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WASHINGTON -- The CPG industry is contributing an estimated $2.1 trillion in revenue and over $1 trillion worth of added value to the overall economy, according to a new study on industry peformance from the Grocery Manufacturers AssociationFood Products Association here.
GMA/FPA's latest report conducted by PricewaterhouseCoopers, is the 10th annual study from the trade group on the CPG industry's financial contributions.
"This report captures the vast economic power and impact of the food, beverage, and consumer packaged goods industry," said Stephen Sibert, GMA group v.p. for industry affairs and membership. "The measures highlighted by PwC show that the CPG industry helps drive and sustain the economy, and returns significant value to consumers, investors, and trading partners."
The report, "Insights Into the Food, Beverage, and Consumer Products Industry: GMA Overview of Industry Economic Impact, Financial Performance, and Trends," found that overall CPG industry growth remains higher than 5 percent, and that total productivity is rising. In 2004, CPG manufacturers employed 14.7 million Americans and contributed $2.1 trillion to the economy. In turn, employees earned $569 billion and manufacturers paid $242 billion in tax revenue.
Slow population growth, discriminating consumers, and an environment in which it's hard to hike prices give rise to highly competitive business climate for the industry. Skyrocketing commodity and energy costs, changing consumption patterns, globalization, and supply chain complexity are just a few of the issues significantly affecting it on a daily basis. During the 1990s, CPG companies concentrated on achieving internal productivity gains, but the report says that today's manufacturers are engaging in targeted collaboration across the value chain to stay in the race.
"The most successful CPG companies are devising new strategies for growth by incorporating a greater degree of openness in their business models," explains Lisa Dugal, partner and North American retail and consumer packaged goods advisory leader for PricewaterhouseCoopers. "The boundaries between retail and CPG manufacturing are blurring. Some in the industry are developing a total experience for their consumers and forging partnerships with companies outside their core business."
Among the other trends responsible for forming the CPG industry are a rise in private label products, the need for continual product portfolio management, growing input costs, and stakeholder demands, the report found.
Another factor is the expansion of such consumer markets as Asia and Central and Eastern Europe. Consumer spending in these areas is growing, yet manufacturers must also face the reality of highly disparate incomes in these areas, along with the incremental challenges of entering new markets. Over 4 billion potential customers in these markets live on less than $2 a day. Selling healthy, clean, and affordable products to such customers is transforming how CPG products are produced and distributed.
The GMA and FPA are merging in 2007 to become the world's largest association of food, beverage and consumer products companies.