More companies focus on innovation, marketing, report finds

WASHINGTON — Consumer packaged goods companies and retailers that sell their products have managed to stay strong despite economic difficulty, according to a new report.

The 2013 financial performance report, "Growth Strategies: Unlocking the Power of the Consumer," conducted by the Grocery Manufacturers Association and PwC, found that despite overall slowing net sales growth rates in 2012, food, beverage and household product companies had respective sales growth of 7%, 5.5% and 3.2%.

"This report shows that in the midst of a challenging economy, the food, beverage and consumer products industry continues to show great resiliency," GMA president and CEO Pamela Bailey said. "By providing consumers with innovative products and convenient, cutting-edge shopping experiences, CPG companies are well-positioned to enhance consumer loyalty and profitability."

The report found that the companies performing best identify consumers, engage with them and focus on innovation to reach them directly, showing how digital channels, adoption of mobile technology and marketing directly to consumers are rewriting the rules of retailing and CPG manufacturing.

Findings in the report, the 17th of its kind, included $1.1 trillion in retail sales last year, including $568 billion at grocery stores. Many companies are embracing the need for product innovation and understanding consumer and market needs as part of their research and development activities. Meanwhile, bottom performers are starting to hold onto their cash, meaning they could be ready to start making more investments in research and development and marketing to launch new products.

"CPG companies that engage with consumers directly through digital channels and build out their direct-to-consumer processes will have the best advantage for creating new growth," PwC U.S. leader for retail and consumer industry Steven Barr said. "Fifty-two percent of U.S. consumers are already buying directly online from brands they trust, proving that CPG companies now have far greater opportunities to walk alongside their shoppers in real time while driving sales of existing and new products."

More than 40% of CPG companies plan to sell products directly to consumers this year, compared with 24% last year, finding direct-to-consumer as an effective means for testing new products and reaching out to new consumers faster and more effectively.