2024 Consumer Products Industry Outlook PDF

2024 consumer products industry outlook As price-taking runs its course, the industry may turn to ‘profitable volume’  travel outlook 2024 consumer products industry outlook Contents Executive summary 3 Methodology 4 What set Profita...

2024 consumer products industry outlook As price-taking runs its course, the industry may turn to ‘profitable volume’  travel outlook 2024 consumer products industry outlook Contents Executive summary 3 Methodology 4 What set Profitable Growers apart 5 The price-focused era is likely over 7 The profitable volume playbook 8 Volume 8 Profitability 9 An agenda for action 12 Outlook deep dives 13 Authors and acknowledgments 21 2  2024 consumer products industry outlook Executive summary For the past few years, the playbook for So, what new growth formula might cut the tension? If price has run its course, companies may need to pivot to volume. But not all consumer product companies—spanning volume is equal. Companies that aspire to Profitable Grower status food and beverage, household goods, in 2024 might consider profitable volume. That means executing a plan that carefully grows volume with an innovative and more personal care, and apparel—relied on price- profitable product mix while retaining as much pricing as practical. taking. Input costs rose dramatically,1 so What follows is our profitable volume playbook, derived from price had to follow—to near-unprecedented financial performance and earnings transcript analysis, subject- levels.2 Companies did all they could to matter specialist interviews, and a global survey of 250 consumer product executives. Its components include moves to boost both control costs to limit pass-through,3 and volume and profitability: premiumization4 helped justify what they Volume charged. But the name of the game was Targeted advertising and promotion price. Precision growth management That strategy seems to have worked for several companies. Looking Opportunistic M&A at the highest performers among the global top 100 companies in the consumer products industry by revenue, we see some were able Profitability to raise prices as much as, if not more than, others, with smaller hits A rebalanced mix to volume and more margin growth (see methodology). The larger group of these “Profitable Growers,” which outperforms on five-year Strategic innovation revenue growth and return on assets (ROA), reveals important Enhanced operations and supply chain lessons about pricing power, revenue growth management (RGM), innovation, supply chain smarts, and a willingness to prune and Of course, these factors are intertwined: mix affects price, price refresh their business portfolio and product set perpetually. affects volume, and so on. The key is finding the right balance among them to drive profitable volume. Each leadership team across the Those lessons will likely be important in 2024, but the world is C-suite should own part of the agenda to hit the mark (see function- changing. Further significant price increases might not be possible based questions in Deloitte’s ‘agenda for action’). in an uncertain economy where retailers are pushing back and consumers are unwilling to pay more and often trade down.5 The While winning approaches to 2024 may revolve around industry may need to look for a new approach. fundamentals like price, volume, and mix, leaders will also likely confront newer challenges like Generative AI, GLP-1 (i.e., the new Navigating away from price-taking to a different growth formula weight-loss drugs), or emerging regulations like the Corporate may be creating tension in the industry’s view of the year ahead. Sustainability Reporting Directive (CSRD). Our outlook concludes The consumer product executives we surveyed are quite bullish with a series of deep dives that include a macroeconomic outlook, on the industry’s prospects and their company’s strategy and a view from each of the industry’s subsectors, executive performance. However, their optimism starts to wane when perspectives on Generative AI and GLP-1, a review of emerging pressed on their ability to succeed on the specifics—areas like regulations, a databank of additional survey results, and a view of unit volume, pricing, or ability to grow margins. They are also the mega trends affecting the industry’s long-term future. decidedly realists regarding geopolitics and don’t feel particularly optimistic about the global economy despite a stronger ending to 2023 than many expected (see the macroeconomic outlook from Deloitte Global Chief Economist, Ira Kalish). 3 2024 consumer products industry outlook Methodology We analyzed a worldwide set of the largest 100 public consumer product companies by revenue, drawn from S&P Capital IQ and filtered for industry definitional fit (e.g., excluding high-end luxury, tobacco, conglomerates with less than 50% of revenue from consumer products). We then used a five-year composite percentile index of both top-line growth and efficient use of assets (measured in return on assets) to assess relative success. Deloitte also conducted a global survey of 250 consumer products executives spanning food and beverage, household goods, personal care, and apparel. All respondents were senior decision-makers at companies with more than $500 million in revenue (most above $5 billion). They were sourced proportionally to roughly match the geographic markets and subsectors in the top 100 global consumer products company financial analysis (figure 1). Survey questions were developed through an analysis of trending topics found in company reports, earnings call transcripts, and analyst reports, as well as through exploratory surveys and interviews with financial analysts, investors, and Deloitte leaders. We also deployed many of these same methods to determine what high-performing companies (on revenue and ROA indexes) were doing differently from the lower-performing companies in our financial analysis. Figure 1: Top 100 global consumer product companies by subsector and geography O thers 4 4% Household Beauty and R e u ro products personal E 2 s t pe 1 10 care 10 of Others Fashion Ge and 4 r man y Eu apparel UK 2 5%rope th te d N or e ric a Uni e s 3 5 13 t 4 Am St a 40% France 5 31%AC of M s t 14 ex AP R e AC i co P Ca A 3 na Ch Food and beverages da n 11 ina 2 67 6 Japa Note: One company was removed from subsequent analysis given recent (2022) listing and outsized growth. We analyzed a period of five years to get a good coverage of pre-pandemic, pandemic, and post-pandemic/high inflation periods. Source: Analysis of the top 100 consumer product companies based on FY22 revenue from S&P Capital IQ. 4  2024 consumer products industry outlook What set Profitable Growers apart We analyzed 100 consumer products companies6 from around the globe to identify those that outperformed their peers on revenue growth and ROA across the five years through fiscal year 2022 (figure 2). The latter half of this period was characterized by price-taking, as pandemic-driven demand, supply chain woes, and high inflation across the economy set the conditions for higher prices. Figure 2: Assessing companies on five years of revenue growth and return on assets Food and Fashion and Beauty and Household beverages apparel personal care products Size of bubble = FY 2022 revenue Revenue growth: FY 2018–2022 composite percentile index 100 Under-utilized growers Profitable growers 90 80 70 60 50 40 30 20 10 Underperformers Efficient performers 0 0 10 20 30 40 50 60 70 80 90 100 Return on assets: FY 2018–2022 composite percentile index Note: One company was removed from subsequent analysis given recent (2022) listing and outsized growth. We analyzed a period of five years to get a good coverage of pre-pandemic, pandemic, and post-pandemic/high inflation periods. Source: Analysis of the top 100 consumer product companies based on FY22 revenue from S&P Capital IQ. Notably, the upper-right-quadrant companies—the Profitable Growers sought out by investors—come from a cross-section of categories, countries, and sizes, making their example applicable across the industry. They also outperformed on other important dimensions, including total shareholder return (TSR), price-to-equity ratio (P/E), and profit margin7 (figure 3). 5  2024 consumer products industry outlook Figure 3: By the numbers Under-utilized growers Profitable growers Average revenue growth: FY2018–FY2022 Number of companies 21 Number of companies 26 Avg. annual revenue growth 11.6% Avg. annual revenue growth 11.6% Avg. ROA 4.1% Avg. ROA 9.6% Avg. EBITDA margin 12.3% Avg. EBITDA margin 20% Avg. ROIC 3.6% Avg. ROIC 8.6% Avg. forward P/E 16.5 Avg. forward P/E 21.2 Avg. 5-yr. TSR 1% Avg. 5-yr. TSR 10.3% 6.9% Number of companies 31 Number of companies 21 Avg. annual revenue growth 2.2% Avg. annual revenue growth 3.2% Avg. ROA 3.7% Avg. ROA 8.4% Avg. EBITDA margin 14.5% Avg. EBITDA margin 20.2% Avg. ROIC 1.9% Avg. ROIC 5.8% Avg. forward P/E 19.4 Avg. forward P/E 19.8 Avg. 5-yr. TSR -1.4% Avg. 5-yr. TSR 0.9% Underperformers Efficient performers 6.3% Average return on assets: FY2018–FY2022 Note: Average = average revenue growth or ROA for FY2018–2022 for the universe selected. One was removed from analysis as an outlier given recent (2022) listing and outsized growth. Latest date for TSR & Fwd. P/E: Dec 31, 2022. Source: Analysis of top 100 CPG companies based on FY22 revenue from S&P Capital IQ. Profitable Growers’ keys to success A close look at financial reports, call transcripts, analyst assessments, and survey data for companies most closely aligned to the profiles8 highlights several vital characteristics shared by Profitable Growers. While these strategies led Profitable Growers to success during the five years through 2022, several of them will likely remain powerful components of the profitable volume playbook going forward. In contrast, lower-performing companies in our financial analysis made different moves: Profitable Growers Other companies More pricing power. Profitable Growers could raise prices as Failed to respond to the consumer-demand pivot from much as or more than other companies while better maintaining goods to services spending. They ended up with considerable volume and increasing profits.9 excess inventory, with both retailers and in their warehouses, that they then had to discount. More investment in their core brands to gain pricing power. Profitable Growers’ five-year average percentage of revenue spent Failed to invest appropriately in innovation, with more market on sales and marketing was more than 110 basis points higher misses and less benefit from premiumization. than others.10 Poor procurement management and hedging strategies left Improved RGM systems. In our survey, 66% of companies these companies relatively exposed to higher commodity prices. aligned to our Profitable Growers profile invested in RGM systems Stuck in slower growth categories with more private-label versus 49% of companies not growing both revenue and profit competition. (i.e., all other companies). In addition to helping set pricing, these systems gave Profitable Growers the analytics to adjust their price- More difficulty incorporating acquisitions than our Profitable pack architecture (68% did so, compared to 51% of all Growers experienced. other companies). Embraced a product innovation-driven strategy to support prices and margins.11 Focused on supply chain stability and enhanced data capabilities (73% versus 60%). Perpetual portfolio transformation, quickly divesting underperformers from entire business lines to individual SKUs.12 6  2024 consumer products industry outlook The price-focused era is likely over Surveyed consumer product companies are shifting away from price: Higher prices created new competition from unexpected Just 2% emphasize price for 2024, and half don’t think they can count substitutes. Price has increased so much on many items, especially on price as a source of growth (figure 4). We see three reasons why in food and beverage, that consumers may be looking to fulfill significant price-taking is likely coming to an end: old needs in new ways—creating unexpected competition for consumer product companies. For instance, if a delivered pizza Consumers are less willing and able to pay.13 Some are forced to from a restaurant is as cheap as or cheaper than one from the become more “choiceful” with their purchases.14 Industry executives grocer’s freezer aisle, spending may shift. Almost seven in 10 food in our survey called out consumer bifurcation into haves and have- and beverage executives (68%) expect increased competition from nots (46%) and decreased willingness to pay higher prices (33%) as fast food and quick-serve restaurants. (For more subsector-specific two of the top three most significant consumer challenges for 2024. findings, see Dive 2.) Few executives thought they could continue to raise prices without materially decreasing consumer demand. Retailers may have had enough of price raises. Through the heights of inflation, retailers let significant price increases pass through with some sympathy. But that leniency could have been a once-in-a-generation (relatively) free pass.15 Four in 10 executives in our survey agree that retailers would push back on any meaningful price increases in 2024. Figure 4: The industry shifts from price to profitable volume Q. It takes a combination of price, volume, and product mix to drive profitable growth. Knowing that each component is important, which of the three will receive the most emphasis in your strategy for 2024? Raise price 2% Increase unit volume Shift the mix to more 36% profitable products and pack sizes 62% Source: Based on Deloitte’s analysis of executive surveys for the 2024 Consumer Products Industry Outlook (N = 250). 7 2024 consumer products industry outlook The profitable volume playbook The profitable volume playbook is about carefully growing volume with an innovative and more profitable product mix while retaining as much pricing as practical. Volume In the past few years, volume suffered from higher prices and reduced advertising and promotion.16 Some companies faced supply and production constraints that made promotional spending unproductive. But now, seven in 10 (72%) executives said they must increase their unit volume to meet their 2024 performance goals. Additionally, six in 10 executives in our survey recently made a significant expansion in their production capacity. Companies that expanded production capacity likely will have additional incentive to do what it takes to keep volumes high to spread that cost. 1. Targeted advertising and promotion In 2024, we expect the pendulum to swing back to more spending on marketing. Over the coming year, 68% of the executives we surveyed said their companies will increase advertising and marketing spending as a percentage of revenue, while 64% will be doing more promotional spending. Two-thirds of executives (66%) plan to emphasize their company’s existing core brands in their marketing over new brand introductions—a tool to maintain pricing power. A majority also plan to increase the proportion of marketing dollars spent on digital mediums as part of their efforts to increase volume. Digital mediums also enable what our “Future of the consumer industry” research identifies as a shift from mass to micro—from a supply-driven approach to one driven by demand (for more information, see Dive 3). Highly personalized digital marketing and promotion should yield higher return on investment (ROI), a key consideration when some research suggests that return on ad spending is now harder to come by.17 It’s worth noting that some analysts think companies may panic about volume and promote too much. We don’t share that concern. Forward-thinking companies will show restraint and manage their volume goals with finesse. 8  2024 consumer products industry outlook Figure 5: Mentions of revenue growth management in earnings documents for the global top 100 consumer products companies by revenue have doubled. Mention frequency among the top 100 consumer products companies by revenue 160 RGM 140 120 Number of mentions 100 80 60 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2019 2020 2021 2022 2023 Source: Deloitte analysis of earnings call transcripts for the top 100 global consumer product companies from 2018 through Q3 2023. Frequency counts were obtained through AlphaSense queries. 2. Precision growth management 3. Opportunistic M&A Many consumer product companies gained sharper realization of After a downturn in dealmaking, 2024 could see the return of the need for RGM during the tumult of the past few years, during M&A activity—especially by Profitable Growers. More than half which time mention of RGM in earnings calls doubled18 (figure 5). (55%) of the executives we surveyed think there will be growth in The drive for volume will put RGM, part of the new age of algorithms the industry’s total acquisitions in the year ahead. And 89% say and automation, more squarely under the spotlight. expanding by acquisition is a priority for their company in 2024. In fact, more than a third (36%) of Profitable Growers say growth by RGM capabilities can include price setting in the context of acquisition is one of their very top priorities (relative to 28% of other competitors on the shelf, targeted promotion strategies, white- companies). space expansion, changes to the price-pack architecture, retailer profitability management, and consumer perception shaping around There are good reasons why activity might be picking up, despite categories, among others.19 Almost six in 10 executives surveyed concern that US antitrust authorities appear to be taking a have improved their company’s RGM capabilities over the past three more aggressive approach.21 Economic uncertainty and higher years. The same number says the capability will play a significant interest rates have decreased valuations for potential acquisition role in their success in 2024. targets, making them more attractive.22 According to our investor conversations, board directors increasingly accept their company’s Generative AI may play a role in these efforts, as RGM was one of lower valuations and are more open to sales. High interest rates may the top potential use cases for the technology, found in our survey, also dissuade private equity investors, several of which use debt among those identified by the Deloitte AI Institute.20 (See Dive 4) funding for acquisitions. That dynamic can give consumer product companies with strong corporate balance sheets an advantage when competing for deals—and 70% of executives in our survey feel their balance sheet would be a plus in an acquisition relative to private equity competition. As for the type of acquisitions they’ll pursue, “bolt-on” is usually one of the first phrases executives used in investor calls. However, companies we surveyed seem enticed by acquisitions that would bring them to a new, high-growth business or market (58%). Others are interested in acquisitions to support a vertical integration strategy (62%). We saw similar interest last year, especially from companies on track for profitable growth. Vertical integration may help companies gain greater control of their value chain, ensure 9 supply, and protect margins from input cost increases. 2024 consumer products industry outlook Profitability Of course, higher volume numbers need to have a positive impact on profit. While each additional unit sold helps to offset fixed costs, products that carry higher margins can do it more quickly. And if you can lower your fixed costs, too, all the better. That’s especially important today, as we transition from investors and management teams pursuing revenue growth at almost any cost to more focus on profitable growth (two-thirds of our survey respondents agree the goal has changed to profitable growth). 1. A rebalanced mix 2. Strategic innovation Consumer product companies may pull several levers to produce a Innovative products tend to command higher margins, driving more profitable product mix. For instance, they can shift their price- eight in 10 executives surveyed to increase investments in product pack architecture to better address consumer needs, occasions, innovation in 2024. and value points while attempting to engineer better margins. This strategy is especially prevalent in the food and beverage space, and But this isn’t necessarily a simple story. New investments join a with some household goods and personal care products. Overall in backlog of innovations that were developed but held back during the our survey six in 10 plan to change their price-pack architecture in pandemic.25 Gaining shelf space in an environment with lots of “new the year ahead. and improved” products could prove challenging. So, what kinds of innovation can succeed? Some companies are also improving the mix by discarding poor performers. In 2020 and 2021, consumer product companies did a Premiumization, an essential strategy of the past few years, looks fair amount of SKU rationalization to free production lines to meet set to continue.26 These superior products tend to command higher demand for their most essential products.23 But pruning away prices—along with higher margins. However, it remains to be seen low-performing products and brands can also increase the average if consumers still have the appetite to spend. Companies should mix margin. Six in 10 (61%) executives surveyed say brand or SKU consider leaving room in their portfolios so consumers can trade rationalization is a priority for 2024. down to value offerings without leaving the brand. More radical changes can involve divesting entire brands or lines of Additionally, companies should seek net-new innovative products— business. Just over half (52%) of executives in our survey say their not just superior versions of existing ones—to break through on companies have made it a regular practice to divest low-performing sales. That’s especially true when word-of-mouth recommendations lines of business. via social media make product efficacy arguably more important than ads. This is something surveyed executives in the industry In the long term, as we anticipate more radical industry upheaval recognize, with 62% agreeing they will need to be innovative in from lower barriers to entry, companies can look to an improved mix finding newer sources of profits as who has money and what is value that includes new products that take them beyond their traditional changes. portfolio. More than half (57%) of the executives we surveyed agree that the growth of capability-as-a-service will break down traditional Sustainability is another area offering innovation opportunities. barriers to entry and drive the reconfiguration of the industry. Three in four executives surveyed (76%) said their company For example, consider the highly profitable retail media ads some embraces a “circular economy” model—encouraging the reuse, retailers have started selling in their digital storefronts.24 Meanwhile, recycling, refurbishing, or repair of goods. Given that two-thirds 64% of consumer product executives say hybrid models that (66%) in our survey agree that consumers will increasingly insist the combine goods, services, and digital experiences will increasingly industry becomes more responsible, this type of innovation could drive industry growth. appeal to new buyers while potentially reducing costs. 10  2024 consumer products industry outlook Looking further ahead, new technology, across several types, is industry can hope for the best but should plan for the worst, taking transforming consumer demand. Nearly two-thirds (60%) of the steps to increase operational resilience and contingency plans. In the executives we surveyed say the rapid evolution of IT and biotech process, companies should consider taking a more flexible approach will change the traditional boundaries of the industry. For instance, if to management. GLP-1 agonist diet drugs do turn out to shift demand in food and beverage, traditional offerings could take a hit (see Dive 5). On the Perhaps unsurprisingly, improving supply chain performance is a top upside, product innovation may encompass new companion offerings priority of surveyed executives when combining those who said it —supplemental protein shakes, probiotic foods that calm nausea, was a clear priority (50%) with those who identified it as one of their portion-controlled offerings, etc.—that are part of the new lifestyle for top priorities (48%). Companies across the industry may consider patients on these drugs.27 These products could be personalized, taking a cue from Profitable Growers, more of whom invested in aligning with a significant industry shift from mass the supply chain data capabilities necessary to support sustainable to micro. Indeed, 62% of executives in our survey agree that the product claims—and the higher prices that sustainable products industry will shift from mass production to personalized product tend to demand. (See Dive 7 for a look at how more supply chain offerings over time. data may be needed for regulatory compliance.) 3. Enhanced operations and supply chain While the industry has tried to address supply chain challenges over the past few years, more progress is needed. Surveyed executives Companies should procure inputs, produce products, and distribute reported many of the same problems, in the same proportions, as them to retailers as efficiently as possible. Profit takes a hit if they did last year (figure 6). That said, six in 10 (61%) in our survey these fundamental tasks aren’t managed well or are impacted by agree that how the industry creates and operates supply chains will disruption and can’t recover quickly. (See Dive 6 for data on cost- change radically in the years ahead. cutting, labor, and more.) On the downstream side of the equation, 86% surveyed will invest in It follows that operational resilience remains a key priority in improving their distribution systems to ensure they can get products the profitable volume playbook. Geopolitical disruption, natural to market efficiently. disasters, labor strikes—consumer product companies can take nothing for granted in 2024 regarding their ability to operate. The Figure 6: Most difficult supply chain challenge 2% Difficulties with international transportation to get our 6% product to the right countries/markets 7% Securing key inputs for our products in a timely manner 37% Securing key inputs for our products at the right price 24% Not enough labor for our facilities to keep up with demand Not enough equipment capacity in our facilities to keep up with demand 24% Difficulties with transportation within a country/market Source: Based on Deloitte’s analysis of executive surveys for the 2024 Consumer Products Industry Outlook (N=250). Q12. What is your most difficult supply chain challenge? 11 2024 consumer products industry outlook An agenda for action Implementing a profitable volume strategy requires precision, balance, and coordination. To prompt conversations and decisions, we suggest consumer product companies use the following questions to help set their 2024 agenda and drive to specifics. While several items may cut across multiple areas, the questions are organized by the functional leadership role most likely to own the issue. CEO and board agenda Does this moment of high interest rates and potentially less private equity competition open new acquisition opportunities? Should we How do we facilitate the shift to profitable volume and allocate consider investing in adjacent areas, either due to increased antitrust resources accordingly? enforcement or expanding our offering scope? Are there opportunities Given the shift, are we in the right businesses with the right products? in our value chain for more vertical integration through acquisition? Have we considered value plays? In a back-to-basics world where investors seek profitable growth over What M&A opportunities exist that allow us to drive a step-function fast growth alone, do our investments in direct-to-consumer and jump in profitable volume? omnichannel still measure up? How do we balance today’s cost challenges with preparation for future Over the long term, what does capital stewardship look like in an era of consumer demands? How long can we wait for ROI while we make high uncertainty and rapid change? Will we be able to achieve higher changes in decision-making, company culture, and talent acquisition ROA as the world evolves? and retention? Operations and supply chain agenda How do we take full advantage of new Generative AI technologies to drive improvement in our decision-making around pricing, marketing Have we built enough operational resiliency for our new geopolitical investments, and supply chain optimization? realities? How about climate, labor actions, or further economic tumult? How do we establish governance and disclosure systems for new What is next on the automation agenda? cybersecurity and sustainability regulations? After years of cost-cutting, are there still “low-hanging fruit” opportunities? Do we need to do something more significant to unlock Sales and marketing agenda further efficiency gains? How can sales and marketing teams work together to drive volume while What role should nearshoring play in our reliance strategy? building our core brand and supporting pricing power? Are we investing enough in supply chain data systems to support How do we optimize our pricing to drive profitable volume growth and sustainability and traceability reporting requirements? leverage our marketing investments to support it? Do we have the right RGM capabilities for price setting in the context Data and analytics agenda of the shelf, promotion strategies, white-space expansion, customer What is the first, the highest, and the best use(s) of Generative AI in our profitability management, and shaping consumer perception? Do we company? have the correct data to feed these capabilities with enough granularity? What is our funding philosophy for Generative AI—are we investing in For RGM, are the right stakeholders involved to act decisively on the learning, deploying, or racing ahead? analysis? Are we willing to deploy some elements with “hands off the wheel” automation? Are we on track for our overall digital transformation? R&D and innovation agenda Talent and capabilities agenda What is the right investment mix to support premiumization versus How do we win talent for important roles if labor market tightness white-space product innovation in the current climate? remains? Are there opportunities to change price-pack architecture to hit new How do we create a frontline work experience to recruit, retain, and value points, including trade-downs, and tap into unique occasions? Can reward workers? we use it to improve the profitability of the sales mix? Are we clear on the skills that are most in demand? Are there new product opportunities in areas like the circular economy or with GLP-1 diet drugs? Are we considering the right mix of talent equipped with the right AI and automation tools? Finance agenda What degree of automation supports improved productivity? Do we Are we continually identifying and divesting low-performing lines of want tools to upskill workers to be more productive, or is the future business and SKUs as a lever for greater profitability? If not, what is about higher-skilled employees and fewer of them? getting in the way? How will our company attract new skill sets to build Generative AI How can we continue to cut costs through operational efficiency while capabilities? Will it be through acquisitions, partnerships, or ecosystems? funding more core brand marketing and R&D? How will we build and maintain consumer and employee trust in new 12 Generative AI systems? Will our consumers trust our Generative AI intent? Will employees come to see it as augmentation or replacement?  2024 consumer products industry outlook Outlook deep dives Our 2024 consumer products industry outlook extends beyond the profitable volume playbook. We collected other highly topical analysis and findings in this repository. Dive 1 - The economic outlook from Deloitte’s Chief Economist Dive 2 - Reports from across the industry subsectors Dive 3 - The future of the consumer products industry Dive 4 - The promise—and the current reality—of Generative AI Dive 5 - The outlook for GLP-1 agonist weight loss drugs Dive 6 - Additional survey findings Dive 7 - An eye on the regulatory landscape 13 2024 consumer products industry outlook Dive 1: The macroeconomic outlook for the consumer products industry A letter from Ira Kalish, Chief Economist, Deloitte Global November 2023 The global economy is closing out 2023 better than was expected. While many saw conditions that pointed to recession, we got something different. In the major advanced economies, inflation has receded, employment has continued to grow, labor markets remained tight, and risk spreads stayed low. Nonetheless, expectations of 2024’s economic outlook should be tempered. The International Monetary Fund (IMF) projects that world economic growth will slow to 2.9%, well below the historical average of the past two decades. IMF expects 2024 growth to be an even slower 1.4% in advanced economies.28 How the economy of 2024 plays out against these expectations will be shaped by the following factors: Inflation. Since mid-2022, inflation in Europe and North America has receded considerably. In part, this reflects the impact of tighter monetary policy. Yet mostly it reflects the reversal of trends. That is, consumer demand for goods, which soared in 2021 thereby fueling inflation for goods, has eased. Supply chain disruption has also eased as the pandemic ended. Plus, oil and food prices, which soared when the Russia-Ukraine war began, have eased considerably. Still, as of November 2023, inflation remains significantly above the 2.0% target of most central banks. And although inflation is moving in the right direction, central banks fear that bringing it to the 2.0% target will not be possible so long as labor markets remain tight.29 Labor market. Despite various headwinds, labor market tightness remains.30 In part this reflects demographics. In any event, the result has been significant wage increases, which is expected to contribute to inflation unless they are offset by productivity gains. From the perspective of the major central banks, the best potential way to bring inflation toward the target is to weaken the labor market, thereby reducing wage pressure. Interest rates. The tight labor market and subsequent wage increases are why it is likely that short-term interest rates will remain elevated well into 2024. Only when central bankers are convinced that inflation is under control and labor markets have softened will they feel comfortable cutting interest rates. Consumer demand: In the United States, demand has held up well, initially driven by the ability of households to dip into the vast pool of savings accumulated during the pandemic. Lately, however, spending was fueled by rising real wages. Yet significant headwinds will likely curtail spending growth in 2024. These include high interest rates, a weak housing market, renewed student debt payments, and a likely slowdown in employment growth. In Europe, however, spending has been weak for a while, largely due to declining real wages and the impact of high interest rates.31 Households took a big hit from the energy shock following the start of the Russia-Ukraine war. Central banks tightened to fight inflation. Although many governments provided households with subsidies to offset the higher cost of energy, those subsidies are ending. Meanwhile, the European economy has slowed, fueled in part by declining retail sales. Thus, the outlook for consumer spending is modest at best. In China, household spending has grown more slowly than expected. This partly reflects the impact of the disruption to the residential property market.32 Declining property prices have reduced consumer wealth, compelling many households to boost saving. Indeed, bank accounts are flush with cash. Meanwhile, consumer spending has been weakened, and the outlook for 2024 is for modest growth. The year 2024 will likely be characterized by slower economic growth than in 2023 and slower consumer spending growth. Yet it will probably be the last year of monetary policy tightening by major central banks. It is reasonable to expect a rebound starting in 2025. For global consumer products companies, it may make sense to focus on the longer term. 14 14  2024 consumer products industry outlook Dive 2: Reports from across the industry subsectors The consumer products industry isn’t a monolith. Here’s an overview of the findings specific to each subsector. Survey data from food and beverage (F&B) executives suggests we will see product emphasizing sustainable (52%), natural (47%), organic (36%), and healthy (35%) properties. All have ties to clean labeling and avoiding “ultra-processed” food. A surprising three in four companies are in favor of front- of-package nutritional labeling. How these companies go to market is also changing, with eight in 10 (83%) F&B respondents increasingly orienting their strategy around occasion-based selling. A subset of our respondents are in the alcohol space. While direct-to-consumer alcohol sales isn’t allowed in all markets, survey respondents in the subsector chose it as one of the most strategically important trends for 2024 (30%). In fact, 61% say they will soon work or are already working directly with delivery app companies. Though zero-alcohol products featured in several company earnings presentations, consumer interest in the zero-alcohol category was only selected as an important trend by a minority in the survey (22%). Executives in the sector also agree that in 2024 returnable/refillable bottle programs will be a place to invest in (83%), shelf re-facings will be more significant (74%), and travel retail will hopefully recover (61%). Food and beverage n = 121 of which, 23 are alcohol companies Executives from household goods companies are likewise focused on sustainable products (45%) and packaging (42%). They are also pursuing novel product innovation (29%). Though prominent in other subsectors, products with “natural ingredients” were selected by only one in five (18%) household goods executives. Many in the sector (45%) believe retailer destocking in 2024 will be less of or no longer a headwind to sales, though most (55%) were still unsure. Household goods n = 38 Environmental sustainability was also a big trend winner for personal care products (38%). About one in four executives (28%) responded that their company will also focus on creating products with clean labels. Expect those kinds of messages to win out over an emphasis on “cutting-edge science,” which was selected by only 8% of respondents. Also, some companies (25%) are looking to devices and/or new beauty goals, which could include wellness over glamour, for growth. Almost seven in 10 (68%) agree that premiumization or valorization is a winning product strategy in the sector. Value/low cost offerings were the least selected trend (8%). A little more than half (55%) are looking for travel retail to recover in 2024. Personal care and beauty n = 40 Finally, environmental sustainability is the top trend for apparel as well (41%), with seven in 10 (73%) saying circularity is a goal for their company. However, fast fashion—perhaps the opposite of sustainable—was the second most frequently selected topic (35%), while the more sustainable “slow fashion” was also near the top at 25%. As a trend, gender neutral/fluid was the least selected at 8%. About six in 10 executives are bullish on a return to normal growth in travel retail (61%). Fashion and apparel, including sporting goods n = 51 Source: Deloitte’s global survey of 250 consumer product executives November 2023 15 2024 consumer products industry outlook 2024 consumer products industry outlook Dive 3: The future of the consumer products industry Deloitte’s 2024 consumer product industry outlook explores the trends, topics, changes, and challenges the industry may experience over the next 12–18 months. But companies need the longer view as well. The Deloitte personnel leading this effort engaged with more than 800 professionals, industry experts, clients, and consumer industry insiders to explore the future of the consumer. In search of the broader context, they also brought in economists, sociologists, policymakers, and others with unique perspectives and long-range vision. Those efforts yielded six forces we believe are important to understanding the next decade of change, including in the consumer products industry. (For more, see The future of the consumer industry.) Figure 7: The six forces shaping the consumer industry The changing consumer An evolving society and culture becoming more diverse with consumers breaking free of and transforming across traditional anchors multiple dimensions Shifting economics, policy, Exponential xTech and power with advancementts in infotech and are causing things to a broad set of other technologies, pivot, become increasingly including biotech and material science, uncertain, and reuire a that will make the progress of the past more flexible approach to decade pale by comparison management Extreme climate and planet Radical industry upheaval and its economic impact that will with the dynamics shaping put pressure on the consumer the industry increasing in industry to transform itself pace and intensity Note: The icons representing the six forces were created using text prompts and generative AI imagining the output. Source: Kasey Lobaugh, Anthony Waelter, Alisa Locricchio, Cole Oman, The six forces: Navigating the world of consumer markets to help shape a better future, Deloitte, 2023. Each of the six forces is quite powerful in its own right. But collectively, they amount to something more, something nonlinear, which can have major implications for the industry’s markets, models, and mechanics. Markets: What is sold, who it is being sold to, what products or services create value Models: How businesses organize and configure, how materials and capabilities are sourced, what new models create value Mechanics: How businesses execute work, employ labor, make strategic and operational decisions Here are some top implications, by area, according to 250 surveyed consumer product executives as to what they most expect to factor into the industry’s development over the next three to five years: Markets Models Mechanics 66% – Consumers will increasingly insist 61% – How the industry creates and Record summarization Summarizing that the industry become more responsible operates supply chains will change care encounters (for HCPs) with (e.g., for environmental sustainability, radically in the years ahead details about history, symptoms, societal issues, privacy) procedures, diagnoses, etc. Source: Deloitte’s global survey of 250 consumer product executives November 2023 16 16  2024 consumer products industry outlook 2024 consumer products industry outlook Dive 4: The promise—and the current reality— of Generative AI In our survey, almost nine in 10 consumer product executives are at least somewhat familiar with Generative AI. In interviews, some industry specialists are skeptical or think the industry needs more investment in the technology basics first, others see Generative AI as an opportunity to remake business models. Still, others framed Generative AI as a threat, not for its lack of effectiveness nor due to prospects of a science fiction dystopia, but for its exponentially expanding utility. This last camp felt that companies not aggressively pursuing Generative AI risk being left in the dust, unable to catch up to those who win out. Deploying Generative AI applications is one of the top 2024 priorities for half (50%) of surveyed executives. A similar percentage (52%) are optimistic it can make a significant financial contribution. Only one in five (18%) are pessimistic about its potential financial impact, while a little under a third (30%) withhold judgment. They are moving fast. Seven in 10 (70%) surveyed executives will deploy Generative AI capabilities for a significant business application in the next year. What will be the first “killer application” of Generative AI? We asked executives about 11 potential use cases for the consumer industry, adapted from those identified by the Deloitte AI Institute33 (figure 8). Figure 8: Use cases with the highest potential for Generative AI Market research 48% Customer support 38% Virtual product environment 37% Revenue growth management (RGM ) assistant 37% Marketing content assistant 36% Product design assistant 26% Financial integrity assistant 26% Virtual shopping assistant 20% Programming/code assistant for developers 19% Data interface 17% Virtual spokespeople 14% Source: Based on Deloitte’s analysis of executive surveys for the 2024 Consumer Products Industry Outlook (N = 250). Q15. Which of the following has the most potential to be a ‘killer application’ of Generative AI in your industry? Perhaps surprisingly, Profitable Growers are more measured in their expectations for Generative AI. Three in four don’t think or are unsure that Generative AI will make a significant financial contribution to the industry in 2024 (versus only 32% from other companies). While this group is investing in the technology, it is doing so more experimentally than its less profitable peers: 55% of Profitable Growers are making a moderate or significant investment in Generative AI this year, relative to 85% of other companies. Though cautious, Profitable Growers understand the direction the future is heading. Three-quarters of these executives (76%) think their industry’s operations and decision-making will transition from human- centric to machine intelligence-centric (versus 56% of executives surveyed from other companies). 17 17 2024 consumer products industry outlook 2024 consumer products industry outlook Dive 5: The outlook for GLP-1 agonist weight-loss drugs Consumer products CEOs and CFOs are starting to get peppered with earnings call questions about Glucagon-like peptide 1, better known as GLP-1. Some investors are concerned that these drugs could create a demand headwind for the industry’s caloric snacks, treats, and the food and beverage industry overall. Some estimates project nearly 4 million patients will be on the drugs in 2025, with about 1.5 million each in the United States and Europe. In an extreme scenario, depending on patient penetration, those numbers could create a –1% impact on volumes in food and –3% in alcohol.34 But even at these numbers, several of our interviewees thought the industry had more important things to worry about regarding volume. According to an analysis of US pharmacy claims, only about a third (32%) of patients prescribed a popular weight-loss drug were still taking it a year later. Dropouts seem to have resulted primarily from adverse side effects (e.g., nausea) rather than costs: All the patients had insurance coverage for GLP-1 drugs, and the results did not differ materially based on which medication was prescribed.35 Dropouts at this level would likely diminish any GLP-1 drug impact on consumer products sales. Respondents from various industry subsectors reflect this sense of calm. Among our food and beverage survey respondents, only one in 10 say their 2024 sales are likely to be hurt by GLP-1, and only about a fifth say they are adjusting their overall strategy because of the drugs. Concern was a little higher for alcohol specifically, with about one in three (35%) adjusting their approach. Perhaps surprisingly, apparel companies were the most likely to change tactics due to GLP-1 (57%). They may be sensing an opportunity as people who lose weight tend to refresh their wardrobes and try new styles. 18 18  2024 consumer products industry outlook 2024 consumer products industry outlook Dive 6: Additional survey insights Other important datapoints from our global survey of 250 consumer products executives Digital transformation – Even while managing costs, companies likely need to invest in technology to stay competitive. Most (92%) said accelerating the move to digital platforms/technologies was a priority. Two in three (67%) agreed digital transformation is necessary to compete successfully. Most (93%) companies are backing up that sentiment with investment, though only half of companies (52%) rated their 2024 investment in digital transformation as significant. Labor – A still-tight job market and a high inflationary environment have put upward pressure on labor costs. However, there are signs that the labor market’s strength is cooling, with job openings falling to their lowest level in more than two years.36 The drop in job openings combined with more even hiring may indicate that the labor market is “rebalancing” to pre-pandemic levels. Our survey data shows that executives expect their hiring to be up in 2024 (55%), while layoffs are static or down (93%). Social media – Companies are getting more cautious with their use of social media. More than half (56%) said they would decrease their use of social media and/or put new controls in place for social media influencers. Six in 10 executives said they will be much more cautious about taking strong stands on social, environmental, or politically contentious topics to avoid backlash that could dampen demand. Cost-cutting – Management attention is also likely going to the cost curve. That’s especially true for companies living at lower volumes. Most (84%) in our survey listed containing costs to increase margins as a priority. And almost two in three executives (64%) said they will focus more on decreasing costs in 2024 than in prior years. Omnichannel – Though off their pandemic highs, omnichannel strategies continue to factor into company plans. For instance, developing or strengthening direct-to-consumer (DTC) channels is a key priority for more than six in 10 executives (64%). However, in our conversations with internal and external subject-matter specialists, several said traditional stores are still the most efficient way to acquire consumers. With the move to profitable growth, we expect less chasing of born-digital competition. In addition, companies will likely be more targeted in their efforts toward modes that have the potential to contribute to margins. Loyalty – Of course, there are reasons to go direct-to-consumer other than efficiency. The difficulty of keeping up with the changing consumer is a challenge experienced by most companies in the industry. Six in 10 (63%) said integrating more consumer data is critical to their future success, and direct sales help generate that data. Many companies (62%) are also acquiring data and building relationships by investing in loyalty programs other than those owned by retailers. Trading down – Almost two-thirds of executives (64%) expect more consumers to trade down. The rest are expecting current levels, with no one expecting a decrease. In addition to trading out to unexpected substitutes, six in 10 expect more private label/“owned brands” competition. As of October 2023, a year-over-year comparison had 78% of a broad set of consumer staples categories losing share to private labels on a rolling 12-week average.37 Competing with private labels and managing consumers’ ability to trade down while staying with the brand will likely be essential to success in the year ahead. Source: Deloitte’s global survey of 250 consumer products executives November 2023 19 19 2024 consumer products industry outlook 2024 consumer products industry outlook Dive 7: An eye on the regulatory landscape Price – Europe has seen regulatory concern around price gouging in consumer-packaged goods. In the United Kingdom, while acknowledging input costs as a significant factor in higher prices, the Competition and Markets Authority’s inquiries concluded some companies were raising prices to increase profits.38 France moved its annual food price negotiations forward, hoping to achieve lower prices from companies sooner.39 The government has also tried tactics to persuade producers to lower costs, and some retailers have taken their own actions.40 However, the decline in consumer products price inflation in many countries could take the pressure off further government action in other markets. Cybersecurity and privacy – 2024 could be a year of data localization. In Europe, the General Data Protection Regulation (GDPR) has already caused many companies to classify and store data differently,, including meeting requirements that specific data be maintained within certain geographic borders.41 Such requirements look to spread as new rules are created in countries including China and India.42 In the United States, the Securities and Exchange Commission (SEC) now requires companies to disclose material cybersecurity breaches within four days.43 As cyberattacks ramp up, determining materiality and when and how to disclose it will be on the agenda for consumer products boards and IT teams.44 Two-thirds of executives in our survey say that improving consumer data privacy and cybersecurity is critical to their digital strategy. Sustainability – New disclosure and sustainability claims rules are also taking shape.45 Some regulators, investors, and other stakeholders increasingly ask for comparability, consistency, and enhanced quality in environmental, social, and governance (ESG) reporting. Though on separate paths and timelines, the European Union and United States are expected to finalize new regulations under the CSRD and the SEC’s climate-related disclosures respectively.46 With the first CSRD-related reports expected to be due January 1, 2025, companies will likely need to spend 2024 preparing. Authorities are also taking a tougher stance on greenwashing, introducing new rules to tackle ambiguous sustainability-linked claims in a firm’s communications, strategies, and targets.47 Traceability – Specific to the food and beverage space, the Food Safety Modernization Act (FSMA) Rule 204 will require new levels of tracking and traceability in supply chains.48 With a compliance deadline of January 20, 2026, we expect companies will spend 2024 assessing their current approach and preparing. Two-thirds (64%) of surveyed food and beverage executives said government regulatory requirements are causing their company to increase investment in traceability. In the EU, related rules will obligate companies to prove their goods have not been produced from recently deforested land. The rules are expected to come into force at the end of 2024, affecting commodities including palm oil, coffee, cocoa, beef, soy, and rubber.49 M&A – Consumer products executives in our survey see the potential for deals being challenged, with two-thirds (65%) believing that the industry will face increased regulatory scrutiny of M&A activity relative to prior years. With antitrust scrutiny high, companies might also consider deals that bring them to adjacent spaces. Source: Deloitte’s global survey of 250 consumer products executives November 2023 20 20  2024 consumer products industry outlook Authors and acknowledgments Nick Handrinos Justin Cook Vice Chairman and US Retail US Consumer Products Research Leader & Consumer Products Leader Deloitte Services LP Deloitte LLP +1 617 437 2071 +1 203 905 2723 [email protected] [email protected] Leon Pieters Céline Fenech Global Consumer Industry Leader UK Consumer Products & Consumer Products Sector Leader Insight Lead Deloitte Consulting B.V. Deloitte LLP +3 188 288 2517 +44 (0)20 7303 2064 [email protected] [email protected] Jacob Bruun-Jensen Jagadish Upadhyaya Strategy Principal, Consumer Industry Research & Insights Manager, Monitor Deloitte Consumer Products +1 415 783 6351 Deloitte Support Services Pvt. Ltd. [email protected] +91 99890 22430 [email protected] The authors are grateful for the knowledge and contributions of a large group of subject-matter specialists in the consumer products industry spanning the United States and Europe and various specialists in data analysis, production, and marketing. We extend our thanks to the following people: Meghan Gragtmans, Todd Jansma, Manogna Marthi, Siddharth Mishra, Srinivasarao Oguri, Stephen Rogers, and Margaret Sparks. 21 2024 consumer products industry outlook Endnotes 1. D  eloitte analysis of World Bank commodity indices (energy, food, fertilizers, 23. Shefali Kapadia, “SKU cuts and vendor shortlists defined CPG supply chains beverages) from 2010, indicating a steep rise in input costs from 2020–2022, in 2020,” Supply Chain Dive, December 22, 2020. data from World Bank. 24. Retail media ad revenues expected to surpass television by 2028. See Group 2.  lejandro Zamacona and Diego Serrano, US Packaged Food & Household A M, 2023 global mid-year forecast, June 2023. Products: No stopping the shopping, HSBC Global Research, September 2023. 25. Lisa Johnston, “CPGs facing fierce pressure to launch new products,” 3.  eloitte, 2023 CAGNY conference highlights, March 2023. Additional Deloitte D Consumer Goods Technology, April 20, 2023. analysis of earnings call transcripts of top US CPG companies between January and December 2023. 26. Madeleine Speed and Susannah Savage, “Mars joins push into premium with Hotel Chocolat deal,” Financial Times, November 20, 2023. 4. Deloitte, 2023 CAGNY conference highlights, March 2023 27. Barclays Equity Research, “Weight-loss drugs through a global consumer 5.  eon Pieters et al., “Food fight: Consumers confront inflation with frugality,” L lens,” August 31, 2023; Christopher Doering, “Consumers on weight-loss Deloitte Insights, February 23, 2023. drugs buying less in certain grocery aisles, study finds,” Food Dive, December 7, 2023. 6. Deloitte analysis of financial data of global top 100 consumer products companies sourced from S&P Capital IQ. The top 100 global public CP 28. International Monetary Fund (IMF), World economic outlook: Navigating global companies were selected based on their FY2022 revenue. Relevant sectors divergences (Washington, DC: IMF), October 2023. within CP include food and beverage, fashion and apparel, personal care, and household goods. The following companies were excluded from the analysis: 29. Tom Fairless and Paul Hannon, “World central banks signal victory over inflation private entities, bottlers, agribusiness players with CP FY2022 revenues less is in sight,” Wall Street Journal, December 14, 2023; IMF, “Inflation rate, average than 50% of their total revenues; conglomerates with CP FY2022 revenues consumer prices,” October 2023. less than 50% of total revenues; companies primarily in the consumer health, 30. IMF, World economic outlook: Navigating global divergences. luxury, and tobacco space; and child companies whose parent is already included in top 100 companies selected. 31. OECD, OECD employment outlook, June 2023. 7. Deloitte analysis of financial data obtained through S&P Capital IQ. 32.  lexandra Stevenson, “China bet it all on real estate. Now its economy is paying A the price,” New York Times, October 16, 2023. 8.  ith respect to our survey, which is double blinded, specific companies W cannot be matched directly; our Profitable Growers profile from the financial 33. Deloitte AI Institute, The Generative AI dossier. analysis is closest to those companies in our survey that say they are on track to grow both revenue and EBITDA margins in the year ahead. 34. Barclays Equity Research, “Weight-loss drugs through a global consumer lens.” August 31, 2023 9. A nalysis performed on 26 companies with available pricing, sales, and volume change data from JPMorgan reports analyzing Nielsen IQ sales 35. Chad Terhune, “Most patients using weight-loss drugs like Wegovy stop scanner data in US markets. within a year, data show,” Reuters, July 11, 2023. 10. Deloitte analysis using S&P Capital IQ data. The five-year average selling and 36. US Bureau of Labor Statistics, “Job Openings and Labor Turnover Survey marketing expense as a percentage of revenue for the 26 Profitable Grower news release,” December 5, 2023. companies was 13.52% versus all others at 12.4%. 37. Barclays Equity Research, “European consumer staples: How big a threat is 11.  ircana, Circana’s 2022 New Product Pacesetters Report reveals that a C private label?,” November, 24, 2023. commitment to innovation drives CPG sales, press release, June 7, 2023. 38. Madeleine Speed and Maxine Kelly, “UK watchdog accuses food brands of 12. Deloitte, 2023 CAGNY conference highlights. increasing prices by more than costs,” Financial Times, November 29, 2023. 13. Pieters et al., “Food fight: Consumers confront inflation with frugality.” 39. Reuters, “French bill moves food price deadline up to middle of January,” September 26, 2023. 14. A melia Lucas, “The hot word for CEOs on earnings calls is ‘choiceful’,” CNBC, November 20, 2023. 40. Richa Naidu and Helen Reid, “French shoppers buy fewer tampons, less detergent as prices surge,” Reuters, September 26, 2023. 15. Thijs Geijer, “Food inflation finally cools in Europe after a long hot summer, ING Research, August 30, 2023. 41. A lan Beattie, “Brussels setting rules for AI isn’t pretty, but someone’s got to do it,” Financial Times, December 13, 2023. 16. Sarah Vizard, “2023 mid-year trends: A shift to sales promotions hits marketers’ spending plans,” Raconteur, August 7, 2023. 42. Umang Poddar, “Right to information: Will this hard-won Indian law get weaker?,” BBC News, August 14, 2023. 17. Barclays Equity Research, “European consumer staples: How big a threat is private label?,” November, 24, 2023. 43. James Rundle, “SEC cyber rules loom over public companies,” Wall Street Journal, December 13, 2023. 18. Deloitte analysis of earnings call transcripts for the top 100 global consumer products companies from calls that took place starting in 2018 and 44. A nne Neuberger, “Cybersecurity threats are on the rise in the US,” 8:02, extending through Q3 2023. Frequency counts obtained through use of Bloomberg, December 8, 2023. AlphaSense queries. Calls during Q3 2020 contained 55 mentions of the RGM 45. Economist Intelligence Unit, “Sustainability disclosure requirements are concept. Calls during Q3 2023 had 121 mentions. tightening,” September 1, 2023. 19. Deloitte Revenue Growth Management Framework, 2023. 46. Deloitte, The Corporate Sustainability Reporting Directive (CSRD): Creating a 20. Deloitte AI Institute, The Generative AI dossier, 2023. holistic, transformation-based approach, 2023. 21. Dechert LLP, “The regulatory gauntlet: Dealmakers face increased scrutiny,” 47. Kenza Bryan, “UK bans vague ‘sustainability’ fund labels in greenwashing November 6, 2023. crackdown,” Financial Times, November 28, 2023. 22. Nicole Sheynin, “M&A trends and outlook for 2024,” AlphaSense, November 48. iFoodDS, “Are you prepared for FSMA Rule 204? Here’s what you need to 16, 2023. know,” June 6, 2022. 49. Susannah Savage et al., “Food industry calls for more time to implement EU deforestation rules,” Financial Times, November 12, 2023. 22 2024 consumer products industry outlook 23 This publication contains general information and predictions only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States, and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. Copyright © 2024 Deloitte Development LLC. All rights reserved. 8377805