{"id":36759,"date":"2022-09-26T11:44:37","date_gmt":"2022-09-26T08:44:37","guid":{"rendered":"https:\/\/saudishopper.com.sa\/en\/?p=36759"},"modified":"2026-03-28T01:48:28","modified_gmt":"2026-03-27T22:48:28","slug":"consumer-companies-in-mena-a-defense-approach-against-inflation","status":"publish","type":"post","link":"https:\/\/saudishopper.com.sa\/en\/consumer-companies-in-mena-a-defense-approach-against-inflation\/","title":{"rendered":"Consumer Companies in MENA: A Defense Approach Against Inflation"},"content":{"rendered":"\n

By Jim Drews, Partner, Bain & Company Boston and Federico Piro, Associate Partner, Bain & Company Middle East<\/em><\/p>\n\n\n\n

In 2022, the average\u00a0consumer price inflation<\/a>\u00a0in the MENA region reached 6.3%, causing input costs to surge and compressing margins. Supply chain bottlenecks and shortages continue to strain operations. Truckload, less-than-truckload, and specialized transportation costs jumped over the past two years. And widespread labor shortages persist.<\/p>\n\n\n\n

As the building pressure of these forces squeezes their profit pools, manufacturers and retailers are fighting to deliver value to consumers. For consumer products companies, these massive macroeconomic disruptions call for a sweeping and dynamic response across several pillars: supply chain resilience, operational productivity, design-to-value programs, and revenue growth management (RGM).<\/p>\n\n\n\n

Of these, RGM tends to deliver value the fastest. In this environment, consumer products companies need to proactively develop comprehensive RGM strategies that enlarge the overall profit pool. Those that do will emerge from the current storm with stronger margins, win-win retailer relationships, clearer value for their consumers, and a stronger position for future RGM actions.<\/p>\n\n\n\n

The RGM imperative<\/strong><\/p>\n\n\n\n

During the first waves of inflation, most consumer products companies increased prices to partially cover rising input costs. They hoped for a quick return to normal, or at least the ability to cover any remaining pressures by containing costs. However, as high inflation has persisted over the past year, many companies have found their initial increases were insufficient. Some have already made multiple rounds of additional pricing adjustments; others are deliberating more. <\/p>\n\n\n\n

In addition to market turbulence, the rules have changed for many categories. The Covid-19 pandemic shook up consumption habits and patterns, prompting shifts in product offerings and channels. Many of those changes have endured, but others are reverting, further muddying the waters for consumer products companies and retailers as they try to meet consumers\u2019 needs.<\/p>\n\n\n\n

Today, it\u2019s more important than ever for consumer products companies to build durable and flexible strategies that can withstand continued inflation and supply pressures. With no clear end in sight, programs that address the full suite of RGM elements\u2014including pricing, assortment, price-pack architecture, promotions, and trade terms\u2014will be vital value-creation muscles.<\/p>\n\n\n\n

Four steps to sustainable RGM<\/strong><\/p>\n\n\n\n

Winning companies will be those that can seize the current moment with bold, decisive actions to address the near term, while building strategies for the medium and long term. They won\u2019t simply revert to a standard playbook of changing line prices and restarting previous programs. Instead, leaders will take four steps to exhaust the full RGM tool kit and unlock value for both retail customers and consumers.<\/p>\n\n\n\n

No. 1: Evaluate the total portfolio mix and prices<\/strong><\/p>\n\n\n\n

Industry leaders will find opportunity in turbulence by optimizing portfolio pricing for their company, retailers, and consumers. They understand this is a chance to take corrective action that can be harder to execute under standard conditions.<\/p>\n\n\n\n

Companies can start by reevaluating the entire portfolio and the price gaps against both competitors and private label products. By understanding shifts in consumer behavior, they can get the price-incentive curve right. They can also use pricing changes to shift their product mix toward their most profitable offerings. Finally, leading companies are mindful of key price points or thresholds, taking the opportunity to break through price stickiness where possible, while leaving headroom for future price increases.<\/p>\n\n\n\n

No. 2: Reset promotional investments<\/strong><\/p>\n\n\n\n

As leading companies restart promotions after the pandemic, they\u2019re pausing to reevaluate their promotional strategies. They\u2019re rethinking how they can expand the category and create a win-win-win situation that maximizes value for themselves, retailers, and consumers.<\/p>\n\n\n\n

Historically, around 80% of promotional investments have failed to contribute to category growth. To avoid the common pitfalls, leadership teams can start by asking themselves several questions: What\u2019s the role of promotion within our category\u2014for instance, to increase household penetration and consumption incrementally, or win share? Is that role different in an inflationary environment? If so, how?<\/p>\n\n\n\n

Once they define the role of promotions, they\u2019ll need a deep understanding of promotion performance\u2014one that goes beyond measuring sales increases to collecting granular data on the return on investment (ROI). Best-in-class companies take an unconstrained view, then diligently factor in customer and supply constraints, to limit low-ROI promotional activities.<\/p>\n\n\n\n

No. 3: Rebase total customer investments<\/strong><\/p>\n\n\n\n

Industry standouts are completely rebasing their customer investments, including consumer promotions, fulfillment efficiency programs, retailer media, in-store assets, sales rep coverage, and data.<\/p>\n\n\n\n

These companies determine the right consumer-back programs for online and in-store, to encourage innovation, push specific activation, and more. Leading consumer products companies also address inefficiencies, lower the cost-to-serve across the system, and allocate investments to the highest-value areas. We\u2019ve seen companies do this through three steps.<\/p>\n\n\n\n