D leadership; currently at 24% of VPs and 26% of
ty In ive
annually li cl rs directors
Created the world’s single largest sustainable a bi us ity
n io a
ai
Seeking to increase spend with women and
commercial cocoa farm through the “Cocoa Life n nd
program” ust minority owned suppliers by 25% by 2025
S

Strategy& 29
Market Trends - Transformational Mergers & Acquisitions
Merger & Acquisition criteria remain largely unchanged and

companies capitalizing on inorganic growth and market expansions
M&A Enablement and Priorities Examples from CAGNY 2022
Nomad Foods acquires firms in international markets to capitalize on

Companies improved balance sheets through cost and continental presence in frozen foods
operational optimization programs to establish a strong
baseline for M&A opportunities 6% 50%
annual growth (5 yr CAGR) of growth is inorganic
Businesses are focusing on achieving two priorities:

expanding markets in similar categories and acquiring McCormick focuses M&A on adjacent product categories to broaden
portfolio
brands to complete owned-portfolio within a category (e.g.,
KC acquiring Softex) McCormick has entered a new and growing product
category at scale through the acquisition of hot sauce
category leaders
When targeting acquisitions, firms focus on enhancing their
portfolio with leading brands that a CPG can bring into their
portfolio and scale growth rapidly (e.g., Hershey’s expansion Nestle is using M&A to expand ESG portfolio
of Skinny Pop)
To expand on their purpose objective, Nestle acquired
Lily’s Kitchen which has become a shining example in the
market
Strategy& 30
Market Trends - CPG & Retail
As you deep dive into our major sectors of CPG & Retail, the trends
become even more granular
CPG Retail
Inflationary Pressure & Increased Demand Volatility Convenience & Personalization are Key
Demand and preferences evolving with recession fears, safety • Customized design experience
concerns, economic uncertainty and continued focus on sustainability, • Curbside pickup locations / pick-up & return lockers
driving desire to streamline assortment • Personalized clothing recommendations through app based data
Accelerated Omni-channel Growth Technology & Innovation are a Priority • Self-checkouts

Omni-channel demand is driving increased volume which requires • Customers increasingly shopping digital • “Virtual rooms”
CPGs to digitize operations, automate their planning and manufacturing, • Influencers and contextual commerce • In-store/warehouse robots
and increase productivity in logistics operations • AI-enabled site merchandising • AI for data mining
SG&A Optimization Value Chain Overhaul

CPGs are continuing to find ways to optimize SG&A through building • Strategic procurement & labor management • Omni-channel approach
capabilities and are increasing productivity and cutting COGS to combat • Inventory-free showrooms for contactless shop (e.g. online ordering)
inflation and cost increases for raw materials, labor, fuel, etc. • Stores are now multi-channel fulfillment centers
• Consumer focus on frugality and avoiding indulgences • Rapid demand spike for grocery impacting the supply chain and workforce
• CPGs will need to find ways to react and synchronize supply with • Big box retailers developed capabilities like delivery and curbside pickup to
Impact of
COVID 19
demand across markets and channels; enhance their analytical manage social-distancing and contact-less shopping experiences
capabilities; and focus on growing digital capabilities • Shutdowns of brick and mortar leading to an excess inventory creating a
highly promotional shopping environment

Strategy& 31
Polling question #5
Which of these is NOT a trend related to Changing
Consumer Behavior?
Decline of brick-and-mortar retail
Health & Wellness
Sustainability
Big brand embrace
None of the above

Strategy& 32
Polling question #5
Which of these is NOT a trend related to Changing
Consumer Behavior?
Decline of brick-and-mortar retail
Health & Wellness
Sustainability
Big brand embrace
None of the above

Strategy& 33
Brick & mortar stores grew
faster than e-commerce for
the first time ever in 2021,
with physical stores growing at
18.5% versus e-commerce
growth of 14.2% [REPLACE WITH IMAGE OR DELETE]
That 14.2% growth for e-commerce is slightly

above the typical annual growth rate, but
much lower than the 31.8% growth
e-commerce experienced in 2020.
Strategy& Source: Forbes (Feb 2022) 34

3
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
Value Chain & the
P&L
20 min
October 2022
35
Value Chain & The P&L
The CPG and Retail value chain primarily includes four key stages
BUY MAKE MOVE SELL
Warehousing & Customers /

Suppliers Plants
Distribution Consumers
Raw & packaging
Finished goods Finished goods
materials
Strategy& Training - CM - CPG & Retail Note: Plan, Source, Make, Deliver is another common framework we use within Strategy& that you may hear referenced October 2022
Strategy& 36
Value Chain & The P&L BUY MAKE
Strategy& helps clients optimize costs through strategic sourcing
and by developing advanced manufacturing capabilities
Strategic Sourcing Levers Manufacturing Considerations
Volume Reduce the amount purchased by eliminating What new technologies What key factors will impact network
Reduction unnecessary and low value services & items will influence manufacturing? strategy and factory design?
Spec Optimize the specification of services & items to match
Demand true need and reduce complexity & customization
Optimization • Robotics and factory automation • Supply resiliency and flexibility
• Additive / distributed mfg (including • Strategic “make vs. buy” decisions
Capabilities-to- Segment requirements and create vendor tiers tailored
3D printing) • Rising interest rate and capital
Needs Alignment based on best-fit with each segment
• Packaging and materials innovation constraints
Optimize make vs. buy, supply locations, and vendor • Predictive maintenance and • Labor pressure and worker shortages
Right Sourcing selection based on economics and capabilities monitoring technologies / sensors
Supplier Consolidate the supply base to capture economies of

Supply Concentration scale, increase competition, and reduce complexity
How will the factory of the future How will my ESG strategy impact my
Commercial Negotiate favorable pricing & other terms, and align leverage big data? manufacturing strategy?
Agreement incentives to create value in the vendor relationship
Standardization & Standardize and simplify buying and vendor • Digitally connected factories that • Increased focus on CO2 and scope 3
Simplification engagement processes.e.g. with pre-defined catalogs
enable global command/control with emissions
Automation / Leverage technology and automation to reduce own
real-time prod. line status updates • May need to rethink product portfolio
Process Technology and vendors’ manual effort required to deliver • Predictive field service & equipment • Emphasis on sustainable ingredients
uptime monitoring and packaging
Ensure buyers and vendors comply with policies, • Forecast, planning, and engineering
Compliance agreements, and standards integration

Strategy& 37
Value Chain & The P&L MOVE
Supply chain network strategy must balance CAPEX availability,
service, cost, and inventory parameters
Network design considerations Network nodes examples
Inbound cross dock Regional DCs
Strategy and growth
• Small-sized • Large-sized, full functions
• Capacity to support overall growth • Double side cross-docking • Combined channels (shared
• Store growth and role configuration asset) with shared stock or
• Channel shifts • Limited to no inventory separated stock
• New products and services holding • Pre-pack possible
• Consumer expectations
• Desired service levels
Sortation center Micro fulfillment center
Network form and function • Large-sized • Medium to small-sized
• Automated and • In store concept possible or at
• Network capacity and DC roles semi-automated sortation city border for fast last mile
• Role of store for fulfillment • Accessibility to local/central/ delivery
• Inbound logistics regional distribution • Periphery of metropolitan
• End-to-end visibility areas
• Required flexibility • High flexibility
Stocking and capacity Dedicated e-comm Returns center

• eCom stocking strategy • Medium to large-sized • Medium
• Facility capacity • Carries long tail of assortment • Supports reverse logistics
• Picking capacity items activities
• Product lifecycle • Typically highly automated • Typically lower automation

Strategy& 38
SELL
The increasingly omnichannel nature of CPG and retail business
today requires careful consideration of customer / consumer needs
Omnichannel strategy begins by defining consumer … and uses those requirements to define store,
fulfillment expectation … online, and omni journey
Differentiated online journey Differentiated store

Service levels’ degree of importance by product type • Personalized recommendations and experience
Personal OTC House- search results • Well merchandised and
FMCG Fresh care/Beauty drugs hold items Seasonal • Accurate product information organized
Subscription • Well-articulated service levels • Easy to shop physically and
• Convenient shopping, check out, and
Shopping
Recommend-
digitally while in store
account management • Easy online product lookup
ations
• Self service options • Easy returns
Product sampling • Easy returns
Endless aisle
assortment
Same day delivery
Delivery <2 days Consistent omnichannel platform

Fulfillment
• Inventory planned as a singular asset that is shared and visible across channels,
Free shipping planning strategies maximize in-stock at the right “omni-shelf”
• Single source of truth for reporting and scenario planning analytics to drive
Pickup points
data-driven decisions
Click and collect • End-to-end value chain visibility
More important
• Governance established between channels to achieve target service levels
Returns • Integrated loyalty programs
Less important More important
Strategy& Training - CM - CPG & Retail Service levels not exhaustive. Additional service offerings include two hour time slots, green delivery options, free returns, etc. October 2022
Strategy& 39
A typical CPG manufacturer P&L has significant COGS, however

Trade spend is the biggest difference from a retailer P&L
Example CPG P&L Breakdown Observations
● Trade, the second largest line item on a CPG’s P&L,

includes many promotional costs that are typically taken on
by the manufacturer, rather than retailer, such as:
○ Every-day Low Prices (EDLP)
○ Discretionary, or Hi-Lo, spend: price promotions,
displays, advertisements
○ Distributor Rebates: buffer for distributor margin in
exchange for sales & merchandising support
○ Channel Discounts: e.g. special promotions for
channels such as Discount to clear stock
○ Swell: out of date product that does not get sold
○ Slotting: payment for space on shelf
● Strategy& works with CPGs on revenue growth
management (e.g. pricing, promotions, mix, commercial
terms) to manage some of these Trade cost buckets
● We also do a lot of work in operations to manage COGS;
for example, outsourcing, co-manufacturing, strategic
procurement, manufacturing automation, digitization etc.

Strategy& 40
The P&L for a typical retailer is dominated by COGS and store &
field operations
Example Retailer P&L Breakdown Observations
● COGS is the largest P&L line item for retailers, at over

50% of total sales, driven by the requirement to source all
products on shelf
● As a result, Strategy& does a lot of work with our clients
relating to procurement strategy and COGS management
● Retailers can manage some of the COGS by sharing some
other trade costs such as promotions and swell (out of
date products that are not sold)
● Store labor also makes up a large portion of the retailer
P&L; there is opportunity to manage labor cost through
human resource management and digital capabilities
● Retailers are also seeing increased cost from growing
consumer trends of at-home delivery and DTC sales
● A strong pricing strategy can support a quick market
response to customer demand and margin management

Strategy& 41
Retailers and CPGs have somewhat contradictory cost drivers

which can create challenges in negotiation & annual planning
CPG Retailer
● Significant COGS is driven by input costs ● Highly COGS-driven cost base since retailers
(e.g. raw materials, labor, fuel, and inflation have to buy all the products that go on shelf;
across the board) they want the CPG price to be low
● Trade is the second highest line item for ● High investment in store & field operations
CPGs which is essential to drive volume and/or and labor is required for a brick and mortar
profitability of a product VS retailer to work; even D2C models require
warehousing and handling
● Almost all products’ sales trends are cyclical so
consumer insights and analytics are ● Omni-channel service has increased cost
essential for optimizing trade spend and when it comes to personalizing the retail
driving ROI for the CPG and the retailer experience and making the store to online
experience seamless
● Trade spend often includes distributor /
wholesale discounts which broadens the ● Retailers want higher trade spend from CPGs
reach of CPGs to more retailers so they gain volume without losing profit

Strategy& 42
Polling question #6
What is the biggest line item on a RETAILER’S P&L?
Merchandising
COGS
Store & Field Operations
Supply Chain

Strategy& 43
Polling question #6
What is the biggest line item on a RETAILER’S P&L?
Merchandising
COGS
Store & Field Operations
Supply Chain

Strategy& 44
Polling question #7
What is typically the 2ND biggest line item on a CPG
MANUFACTURER’S P&L?
COGS
Marketing
SG&A
Trade

Strategy& 45
Polling question #7
What is typically the 2ND biggest line item on a CPG
MANUFACTURER’S P&L?
COGS
Marketing
SG&A
Trade

Strategy& 46
4
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
Capabilities
Driven Strategy
20 mins
October 2022
Capabilities Driven Strategy
Capabilities Driven Strategy aligns the organization around

differentiating capabilities, creating a ‘Right to Win’
• Capabilities are tools, processes and people that establish a company’s ‘Right to Win’
– Building a Right to Win uses combined assets and capabilities to create advantage in a market; in many cases it
is the combination of several capabilities that creates success
– Market dynamics are used to identify winning capabilities – few companies do this well
• Capabilities depend on scale and focus; often, BUs must rely on shared capabilities to support a ‘right to win’
• Managing the portfolio aspect of capabilities becomes critical – corporate now has three major roles:
1. Build capability scale and focus across business units and products
2. Align the portfolio to be more coherent around chosen capabilities
3. Create the right organizational and operating model to support and leverage Capabilities+

Strategy& 48
To address challenges in the market, we believe winning

organizations will differentiate themselves in four key dimensions:
Capabilities, Configuration, Cloud and Culture
01 02 03 04
Capabilities: Configuration: Cloud, Data Analytics and Culture:
They commit to a “capability system” They pick spots where they can Technology: They build resilient cultures that can
with 5 to 6 differentiating tightly compete the best, choosing the Their ecosystem is tech and data manage change effectively, offer
aligned to their portfolio. This product lines and value propositions enabled allowing focus on audience meaningful employee experiences
capability system informs their right to that match their strengths; instead of management and personalization by and do more for the people and the
play and win maintaining broad product portfolios leveraging zero and first party data planet
Strategy& 49
Capabilities Driven Strategy - Capabilities
As value of assets has diminished, building the right capability

system is key to winning in the future
But as a capability architecture is built a few principles are essential
to keep in mind:
The right system of Not trying to build best-in-class capabilities across all capability
dimensions but instead making clear choices around which
capabilities is at the capabilities should be differentiating
core of the CPGs right
Leverage M&A to acquire new relevant differentiating capabilities
to win and their unique
value proposition.
Competitive advantage through Partner up for other needed capabilities, joining forces with other
capabilities is so valuable: it’s organizations with complementary capabilities in order to form an
tailored to an organization and “ecosystem”
not dependent on assets, it
Ensuring commercial, supply chain and enabling capabilities are
builds on their strengths.
harmonized and reinforce each other in support of the overall
strategy

Strategy& 50
Capabilities Driven Strategy - Capabilities
CPG companies need to build a "capability architecture" and select

5 to 6 differentiating capabilities based on their way to play
Capability Architecture
Global Beverage Global Personal
Capabilities Manufacturer Care Company
Buy/Make Commodity risk mgmt and integrated margin mgmt ✓
Quality, safety & sustainability ✓
Agile manufacturing ✓ Most important is to prioritize
Move Integrated distribution capabilities based on your
Last mile delivery ✓ ‘Way to Play’.
DSD
Sell Brand building ✓ ✓ This involves picking where
Revenue Growth Management ✓ and how you will drive scale
Omnichannel excellence with insights, categories,
Enabling Data & analytics (including demand forecasting and ✓ ✓ customers, supply chain, etc.
capabilities IBP)
in ways your competitors
Portfolio mgmt (including M&A)
can not.
Modern workforce (upskilling & flexibility) ✓
Agile innovation ✓
Complexity management (including assortment) ✓
Continuous cost transformation/margin expansion ✓
Tax optimized location strategy

Strategy& 51
Capabilities Driven Strategy - Configuration
Building a coherent portfolio aligned to a capability system unlocks

premium growth and returns
As companies decide on a capability system, they need to assess their portfolio for coherence and:
Shape the portfolio to get in the categories with right margin Fill capability gap through deals and divest businesses and
01 structure that fit their capability set

Aligning their portfolio to their capability system provides them
with a “coherence premium” delivering better growth, profitability,
02 brands that are poor fit
With a market powered by low interest rates and the need for
companies to adapt, the stage is set for a sustained boom in M&A
and total annual shareholder returns (TSR)1. and capability enhancement deals generate a substantial
premium in terms of TSR2.
Capabilities-driven deals significantly outperform limited-fit deals in total

annual shareholder return (TSR)
Average annual TSR above or below local market index performance, in
percentage points
3.9 2.5
-10.9
Leverage deals3 Enhancement deals4 Limited fit deals5
Notes: 1) As shown in a 2015 Strategy& study of 40 CPG companies with coherence scores assigned to each of them; 2) As shown in a 2020 Strategy& study of the 50 biggest deals of the past decade
3) The buyer uses its capabilities to improve the target company 4) The target company brings the buyer capabilities it needs 5) The buyer largely ignores capabilities
Strategy& 52
Capabilities Driven Strategy - Configuration
CPG companies are exploring new ways to play leveraging

breakthroughs in automation and technology
Unique Data, Insights &

‘Super’ Distributor Consumer Connector
Leverage Direct Store Delivery (DSD) Utilize consumer behavior data generated
New Ways to Play for capabilities developed to support own by having a broad portfolio to develop
CPG companies business to provide distribution services capabilities to forecast consumer
to other less-scaled CPG companies behavior to be sold to other CPG
Significant breakthroughs in companies
automation and technology across
commercial capabilities and supply
chain…
Life Style Platform Full Meal Solution Ecosystem
... making business models that were Extend brand strength in specific Create a better and more customized
previously logistically challenging for categories (e.g., make-up) to adjacent (e.g., for health reasons) consumer
and cost prohibitive for CPG product categories and services (e.g., experience for eating at home by
companies more viable beauty solutions) to meet a key consumer combining the best elements of meal kits,
need restaurant delivery and self-cooking

Strategy& 53
Capabilities Driven Strategy - Cloud
Connecting the different capabilities through an entire data

ecosystem is key to drive meaningful business outcomes
CPG industry lags
others in effective Build the right digital
01 capabilities to support
usage of the cloud Data Ecosystem commercial objectives
As the data ecosystem for Componentize

tech architecture
CPG companies continues to 02 by transitioning to
expand... microservices and APIs
... most CPG industry Leverage cloud-native

cloud transformations services models and
are still partial, and... 03 go beyond traditional
Infra-
structure-As-A-Service
… CPG companies
are not using the full Embrace agility,
capabilities of cloud product, & engineering
04 mindsets, not just Agile
(e.g., Internet of Things,
development processes
Natural Language
Processing) Ensure security and
05 privacy standards
are upheld
Cyber
Strategy& 54
Capabilities Driven Strategy - Culture
Building a resilient culture that integrates ESG thinking, can

withhold change and offers meaningful employee experiences
Energize Your Culture
2x Think like a VC, funding the minimum Clear a path for your agile teams,
viable product (MVP) and releasing ensuring the right resources and
more likely to outperform funding in stages governance
peers on both revenue
growth and profitability if you
have a distinctive culture1
Given the amount of change that the CPG
companies will experience, those that
Integrate ESG thinking into the culture, Leverage M&A and partnerships in a
build a resilient culture that can withhold
invest in upskilling and employee way that is coherent with your strategy
change and offer a meaningful employee
experience to further drive your ROX and cultural aspirations
experience will have an advantage
Notes: 1) PwC research from our annual culture survey over the past ten years has consistently shown that organizations that have a distinctive culture
that gives them a competitive advantage are twice as likely to outperform other companies in their industry peer group on revenue and profitability

Strategy& 55
Capabilities Driven Strategy - Culture
Continue to adapt your workforce and plan for a ‘years from now’
future that is here now
Embrace New Ways of Working Accelerate your Digital Journey Be Operationally Agile
Focus on people, productivity and how Double down on automation and Optimize the business through a revised
you work. Identify and preserve the accelerate upskilling investment to build workforce strategy-driven by new
evolved behaviors and cultural changes that a resilient, digital workforce while scaling capabilities and enhanced flexibility;
resulted from the crisis (e.g., breaking down innovation across the organization evaluate the workforce mix to ensure agility
silos, rapid decision making) to have and scalability for post-crisis operations;
continued impact on the immediate and leverage a digitized experience to
longer term business strategy reevaluate and transform your operating
model
Capitalize on New Capabilities Inspire Commitment Reimagine the Physical Space

Future proof skills for tomorrow. Adapt Build empathetic policies and culture. Consider how and where people work.
people processes for a more virtual world Sustain cultural strengths seen during crisis Harness newfound agility to work virtually
and empower employees to provide and align business objectives and KPIs to and remotely and reduce the physical
services through digital and virtual hearts and minds of the workforce. Remain footprint to facilitate scalable growth and
channels.Review recruiting and sourcing connected to workforce needs and long-term cost savings
strategies to attract newly available talent in sentiments
the market

Strategy& 56
Polling question #8
Companies that have a distinctive culture are likely
to outperform their competitors by:
1.5X
2.0X
2.5X
3.0X

Strategy& 57
Polling question #8
Companies that have a distinctive culture are likely
to outperform their competitors by:
1.5X
2.0X
2.5X
3.0X

Strategy& 58
How would you describe the culture at Trader Joe’s?

Strategy&
5
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
S& projects
20 mins
October 2022
Strategy& serves clients’ varied strategic problems across four
key practise areas; here are a few examples of our work…
Enterprise Strategy & Value Cloud & Digital
FFG Org & Op Model Design Capabilities Architecture Digital Strategy
Growth Strategy &

Digital Value Creation Technology FFG Salesforce / SAP
Enterprise Agility
Operations Customer
Ops & Logistics

Strategic Sourcing Marketing & Sales Customer Experience
Resilience
Supply Chain
Design to Value Pricing & Profitability Service & Engagement
Optimization/Digitization

…and more! 61
Strategy&
Case Study - ESV: Fit For Growth
We identified $300M+ in structural savings against a $1.2B

baseline, while helping invest in key new capabilities
Comments from Conagra Brands CEO Key Highlights
Actions executed within 12

months, savings in 18 months
100%
Reduction in SG&A
>20%
Savings achieved without IT
>80% enablement
Video at:
strategyand.pwc.com/fitforgrowth/ Savings reinvested in growth
conagra ~15%
Strategy& 62
The capability-driven organization and cost restructuring effort

transformed their cost structure, operating model and ways of working
STEP 1 STEP 2
Developed Clear Strategic Priorities & Aligned Cost Structure by Enhancing Differentiated Capabilities, Changing Operating Model and
Differentiated Capabilities Eliminating Low Value Added Activities
• Innovation – market and From Levers To

• Portfolio segmentation &
tailored complexity portfolio driven
• Invested and divested to focus on branded business
• Brand investment and mix • Trade effectiveness and Portfolio Disaggregated Segmented and
and drive innovation
shift efficiency Segmentation Brands and Focused on Priority
• Co-constructing brand strategies, innovation PODs,
and Divestiture Customers Focus I&A centralization Brands/Customers
• Lights On “Plus” in Non-Differentiating Capabilities

High Touch and (from ~5k to 3k headcount)
SG&A Operating Focused on Being the
Aspiring to be Best at • Broker optimization and outsourcing reducing 30%+
Strengthen Accelerate Model Best Where it Counts
Everything sales headcount
Brands Growth
Value • Reduction in senior management (Director and
Creation Management Top Heavy/ above) by over 30%
Flat and Accountable
Structure High Seniority
Expand • 50%+ of remaining SG&A headcount in Technology,

Margins Technology and Insourced and High Finance and GBS outsourced Modernized and
Back Office Fixed Cost Variabilized
• Integrated margin management • New location for Consumer Brands, Sales and
• Variabilized capabilities – brokerage, IT, Backoffice Innovation Running the Function
Running the Function
Culture • New mentality – leaders modeling Like a Company
Like I Own It
performance-focused culture Owner

Strategy& 63
The company realized more than $300M in margin

expansion, with most actions completed within 12 months
Example Program Milestones Example Timing of Benefits and Costs
Milestone Timing
Teams Mobilized, Surveys Launched Jan Y1
Targets Set Feb Y1
Board Approval of Restructuring Apr Y1
Non-Labor Discretionary Spend Actions Implemented May Y1
Program Announced to Street May Y1
Voluntary Retirement Announced May Y1
Spans & Layers and Initial ZBB Actions Completed (First Jun Y1
Wave Exits)
ITO/BPO Deals Signed Jul Y1
New Ways of Working & Incentive Plans Announced Aug Y1
G&A ZBB Actions and Initial Outsourcing Completed Oct Y1
(Second Wave Exits)
Key Gating Factors
Outsourcing Actions Completed Feb Y2
(Third Wave Exits) • Decisiveness on target setting
Continued Roll Out to Higher Value Functions and May Y2 & • Speed to execute people impacts/notifications
Customers Beyond
• Ability to execute initiatives in parallel
Strategy& 64
Case Study - Customer: Revenue Growth Management
RGM was a strategic priority for global alcoholic beverages

company, Beam Suntory
Project Objectives 1 Define RGM Framework & Assessment Playbook
Build RGM Capabilities Globally Unlock Value Potential

• Assess RGM capability maturity • Quickly understand opportunity
in an initial set of markets and challenges associated with
globally focusing more strategically
• Agree on a roadmap for • Align on the value of building a
capability development global capability and the size of
prize across select markets
PwC/Strategy& Approach
1 Define RGM Framework & Assessment Playbook
2 Assess Market RGM Capabilities & Gaps
3 Evaluate Size of Prize & Quick Wins
4 Develop Action Plan & Roadmap Developed framework specific to aspects of client category (spirits)
5 Develop Client Way of RGM

Strategy& 65
Prioritized markets based on market materiality and go-to

market approach and followed a rigorous approach for each
2 Assess Market RGM Capabilities & Gaps 3 Evaluate Size of Prize & Quick Wins
Market prioritization and analysis
Market Materiality Go-to-Market Approach Data Availability

High Direct High
High Direct High
High JV High
High JV Med
High JV Med
High Major 3rd party Med
High Major 3rd Party Med
California High Distributor A/C Med

Florida High Distributor B High
1 = Lowest 4 = Highest “Best in Class”
Event
Trade Spend Analysis
Strategy& Training - CM - CPG & Retail
Price Ladder Analysis October 2022
Analysis/Promotion ROI
Strategy& 66
Analyses were used to size opportunities for each market

and develop a capability development roadmap
4 Develop Action Plan & Roadmap & Playbooks RESULTS:
Estimated 3-5 year impact for client:
5 Develop Client Way of RGM
Global RGM Playbooks

Majority of OI impact is due to increased effectiveness
Commercial Promotion Pricing of spend that also drives revenue growth estimates
trade policy Playbook Playbook

Strategy& 67
Case Study - Cloud & Digital: Retail Shared Services
We helped build industry leading capabilities to produce

a single, scalable platform to support future growth
Legacy System & Scope Driver for Change
Large office supply retailer, Office Depot, acquired

a technology managed services provider in a
move to transform:
Cloud Enterprise Resource Planning (ERP) FROM TO
● General Ledger ● Adv Collections
● Accounts Payable ● Expenses Professional services
Revenue Management
Traditional retailer
● Accounts Receivable ● provider
● Cash Management ● Subscription Management
Supply Chain Management (SCM) They chose Oracle Cloud to support scalability of
● Supplier Quality Mgmt.
the newly combined entity and transformation into
● Purchasing
● SSPO ● Supplier Portal a service oriented company with a goal of
providing visibility across the value chain.

Strategy& 68
Case Study - Cloud & Digital: Retail Shared Services
Business process standardization resulted in operational

efficiencies, revenue optimization and 606 compliance
PWC Solution Outcomes
PwC brought a cross-competency team to holistically address
their business challenges, including pricing strategy, tax,
security, and organizational change management.
We provided life cycle implementation services including

Program Management, process & functional design, technical Acquired industry leading Produced a single, scalable
design and development, indirect tax, and end-user training. capabilities for their finance global platform to support future
function growth
We leveraged PwC’s Oracle Retail Model System, digital
PMO, and automated data conversation tools to accelerate
implementation.
We also designed and developed an innovative PaaS

solution for Salesforce and Oracle Order-to-Cash
innovation that allows them to sell and manage delivery of
their services at a Contract level while augmenting revenue Performed finance business
process standardization Achieved revenue optimization
and facilitating 606 compliance.
resulting in operational and 606 compliance
efficiencies & better controls

Strategy& 69
Introduction
Polling question #9
Volkswagen
Rolls Royce
Ferrari
Bugatti

Strategy& 70
Introduction
Polling question #9
Volkswagen
Rolls Royce
Ferrari
Bugatti

Strategy& 71
Data & Resources
There are several key data sources and tools that CPGs and
retailers require for success
Front office Middle office Back of office
Technology Technology Technology

• CRM (e.g. Salesforce) • Enterprise resource planning (ERP) • Industry cloud solutions
• Trade promotion tool (e.g. (e.g., Oracle, SAP) • HR / payroll tools (e.g., ADP, Workday)
Performance Analyzer - optimizing • Business planning (supply/demand) • Centralized marketing design platform
promotions, marketing and pricing (e.g., SAP, Logility)
• Security platform
• CDP - consumer data platform (e.g., • Product lifecycle management
Salesforce, Twilio, Microsoft) software (PLM)
• Robotic process automation
Data Data Data

• Syndicated data (Nielsen, • Forecasting data (Supply and • Enterprise-wide data lake
Euromonitor) demand) • HR & resourcing data
• Consumer insights • Procurement spend & strategic • Marketing suite
sourcing data
• Transportation & network rates
Strategy& 72
Wrap Up
Resources are available for your future reference

We will share the deck following this training; reference the Appendix for additional resources

Strategy& 73
Wrap Up
Consumer Markets Communities Of Interest
We have launched 3 Communities of Interest based on the unique subsector needs and solutions. If you want to stay
engaged and learn more on an ongoing basis, use the QR code below to sign up
Consumer Packaged Transportation, Travel &

COIs Retail
Goods Hospitality
- Amanda Foster - Kelly Pedersen - Jeanelle Johnson

Leads
- Ethan Dameron - Josh Goldman - Chuck Christensen

Strategy& 74
The Final 5: if you forget everything else, remember these!
1. 20% of revenue from Fortune 500 companies comes from Consumer Markets brands (Number 1 and 2
are retailers Walmart and Amazon)
2. Key trends are:
a. Changing consumer behaviour
b. Digitalization
c. E2E Value Chain transformation
d. Environmental, Social & Governance
e. Transformational M&A
3. CPGs and retailers are big parts of a broader value chain to buy, make, move, and sell consumer
goods; Strategy& supports clients along each aspect of that journey with market-leading strategy
4. COGS is the biggest P&L item for both Retail and CPG, with Trade spend making up an almost equal
portion for CPG manufacturers
5. Our approach to support CM companies is Capabilities Driven Strategy; building capabilities,
configuration, cloud, and culture to enable operational excellence and drive growth

Strategy& 75
Q&A

Strategy&
Strategy& Training - CM - CPG & Retail
Strategy&
Electronic Evaluation
Strategy& Training - CM - CPG

& Retail
Start Date & Time:
October 21, 2022 | 12pm ET
End Date & Time:

October 21, 2022| 2pm ET
You have until October 26, 2022 at

11:59PM ET to complete the evaluation or go to:
survey. https://forms.office.com/r/Ee5PCdJV4
Y
D Follow on screen prompts to complete the evaluation
survey for this course.
A
Strategy&
- CM(CPG
- CPG
&&Retail)
Retail
Appendix
October 2022
Data Sources - CPG
Consumer Goods & Food: Additional resources

Thought Leadership Webcasts/Learnings
• Future of CPG Below Available on Vantage (search):

• Unlocking Hidden Value in Product Portfolios (CPG) • Industry Focus: Consumer Packaged Goods Training
• Reimagine Your Entire Brand Portfolio • Retail and Consumer Basics e-Learning 2020
• CPG Subsector Trends • Trade Promotion 101
• Using Technology to Rewire a Food Business • Trade Promotion Management Solution Overview
• Industry Overview: Food and Beverage
Additional Resources
• Global Consumer Insights Survey

• BevNet.com (Spirits industry news)
• BevIndustry.com (Beverages industry news)
• Fooddive.com (Food industry news)

Strategy& 79
Data Sources - Retail
Retail & Grocery: Additional resources

Thought Leadership Webcasts/Learnings
• Holiday Outlook • Retail and Consumer Basics E-Learning

• Global Consumer Insights Survey • R&A R&C Sector Trends - Apparel, Footwear and Accessories
• Ready to Reopen • BY/JDA E-Learnings
• Retailers Take a high touch approach to COVID-19
• NRF x PwC COVID-19 retail study
Enabling Tech/JBRs Additional Resources
• Blue Yonder - Luminate Retail Industry Conferences:

• SAP Retail • NRF Big Show
• Oracle Retail • Shoptalk
• Microsoft Dynamics • Retail Distrupt
• Centric Websites:
• Visulon • Business of Fashion
• Retail Dive
• Retail Brew
Strategy& 80
Data Sources - Consumer Markets
Want to learn more? Access the resources below!
Strategy & Website PwC Intelligence - CM Inside Sectors - CM
Additional Resources Reference Links

Consumer Markets Overview eLearn on Vantage (30 mins) - Updated July ‘20 Link
CM Advisory Yammer Link
CM Client Success Stories Link

Strategy& 81
strategyand.pwc.com
© 2022 PwC. All rights reserved.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see pwc.com/structure for further details.
Disclaimer: This content is general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Sector Overview - CPG & Retail

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sector Overview - CPG & Retail

Uploaded by

Copyright:

Available Formats

Strategy& Training

CM - CPG & Retail

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

CM products are brought to you via major retailers, many of whom

CONVENIENCE/DRUG DISCOUNT SPECIALTY E-RETAILERS

Strategy& Training - CM - CPG & Retail October 2022

1. Industry overview 15 mins

2. Market Trends 15 mins

3. Value Chain & the P&L 20 mins

5. Capabilities Driven Strategy 20 mins

6. Representative S& Projects (Revenue & Cost) 20 mins

7. Wrap Up and Q&A 15 mins

Appendix: Key Data Sources & Reference Material

Strategy& Training - CM - CPG & Retail October 2022

With you today...

Ed Landry Skanda Janakiram Ben Olsho Erin Ford Dimi Koumenos

Strategy& Training - CM - CPG & Retail October 2022

The Consumer Markets Team

Strategy& Training - CM - CPG & Retail October 2022

• An overview of the CM industry including sectors,

• Current trends in the industry that are posing challenges

• The standard value chain of CPG manufacturers and

• Our approach to help clients differentiate themselves in the

• Examples of successful engagements with our clients

• Data sources for your future reference

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

What is consumer markets?

Consumer packaged goods (CPG) CPG: Retail:

Strategy& Training - CM - CPG & Retail October 2022

Consumer markets are the heartbeat of the US economy

Economy Workforce Capital Innovation

68% 31% 20% 26%

Consumer Packaged Goods: Sector overview

Alcohol Beverage Personal Care

What makes the sector unique?

Retail: Sector overview

Big Box Convenience

$4.9TR1 6-8%² E-tail Drug

What makes the sector unique?

1) Based on PwC Analysis & Ibisworld Data as of 08/2020

Below depicts an illustration of the lifecycle from farm to table -

AGRIBUSINESS AND CONSUMER PACKAGED RETAIL

Plant Production: Convenience &

Source: Booz & Company analysis

None of the above

Strategy& Training - CM - CPG & Retail October 2022

None of the above

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

Strategy& Training - CM - CPG & Retail October 2022

Consistently strong performance has been elusive for an industry

2000-2007: 2008-2009: 2010-2013: 2013-2016: 2017-2019: 2020-2022:

Revenue CAGR 4.3% -1.0% 3.9% -1.4% 2.5% 4.8%*

Players within Consumer Markets are challenged with five key

Changing Digitalization End-to-end Environmental, Transformational

Strategy& Training - CM - CPG & Retail October 2022

Purchase patterns seem to have changed ‘for good’, with some

Health & Limited