Dec 05, 2013

The Consumer Products segment has been affected by the economic crisis wave to a lesser extent compared to other sectors. Results show an absolute increase in consumption, primarily driven by the growing demand from emerging economies and a substantial stability in Western markets. Focusing on the Western market, the situation of stability is the outcome of the new competition dynamics which have resulted in a substantial stability of the sector but also in a radical transformation of companies. The growth of mass retail channel and private labels is the most significant phenomenon that has plagued the local producers in the past and now must become an opportunity for them.

The fundamental change is not just affecting sales channels, but (especially for food) also the supply chain: the most important effect of the crisis is in fact on the trend of commodity prices, that are no longer related to demand-offer reports but rather to speculative situations with oscillations not transferable on selling prices (at least in markets with fixed-price inflation), in contrast to what happens in other sectors (e.g. steel or petrochemical sectors) where the dynamics of the raw materials have a direct feedback on the market. The impact certainly does not favor companies that cannot support the working capital requirements and must find other forms of purchase or coverage.

A radical change in organizational culture that this situation entails is the abandonment of traditional planning and control techniques and the introduction of new simulation mode that transform the buyer role, typically oriented to the supply chain optimization, into a trader focused on the market performance and on price elasticity factors that may affect the trend.

It makes sense to imagine that the next years’ budget will include supporting processes and systems with radically different levers, compared to the actual, and that the speed and creativeness (which have always characterized the Italian talent) even in the introduction of new techniques will be the real "business driver".

SDG - Consumer Products produces different business models to support these new trends, among them there could be yours! Stay in touch.