Consumer Goods Technology

ROUNDTABLE PARTICIPANTS

THROUGH THE

CONSULTANT’S EYES

INDUSTRY THOUGHT-LEADERS SHARE GUIDANCE FOR CONSUMER GOODS FIRMS FACING NEW CHALLENGES IN 2009

JAMES COLEMAN Executive Partner and Managing Director, North America Consumer Goods and Services, Accenture

BRIAN GIROUARD Global Leader, Consumer Products & Retail, Capgemini

When it comes to weathering challenging times, perhaps President Barack Obama puts it best: “If you’re walking down the right path and you’re willing to keep walking, eventually you’ll make progress.” Consulting firms can help ensure that consumer goods (CG) companies stay the course with strategic initiatives by offering guidance, research and thought leadership. In our first Consultant Outlook Report, analysts from Accenture and Capgemini lend their skills and expertise to answer the questions on every CG executive’s mind:

How is the current economic state impacting the CG industry? COLEMAN: While it’s true that consumer companies are usually considered a relatively safe haven in turbulent times and are less impacted than other manufacturing industries in absolute terms, they do face challenges. Many are

laden with debt from large acquisitions; they’re all impacted by volatile raw material, energy and packaging costs; and consumers are cutting spending due to the declining credit and job markets.

The relative impact differs by industry sub-sector. We see consumer health companies holding up well and remaining acquisitive.

Food and basic household product segments are not feeling as much stress, but drinks companies, especially soft drinks and beer, have been negatively impacted with drops in profitable out-of-home consumption. The high-end beauty segment, like luxury apparel and footwear, is also feeling the pressure.

The increased cost of goods caused by elevated commodity costs combined with decreased pricing power is positively impacting food processors, while challenging manufacturers. While we see a break in the commodity cost trend, manufacturers still need to lower their cost-to-serve and balance the mix of near-term versus sustainable long-term performance.

As part of our High Performance Business research that was conducted across industries, we analyzed the financial results of 850 companies in the United States that lived through the recession of 1990 to 1991. Those who outperformed their industry for six years following the recession kept their eye on the prize and actually put distance between themselves and the low performers during a recession. High performers adapt well to change and think differently. They act decisively — they focus on generating cash flow, investing in segments in which they lead and managing a narrow portfolio of businesses.