Problems in Globally Transforming Markets Faced by Cpg

Published: 2021-09-12 04:50:08
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Category: Corporation, Strategy

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CPG trades in packaged goods consumed on daily basis like food, beverages, healthcare and medical products, cosmetics, industrial goods, etc. Since most of these products need to be handled with care, a major part of costs in CPG industry is incurred on packaging of products.
The global CPG market is growing rapidly with contribution from both developed as well as developing countries. In 2016, USA was one of the leading countries in CPG market globally. In 2014, total spending on CPGs by US consumers was around 397.6 billion dollars, by 2016, it grew up to 407.2 billion dollars, growing at this pace, it is expected to reach up to 427.1 billion dollars in the year 2020.To stay in pace with growing market and changing trends due to penetration of internet, CPGs have continually innovated with their products and packaging techniques. It is evident from data, in 2013, online sales of CPGs were only 8 billion dollars while offline sales amounted to 658 billion dollars. By 2018, online sales increased more than four-folds, to 36 billion dollars, while offline sales only increased to 682 billion dollars. This clearly shows that CPG have taken the turning market trends towards internet, into account and took measures to meet market expectations.
Despite regular innovation and steps in improvising their techniques, CPGs face many problems in globally transforming markets. Consumer demands and habits are rapidly changing, as a result of which manufacturers require increasingly flexible, multi-functional equipment to allow for quick and efficient changeovers. It causes more complexity in supply chain and thus increase costs.
Apart from this, CPGs face yet another problem, i.e., workforce shortage. CPGs are plagued with workforce shortage since a long time. To address this shortcoming, companies are making strides in recruitment and education to retain talent. These steps include carving out swift, individualized paths for growth among junior workers. Additionally, CPGs are working to make jobs more interesting for employees, connecting them with their work on a deeper level and improving recognition for a good job and better rewards for employees on performing well.
Past growth does not ensure future prosperity. The need to meet rapidly changing and diverging consumer demands requires innovation in a wide range of equipment, materials and techniques, which demands a huge amount of investment. While e-commerce offers most CPGs a considerable sales growth, many must sort through the growing pains as they find their footing in the digital space. For many companies, it is difficult to forecast demand on e-commerce platforms and overcome challenges with fulfillment and content verification—all while meeting sustainable packaging demands and retaining control over branding when products are re-packaged for distribution by third parties. Some companies struggle to identify which of their products are best suited for e-commerce, and frozen food manufacturers are especially eager to understand how to get in the game. CPGs also need to focus on developing packaging technologies that respond to climate challenges.
Finally, to address the problem of workforce shortage and meet the amount of required number of employees as old ones retire, CPGs should turn to advocating for training of young employees provided by technical schools, apprenticeship programs providing young workers the opportunity to learn key skills on the job. Improving benefits and automating certain jobs are also measures that companies can consider.

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