WASHINGTON, DC: Procter & Gamble, PepsiCo and Coca-Cola are among the US companies that have adopted successful strategies in the consumer packaged goods sector during the recession, helping the category outperform the market as a whole, the Grocery Manufacturers Association and PriceWaterhouseCoopers say.
The two organisations' 2009 Financial Performance Report, sub-titled "Focusing on Today, Envisioning Tomorrow", argued many CPG firms achieved "superior performance in 2008, certainly on a relative basis," despite the "string of sobering economic facts" that came to define last year.
Overall, the 157 companies assessed posted an annual average growth rate of 10% in 2008 – with the top quartile of this group recording an improvement of 18% – although the median shareholder return also fell by just over 25%.
Among the strategies these corporations have adopted in an attempt to offset the worst impacts of the downturn are moving into fast-growing markets like China and India, reassessing their brand portfolios, and "scaling back" their adspend.
Procter & Gamble, the world's biggest advertiser, was lauded, in particular for having "expanded its presence in Asia during the financial crisis, even as other Western companies have fled."
Similarly, the Cincinnati-based organisation performs "ongoing evaluations of its brands, ensuring that they are performing well and fit strategically within the larger brand portfolio."
This has resulted in the sale of properties such as Johnson Products and Infusium 23, but also ensured that the FMCG giant remains focused on its core areas of competence.
It has also recently announced the purchase of the Art of Shaving, a retailer selling premium shaving products in high-end shopping malls in the US, as it seeks to diversify its overall offering.
Coca-Cola was praised for streamlining its operations, its acquisition strategy, and for launching new products, such as vitaminwater10, based on gaps which it has identified in the market.
According to the company's cfo, Duane Still, "we are first and foremost a brand company. We realized that we weren't really focusing enough on the brands themselves, so we created business units that align against our brands."
Similarly, the soft drinks giant is "investing in new products like Coca-Cola Zero to offer our consumers more choice, and we are coming up with different packaging bundles."
Overall, he suggested that the "images of our brands" and Coca-Cola's intellectual property are "paramount and worth protecting at all costs."
PepsiCo was also credited for "rejuvenating its iconic brand", including launching a new logo and redesigning the packaging of certain products, as it aimed to strengthen its position relative to own label.
Richard Goodman, its cfo, argued that "you need to make sure that your brand stands for something and that it is differentiated in some meaningful ways from private label."
He added that "the key is managing your relationships with each of your customers, across all of your channels," a policy that is especially important in the current climate.
Data sourced from PWC; additional content by WARC staff