The Mix: Inflation, Innovation and Retail Collaboration

Geoff Freeman, President/CEO, Consumer Brands Association 

We tapped Freeman for his views on the biggest challenge impacting the consumer goods industry — and then threw in a question on the second biggest challenge.

What's your outlook on the impact of inflation in consumer goods?
The CPG industry, like all industries and the consumers it serves, is contending with inflation. The cost of ingredients, materials, and energy — which accounts for about 70% of the industry’s total costs — is up 35% since before the pandemic. Wholesale costs coupled with constant supply chain disruptions and a persistent labor shortage offers little hope that the cost pressures on our companies will ease in the near term. While we may see some of the intensity reduced in the coming months, industry cost pressure will remain well above pre-pandemic norms through the rest of the year and possibly beyond.  

What are CPGs hearing from consumers when it comes raising prices, and how are they responding?
We don’t have those specifics, though we do know from recent polling that consumers blame the pandemic, subsequent policies, and the supply chain for CPG inflation — in short, they understand where pricing pressures are coming from even if they may not know just how intense the cost environment has been for CPG companies.

Related: CPG Checklist: Supply Chain Safeguards

They also may not understand how high demand has been since the start of the pandemic. Consumer demand for CPG products has exceeded March 2020’s shelf-clearing highs for the last eight months, most recently up 5.4% over last year. The focus of CPG companies remains delivering for consumers in a high demand environment. We make essentials and it is our industry’s responsibility and privilege to ensure American families have what they need every day.

What more needs to be done?
Consumer Brands Association urges government leaders to keep their focus on addressing root causes of inflation. We are working with the government to offer input and develop solutions that are, one, in our control (unlike Russia’s actions) and, two require federal leadership. The attention of policymakers is best spent on easing supply chain pressures by creating greater visibility and coordination, increasing trucking capacity, reducing port congestion and incenting more workers to return to the labor force.

Your research shows that nearly 60% of Americans in the workforce want flexibility. How are CPGs delivering on this when not all roles can be done from home?
CPG companies are doing everything they can to attract and retain talent and provide greater flexibility whether for office or manufacturing roles. Specific to facility employees, companies are upending long-held production models and looking seriously at how to take ideas from the gig economy and apply them to the manufacturing world, putting more control in the hands of workers while still ensuring they deliver for consumers.