The End of the Price-First Era
Why CPG's decade-long pricing playbook is about to expire
The consumer packaged goods industry has spent the last three years playing a dangerous game of pricing chicken. After rising prices led to estimated global sales growth of almost 10% in 2023, CPGs urgently need to revive volume growth in most markets, as consumers are feeling increasingly "pressured" according to a 2024 Nielsen report. But here's what the data doesn't tell you: we're witnessing the death of price elasticity as we know it.
The traditional economic model assumed consumers would eventually adjust to higher prices. Instead, they're rewriting the rules entirely. Slightly more than half the executives polled (54%) said they'd been significantly affected by consumers reining in spending in 2023. This isn't temporary belt-tightening—it's a fundamental shift in how value is perceived and measured.
The companies that will thrive in 2025 and beyond won't be those that perfect pricing algorithms, but those that completely reimagine what they're selling. The viral trend of 'restock' videos, where users show off their perfectly organized pantries, has significantly influenced buying behaviors in the CPG space. This signals something profound: consumers are buying experiences, not just products.
Forward-thinking brands are already moving beyond price optimization to "value architecture"—creating products that justify their cost through multiple dimensions of worth. Think sustainability credentials, convenience factors, health benefits, and social signaling combined into a single offering. The winners will be those who can articulate and deliver this multi-dimensional value before competitors catch on.
Sources:
RML Global Trends Report 2024
Bain & Company Consumer Products Report 2024
Sterling Choice CPG Industry Analysis 2024