Global consumer product sales see slow growth in 2024 as price increases stabilize, volumes improve: Report

Consumer goods companies must accelerate their digital transformation to recover lost ground due to declining shareholder returns. Despite easing inflationary pressures, consumer confidence remains fragile, prompting consumer goods companies to redefine AI-led, technology-driven models to revitalize growth.

Global consumer goods sales growth slowed in 2024 as price increases moderated and volume growth remained limited. Sales increased by 7.5% year-over-year in 2024, down from 9.3% in 2023 and 9.8% in 2022, indicating continued challenges for the industry as consumer spending habits shift and economic pressures mount. Bain & Company explores these dynamics and more in its Consumer Products Report.

Richard Webster, global head of Bain & Company's Consumer Products practice, said: "The challenging dynamics of 2024 have disproportionately pressured the largest consumer goods companies. As inflation subsides, it is clear that the old model of mass consumer goods growth is not entirely suited to the emerging new normal. The industry is at a turning point where the traditional reliance on price-driven growth is not enough to sustain long-term growth. Now is the time for consumer goods companies that are ready to seize the opportunity to define an agenda and make strategic choices that will enable them to thrive in the age of generative AI."

Bain & Company's findings show that in developed markets, consumer goods sales growth fell from 7.7% in 2023 to 4.5% in 2024, and while price increases have moderated, volumes remain disappointingly flat. This sluggish growth reflects the cumulative effect of prolonged high inflation: by the end of 2024, prices in the US and EU were more than 20% higher than in the first quarter of 2020. Bain Consumer Labs' latest consumer survey shows that cost of living remains a top concern for consumers in the US and Europe, with about 80% of respondents saying they are cutting back on spending.

Conversely, emerging markets continue to serve as a major engine of growth, with retail sales up 11% year-over-year. This performance is broadly consistent with recent years and more than doubles the growth rate of developed markets in 2024. Against the backdrop of modest price increases in emerging markets, the reported 3% volume growth accounts for almost all of the volume growth recorded by the global consumer goods industry.

The challenging dynamics of 2024 have put significant pressure on the largest consumer goods companies, especially as emerging brands gain momentum and consumer preferences increasingly diverge from mass-market products. Bain & Company data shows that in the first half of 2024, revenue growth for the world's 50 largest consumer goods companies was just 1.2%, while emerging brands accounted for 40% of total US consumer goods growth.

At the same time, consumer health trends, such as a heightened focus on overly processed foods and the growing acceptance of GLP-1 drugs, have the potential to trigger lasting disruption within the industry. Significant shifts may stem from the intersection of changing consumer behavior with macro trends, including immigration, the redefinition of family structures, and population aging.

The consumer goods landscape is rapidly transforming, driven by changing shopper behavior and an evolving retail environment. Consumers are exhibiting more polarized consumption habits, with some prioritizing value and affordability while others are willing to pay a premium for high-quality products. Our recent research also shows that consumers are increasingly busy and prefer convenient consumption methods (e.g., ready-to-eat snacks). The retail environment is becoming more modern, centralized, and diverse, driven by the rise of value formats, the expansion of e-commerce platforms, and increased spending on food service. For consumer goods companies, minor adjustments are not enough to make up for losses. They must radically overhaul their product portfolios, enhance their digital capabilities, and integrate AI into their operations," notes Faisal Sheikh, partner and head of Bain & Company's Consumer Products practice in the Middle East.

While 90% of consumer goods company executives recognize the importance of AI, only 37% list it as a top-five priority. Only 6% report having plans to leverage AI to create business value, highlighting a critical execution gap.

Innovations in Enterprise Resource Planning (ERP) and AI are redefining the capabilities of digital technology. For many consumer goods companies, this represents a once-in-a-lifetime opportunity for a transformative, technology-driven change. Bain & Company says advanced retailers are already using AI to optimize supply chains, automate content creation, and hyper-personalize marketing; however, most consumer goods companies have yet to catch up.

Adopting AI is imperative; however, many consumer goods companies lag in implementing large-scale digital tools. Companies that fully incorporate AI into their business frameworks will lead the next wave of industry growth, and successful consumer goods companies will not be hampered by perfectionism; they will cohesively move towards major initiatives through near-term digital applications while continuously testing and learning.

To regain investor confidence, leading consumer goods companies must focus on the fundamentals, rediscover volume growth to reclaim market share taken by smaller emerging brands and local competitors that have effectively engaged consumers. They should also invest in productivity programs that improve margins and generate cash flow to support further investment in key areas such as technology, advertising and promotion. To achieve meaningful transformation, consumer goods companies must:

Rethink their sustainable growth strategy by optimizing current profit pools through superior execution and expanding categories or creating new ones through bold portfolio decisions;
Reshape themselves to continuously improve productivity by streamlining existing portfolios and operations while building unique focuses for the future; and
Redefine AI- and technology-driven models by enhancing their ability to deploy value-generating digital tools at scale while reimagining their entire business for tomorrow.