KPMG Organic Growth Barometer

18 Pages·2017·0.96 MB·English

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Contents
Introduction 03
About the Barometer 04
Growth trends in Consumer
Packaged Goods (CPG) 06
KPMG CEO Outlook Survey fndings 08
What top performing CPG
companies did right in 2016 09
Strategies for organic growth 11
References 17
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG
network of independent member frms affliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Kingdom.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavour to provide
accurate and timely information, there can be no guarantee that such information is accurate
22 acs to ofn th seu cdha tien fiot rism raetcioeniv ewdit ohro tuhta atp itp wroipll rciaotnet ipnruoefe tsos bioen aacl caudrvaitcee ianf theer af uthtuorreo.u Ngoh one should
examination of the particular situation.
Introduction
“Organic growth is
becoming more diffcult
to achieve in consumer
packaged goods.
Organic revenue growth is
a key performance metric for
consumer packaged goods (CPG) companies,
as well as for analysts and investors who
want to see earnings increase year-on-year.
Right now however, CPGs are fnding organic
growth increasingly diffcult to achieve.
It is no longer a simple case of developing
a new product to accelerate growth. Nor is
it as easy to take existing lines into high-
growth markets as competition from local
brands intensifes.”
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms
affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United
Kingdom. The KPMG name and logo are registered trademarks or trademarks of KPMG International. The information contained
herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we
endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate
3 professional advice after a thorough examination of the particular situation.
Introduction (continued)
About the Barometer
The power of the customer Improving effciency The KPMG Consumer Packaged Goods Organic Growth
Consumers are becoming more informed. They understand the All the while, costs pressures are building and will likely intensify Barometer is a unique database that tracks the organic
importance of shopping around to get a better deal and are using post-Brexit. Many have already stripped out operational costs, but revenue growth of 50 of the largest CPG companies
multiple channels of purchase. As a result, selling becomes harder and other less controllable costs, such as input prices, present little scope listed on the US and European stock exchanges. It is
we’re seeing that the consumer is increasingly in control. Take grocery for adjustment. In the challenge to balance growth with surging costs, based on externally reported company data.
for instance, where consumers have switched decisively from branded CPGs are possibly better placed than retailers from a margin point of
Organic growth is defned as the percentage year-on-year
goods to supermarkets’ own labels over the course of the past decade. view. However, they still need top-line growth as well as bottom-line
changes in revenue at a constant foreign exchange rate,
Knowing your customer’s shopping preferences – what they want to improvements to keep shareholders happy.
excluding the impact of acquisitions and divestments
buy, how they interact with companies, and what channels they use to
from one year to the next. Only data for the 50 largest
browse and purchase is critical, and becoming more diffcult to get right. Organic growth is becoming harder, but it’s still possible
companies quoting organic growth in 2016 is published in
Together, all of these factors are creating a challenging landscape for this barometer.
Disruption: the infux of start-ups and a focus on innovation consumer companies and it’s clear from the decline in growth rates that
On top of a consumer landscape controlled by customer preferences, keeping up is now more diffcult. However, some are getting it right. Our frst edition, published in 2016, tracked performance
innovative sector start-ups have emerged with strong knowledge of the The KPMG Organic Growth Barometer gives you the opportunity to fnd from 2010-2015, on a fve-year compound annual growth
customer, and have the agility to execute and respond to trends more out what top performers are doing to achieve organic growth and to rate (CAGR) basis, as well as 2014 and 2015 year-on-year
quickly than major CPGs. Despite aspirations to mimic the newcomers, benchmark your own company’s performance against them. organic growth comparisons.
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Those large consumer companies who are embracing innovation are KPMG UK organic growth comparisons.
starting to create ‘incubation labs’ to get new ideas off the ground - they’re The barometer gives companies the opportunity to
partnering with starts-up instead of competing with them. We’re also seeing benchmark their organic revenue growth against the overall
an increase in mergers and acquisitions so that businesses can diversify or CPG database and top quartile performers. It also provides
simplify their portfolios, and in doing so attract the right skill sets. KPMG’s insights on strategies for growth.
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
4 Pparirntticeudl ainr itnhdeiv Uidnuitael do rK einngtidtyo.m A.l tThhoeu KgPh MwGe ennadmeea vaonudr l otog op raorvei dreg aicscteurreadte t raandde tmimareklys ionrf otrramdeatmioanr,k tsh oefr eK cPaMn Gb eIn ntoe rgnuaatiroannatel. eT hthea int fsourcmha intifoonr mcoantitoanin iesd a hcceurerainte is a osf o af gtheen edraatle n iat tius rree caenidv eisd n oort t ihnatet nit dweidll ctoo nadtindurees tso t bhe accircurmatset ainn cthees of any
future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Growth trends in CPG
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Kingdom. The KPMG name and logo are registered trademarks or
5 trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Growth trends in CPG
The analysis undertaken for the
KPMG Organic Growth Barometer
has highlighted fve key trends:
G rowth is harder to come by Median growth New entrant top performers
T
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Short Form Name 2016 ogrgoawntihc In q2u01a5rt itloep?
median and top performance companies is narowing. 2011-2016 3.4 pa
1 Heineken NV 4.80% 0
Food, tobacco and beverage 2 Davide Campari - Milano SpA 4.70% 0
companies are top performers
2016 %
3 L'Oreal SA 4.70% 0
C
ofofemripnagr efodo wd,i ttho boathcecro CaPnGd bceovmepraagneiess p, e‘erxfopremri ethneti abl ecsotm. panies’ 3.0 pa 4 Rémy Cointreau SA 4.70% 0
5 The Coca-Cola Company 4.00% 0
S ingle brands and categories do best • bM aesdeida no nC A5G0 Rco gmropwanthie rse rdeupcoerdti ntog 35. 4y%ea r( fororgman 4ic.2 g%ro win t2h0.15), 0 = new entrant
Companies with single brands and categories perform • M edian 2016 growth (YoY) has remained consistent at 3.0% in
better than those with multiple brands, with growth coming comparison to 2015. Eight year upper quartile performance
predominantly from mature markets. Those demonstrating
sustained top-quartile growth from 2011 to 2016 are Lindt 0% 5% 10% 15% 20%
a
Bnrodw Snp rFüonrgmli a(nch (owchoilsaktey),) .C olgate-Palmolive Co. (oral care) and Revenue CAGR 2011-2016 and 2016 2009 2.5% 3.9% 9.0% MToepd qiauna rtile
% pa growth 2011-2016 2015 2016 2010 3.0% 5.0% 9.0%
New top performers
Top quartile threshold 4.5 5.0 4.0 2011 5.0% 7.0% 14.0%
Companies entering the ranks of top performers in 2016 2012 4.7% 6.0% 10.2%
Mincillaundoe :S TphAe, CRoecmay-C Coolain Ctroemaup aSnAy ,a Ln’Od rHéaeli nSeAk,e Dn aNvVid. e Campari – Median 3.4 3.0 3.0 2013 3.5% 5.0% 16.9%
Lower quartile threshold 2.2 0.4 1.4
2014 3.0% 4.0% 12.0%
0% 5% 10% 15% 20%
K
T
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2011 5.0% 7.0% 14.0%
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights re2s0e1r2ved. Printed in the U4n.7it%ed Kingdom. 6T.h0e% KPMG n1a0m.2e% and logo are registered trademarks or trademarks
6 o
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2014 3.0% 4.0% 12.0%
2015 3.0% 5.0% 9.5%
2016 3.0% 4.0% 7.2%
SABMiller*
Reckitt

%

Benckiser 4.8
%
4.6 AB InBev
L'Oreal %
5.0
%
4.6
Companies reporting higher than four
percent organic growth in 2016:
Colgate–

The Estée Lauder Companies - 7.2%

Palmolive

Lindt and Sprüngli - 6.0%

WhiteWave Foods - 5.0%
Beiersdorf
5.2%
Brown Forman - 5.0%

SABMiler - 5.0%
4.5%
Heineken NV - 4.8%

Rémy Cointreau SA - 4.7%

L’Oreal SA - 4.7%

Davide Campari - Milano SpA - 4.7%
Brown
Clorox - 4.6%
Nestlé Forman
Colgate-Palmolive Co - 4.0%
%

%

The Coca Cola Company - 4.0%
4.5 6.8
Companies demonstrating sustained
top quartile performance 2015-2016:
The Estée Lauder Companies Companies in Estée
Lindt and Sprüngli Lauder
Brown Forman the top quartile
%
Colgate-Palmolive Co 2011-2016 (CAGR) 7.2
Lindt &

Sprüngli
*S ABMiller has since been acquired
by Anheuser-Busch InBev (ABI) as
%
of 11th October 2016
7.7
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Kingdom. The KPMG name and logo are registered trademarks or
7 trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
KPMG CEO Outlook
Survey Findings
To anchor our barometer within the context
of global performance and sentiments over
the period, it is supplemented with KPMG’s
cross-sector CEO research conducted in 20171.
The views shared by consumer goods and retail CEOs reveal disparity with
CEOs in other sectors, as they tend to be more upbeat and confdent about
their industries’ futures.
We found, for instance, that CEOs in consumer goods and retail are more data-
driven than those in other sectors, which tend to be more focused on diversity.
They are fxated on achieving greater speed to market and driving innovation by
investing and adopting disruptive technologies, such as cognitive automation,
the internet of things and blockchain.
They are slightly more confdent than other sectors about their individual company’s
growth prospects over the next 12 months, but less confdent about the industry’s
growth as a whole.
Projecting to the next three years, CEOs describe themselves as very confdent
about growth prospects for their businesses and the industry.
Most worrying for consumer goods and retail CEOs is the negative impact of
global economic factors. They describe it as by far the biggest factor impinging
on organic growth. And more than CEOs in any other sectors, they fear the
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved. Printed in the United Kingdom. The KPMG name and logo are registered trademarks or trademarks of KPMG International. The information impact of new competitors and disruptors.
contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely
8 information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the particular situation.
What top performing CPG
companies did right in 2016
Five key consumer trends for growth in 2017-2018
As the CPG industry goes through F
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change and fux, some companies are new markets in Greater China and Russia. The group’s strategy has their peak earning years. Coupled with fewer family and more
fnding more success than others in been to focus more exclusively on its high-end brands4. singles households, these changing consumer demographics
are altering spending habits. Urbanisation is also driving new
achieving organic growth. What are top 2016 was especially good to Heineken NV., which saw its premium brand consumption trends and situational needs.
performers focusing on that makes a p
Voiertnfoalmio daenldiv Mer esxtricoon5g. Ipt eartftorirbmutaensc iets i nc okemyp Eeutirtoivpee adnv manatrakgeets a, nads owrgeall naisc in 2. D isruption is occurring across the customer value chain
difference to their growth fgures? revenue growth to its diversifed footprint and innovation agenda. addressing new customer expectations for both quality and
convenience. This trend is driving changes in channels for food
L’Oréal credits its technological investment with winning over more Estee Lauder achieved an organic growth rate of 7.2 percent in 2016 and and snack shopping, leading to the growth of private labels,
customers. Already serving one quarter of the four billion consumers in have attributed some of this success to strength in China and duty-free subscriptions boxes, and online grocery shopping and platforms.
the global cosmetic market, it has set its sights on achieving double. It stores. Understanding Millennials and making tactical acquisitions of
plans to do this by accelerating its deployment of what it calls ‘game­ brands with a strong Millennial following also appears to be paying off6. 3. T oday’s consumer is more informed about what they buy
changing innovations’, which include developing products to suit rising and where they buy. This ranges from the nutritional value of
trends and maximising use of the digital cloud. Organic revenue growth 2016 their food to how it arrived on their plate. A greater emphasis
8.0% on healthy options and demand for transparency in the
Demonstrating the importance of knowing your customer and how 7.0% 7.2% supply chain is driving preferences and choices.
they want to interact and shop, L’Oréal ensures that its brands are very 6.0% 6.0%
visible on digital media. Maybelline New York, for example, has more 5.0% 5.0% 5.0% 5.0% 4.8% 4.7% 4.7% 4.7% 4.6% 4. M illennial preferences are also changing how people consume
than 30 million followers on Facebook. As a consequence of its digital 4.0% 4.0% 4.0% and pay. New business models are providing a better
presence, e-sales grew by more than 30 percent in 20162. 3.0% customer experience and mass personalisation. There is a
Davide Campari-Milano, meanwhile, compensated for challenges 2.0% shift to ‘access’ over ‘ownership’ where shared economies
in emerging markets by focusing on the developed economies, 1.0% are providing services on demand.
where high-margin global and regional brands continued to exceed 0.0% 5. C onsumers are now interacting with manufacturers more
performance expectations. Intelligent acquisitions have also bolstered than ever as they increasingly desire control of ordering and
revenue after successful integration, most recently in 2016 with Grand delivery channels. This is resulting in a rise of direct sales
Marnier which now represents 25% of group sales3 . between manufacturers and consumers, with the consumer
valuing confgurable products and lower prices.
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
9 pParirntticeudl ainr itnhdeiv Uidnuitael do rK einngtidtyo.m A.l tThhoeu KgPh MwGe ennadmeea vaonudr l otog op raorvei dreg aicscteurreadte t raandde tmimareklys ionrf otrramdeatmioanr,k tsh oefr eK cPaMn Gb eIn ntoe rgnuaatiroannatel. eT hthea int fsourcmha intifoonr mcoantitoanin iesd a hcceurerainte is a osf o af gtheen edraatle n iat tius rree caenidv eisd n oort t ihnatet nit dweidll ctoo nadtindurees tso t hbe caicrcurmatset ainn cthees of any
future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
The Estée Lauder Companies
Lindt and Sprungli
WhiteWave Foods
Brown Forman
SABMiller
Heineken NV
Rémy Cointreau SA
L'Oreal SA
Davide Campari - Milano SpA
Clorox
Colgate-Palmolive Co.
The Coca-Cola Company
Strategies for
organic growth
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Kingdom. The KPMG name and logo are registered trademarks or
10 trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.