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    Report: CPG Industry Sales Continue to Rebound

    WHITE SULPHUR SPRINGS, W.Va. - The CPG industry's financial performance in 2003 continued to rebound as median net sales rose nearly two percentage points to 6.5 percent from 4.6 percent in 2002, and returns on sales and assets continued to climb for most companies, according to a study released during GMA's Executive Conference here.

    WHITE SULPHUR SPRINGS, W.Va. - The CPG industry's financial performance in 2003 continued to rebound as median net sales rose nearly two percentage points to 6.5 percent from 4.6 percent in 2002, and returns on sales and assets continued to climb for most companies, according to a study released by Swander Pace & Company, the CPG strategy arm of Kurt Salmon Associates, and the Grocery Manufacturers of America during GMA's Executive Conference here.

    Large companies ($3 billion or more in net sales) led the way, with median returns of 17.9 percent on sales and 15.6 percent on assets. Medium companies (sales of $300 million to $3 billion) saw a drop in median return on sales (11.4 percent in 2003 compared to 13.3 percent in 2002) and an increase in median return on assets (14.1 percent in 2003, up from 13.6 percent in 2002). Small companies (less than $300 million in sales) realized 4.9 percent in median return on sales, an increase compared to 4.5 percent in 2002, while median return on assets dropped from 6.9 percent in 2002 to 5 percent in 2003.

    The report concludes the industry must better measure and monitor more than these customary benchmarks if it is to succeed in an increasingly competitive macroeconomic environment. Drawing on a survey of GMA members, report authors point out two-thirds of respondents recognize non-financial metrics, such as brand strength, innovation, and organizational capital, as the primary drivers of companies' performance.

    The study collected data from 185 public and private companies, largely GMA's members, and also compared results among sectors -- food, beverage and household and personal care sectors. HPC manufacturers showed the highest median sales growth, 7.7 percent, while food manufacturers saw a 7.4 percent rise and beverage makers an increase of 6.9 percent.

    KRAFT WINS INAUGURAL AMC CPG AWARD

    Also during GMA's Executive Conference, the Grocery Manufacturers of America's Associate Member Council (AMC) presented the first AMC CPG Award, which honors innovation through creativity, product innovation and industry collaboration, to Kraft Foods.

    Kraft and Safeway formed a cross-functional team to improve Safeway's retail stock position. The project sought to improve the level of collaboration and alignment between Kraft and Safeway to build a more effective and efficient supply chain, drive increased sales and reduce expenses.

    As a result, Kraft experienced a 162 percent sales increase in one featured category by improving supply chain processes. According to Ron Volpe, supply chain director for Kraft, "a true partnership" with Safeway was created through the adoption of new tools for collaboration and innovation.

    "The cross-training that has occurred between companies has raised the level of awareness of the business implications of decisions," Volpe said. "What started as a way to approach supply chain issues has rapidly become a 'best practice' throughout and across both organizations."

    Kraft Foods was chosen from among seven finalists (in alphabetical order, with nominated project category): Bird's Eye Foods (trade promotion management), Campbell Soup (data synchronization), E&J Gallo Winery (category business intelligence), Heinz (trade promotion management), PepsiCo (global manufacturing and logistics capital procurement), and Welch's (trade promotion management).

    "All of the finalists' submissions demonstrated the innovative ways in which GMA members continue to move the CPG industry forward," said John C. Scott, AMC member and director, consumer goods and retail industries, Unisys Corporation.

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