Key Takeaways
- Pricing drove growth; volume fell. Since 2019, CPG sales grew ~4%, largely from price increases, while volume declined ~1.4 pts—signaling margin pressure beneath the topline.
- Trade spend is huge but under‑analyzed. Promotions consume 20–30% of gross sales, yet many teams still rely on basic sell‑in metrics—leaving value untapped.
- Modern Revenue Growth Management (RGM) unlocks 3–5% gross profit. Use multi‑metric scorecards, sell‑out data, and portfolio views to improve promotional effectiveness.
- Everyday Low Pricing (EDLP) often hides waste: Track passthrough to shoppers and base‑volume lift; cut long‑term support that doesn’t move volume.
- Shift from cost‑cutting to strategy. Align promotions to shopper objectives by channel, brand, and pack size; coordinate calendars to reduce cannibalization.
- Partner with retailers. Shared analytics (margin, share, category dynamics) enable joint plans that improve both retailer and brand outcomes.
CPG companies face margin pressure from rising costs, shopper demands for personalization, and increased competition from nimble brands.
These factors create a challenging equation: investors demand both top-line growth and sustainable margins, but achieving both requires rethinking how CPG companies manage revenue growth.
Why Traditional Approaches Fall Short
Many CPG firms still evaluate promotional effectiveness using single sell‑in metrics and treat trade spend as a budgeting exercise rather than a strategic lever. This misses key dynamics: a promotion can show positive ROI for one SKU while cannibalizing higher‑margin products across the portfolio; EDLP support may benefit retail partners without growing incremental base volume; and trade terms structures often accumulate distortions that inflate everyday spending beyond reasonable levels. Given that trade spend is among the largest P&L items, companies need more rigorous analytics to determine whether investments actually drive intended outcomes.
Modern Revenue Growth Management Creates Value
Revenue growth management covers pricing, promotions, product assortment, brand‑pack price architecture, and gross‑to‑net spend management. Done well, it aligns promotional investment with shopper strategies rather than applying one‑size‑fits‑all techniques. The shift depends on granular shopper strategy articulation by channel, brand, and pack size; shopper behavior insights from retail partners and third‑party data to understand purchase patterns and basket composition; and investment allocation aligned to strategy, recognizing that products play different roles and require different promotional intensity. Balanced scorecard evaluation replaces single‑metric ROI—assessing financial performance, strategic alignment, portfolio impact, and retailer outcomes—while continuous measurement and strategy refinement ensure promotions adapt as market conditions and shopper behavior evolve.
Hidden Value in Everyday Pricing
EDLP and long-term price support often escape rigorous analysis despite consuming significant resources. Many CPG companies don’t consistently measure EDLP ROI, partly due to uncertainty in methodology. Modern approaches isolate spend related to everyday pricing and use advanced demand models to track base-volume lift. Monitoring retailer passthrough—how much support reaches shoppers—prevents inflated retailer margins that don’t advance pricing strategy. Persistent increases in everyday spend or gross‑to‑net beyond expectations signal the need to reset trade terms, reduce distortion, and establish active monitoring going forward.
Evaluating Promotions Across All Products
Evaluating promotional events in isolation misses cross‑product dynamics and broader customer impacts. A high‑performing event for one brand can show strong ROI yet reduce portfolio returns once cannibalization and performance at other retail accounts are considered. Modern analysis uses sell‑out data (not just sell‑in) and examines how promotional intensity for one pack influences complementary or substitute products. This portfolio perspective reveals opportunities to optimize promotional calendars, adjust feature and display timing across brands, and coordinate activity to maximize total portfolio contribution rather than individual SKU performance.
Retailer Collaboration Creates Mutual Value
Modern Revenue Growth Management works best when brands and retailers share data and align on goals. Joint analytics using sell-out data and multi-metric scorecards help evaluate promotions consistently, improve category performance, and reduce low-return events. Real-time dashboards and scenario simulators enable quick adjustments and smarter planning. Coordinating calendars and agreeing on KPIs during joint business planning ensures fewer cannibalized sales and stronger shopper impact. The result is clear, shared metrics that drive mutual alignment and better outcomes for both retailers and brands.
Building Sustainable Capabilities
Start with quick wins to fund the journey, then scale the capabilities that sustain margin growth.
Quick Wins (Next 90 Days)
- Measure promotion ROI using sell‑out data and multi-metric scorecards (financial impact, portfolio effects, retailer outcomes).
- Rationalize EDLP spend by tracking passthrough to shoppers and cutting support that doesn’t grow base volume.
- Analyze portfolio impacts to reduce cannibalization, optimize promo calendars, and coordinate features/displays across brands.
Long-Term Capabilities (Next 6–18 Months)
- Integrated data foundation: unify retailer, syndicated, DTC/ecommerce, and financial data for a single source of truth.
- AI-driven predictive analytics: forecast demand, price elasticity, and promo lift; simulate scenarios before spending.
- Always-on monitoring: deploy dashboards that track margins, gross-to-net, passthrough, and shopper outcomes in real time.
- Governance & playbooks: standardize RGM processes, KPIs, and decision rights; codify test‑and‑learn cycles with retailers.
- Talent & operating model: upskill commercial finance and sales teams; embed RGM specialists within account teams.
How This Pays Off
- Margin improvement: quick wins unlock 3–5% of gross profit while long-term tools sustain gains.
- Better retailer alignment: shared analytics and clear KPIs enable joint business planning and smarter promotions.
- Stronger shopper outcomes: targeted offers increase trial, penetration, and loyalty without over-discounting.
Wiss works with CPG companies to optimize financial operations that support margin improvement. Our advisory team helps implement analytical frameworks that connect promotional spending to strategic outcomes, identify hidden value in trade spend structures, and build financial visibility that drives better commercial decisions.
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