Today, public companies are tightening portfolios while private firms are broadening theirs — each driven by different time horizons.

Focus tends to win on performance, diversification on stability, and the great companies learn to balance both.

The future belongs to the “focused diversifiers”: those who know who they are, but aren’t afraid to stretch where it matters.

Making deliberate decisions and leveraging the opportunity to aggregate categories to provide higher-level solutions to consumers is a fundamental driver for long-term value generation.

Every few years, the world’s biggest consumer goods companies seem to change their minds.

One moment they’re narrowing down to “core strengths,” selling anything that doesn’t fit. The next, they’re buying everything in sight, from snacks to supplements, in a rush to catch new growth.

Think of Kraft Heinz splitting up, Unilever spinning off ice cream, Nestlé trimming water, or Ferrero buying W.K. Kellogg’s cereal business. What looks like chaos is, in fact, the rhythm of an industry that has always swung between “focus” and “diversification”, between depth and breadth.

The Eternal Question: How Broad Should You Be?

In consumer goods, success depends not only on what you sell, but on how many things you choose to sell.

A focus strategy means concentrating on the categories where you have real muscle, sharper identity, higher margins, and clearer execution.

A diversification strategy means expanding into new or adjacent spaces capturing growth, spreading risk, and staying relevant as consumer behavior shifts.

Both strategies work. Both fail. The art lies in knowing when to switch.

Why focusing or diversifying?

In principle, companies diversify when they seek new sources of growth, broader revenue stability, or the chance to participate in emerging consumer occasions.

They focus when complexity erodes profitability, or when leadership needs to reaffirm what the business stands for.

While these moves are usually financial or vision-driven, a third trigger remains underleveraged: one that is consumer-centric. Companies can combine categories to deliver higher-level solutions to consumers.

By offering multiple products, and potentially also services, in a consumer “set,” the business can capture more value, raise switching barriers, and deepen engagement. Examples could be combining health drinks, protein bars, supplements and other categories under a unified longevity platform.

When the Market Speaks: Focused Publics, Diversified Privates

Over the past decade, publicly listed giants have mainly chosen focus. Investors reward simplicity and punish complexity.

Unilever, Kraft Heinz, and Nestlé are all slimming down, shedding slow-growth assets, and homing in on profitable cores. Data backs the move: according to a recent BCG analysis, companies that narrowed their portfolios delivered higher annual total shareholder returns over the past decade.

Private and family-owned firms, by contrast, play the long game. Ferrero has bought more than 20 companies in ten years, expanding from chocolate into cookies, cereals, and ice cream, almost doubling its revenue, expanding occasions and categories covered by its portfolio. Mars, now merging with Kellanova, is doing the same: building breadth for resilience, not just short-term returns. Lactalis announced two major acquisitions this year being a bunch of yogurt brands, including Yoplait, in the US from General Mills and, more recently, the Fonterra’s consumer unit. This expands further its geographical footprint.

Private companies being active in major M&A activities

Coke and Pepsi: The Clearest Test Case

Two icons, two models. Coca-Cola is a focused pure play in beverages. PepsiCo runs a dual empire of drinks and snacks.

Over the last decade, Coke’s market capitalization rose by nearly 60%, PepsiCo’s by around 40%. Coke wins on margin and investor love; PepsiCo wins on stability and crisis protection.

^{Source: Bloomberg, Reuters, Companies’ Financial Reports, 2016-2025}

The conclusion? There isn’t one. The right answer depends on what kind of company you are and what kind of world you operate in.

The Risk–Return Pendulum

Focus maximizes returns in calm seas. Diversification keeps you afloat in the storm.

In the 2008 financial crisis, and again during COVID, diversified companies outperformed because their broader portfolios cushioned shocks.

But in stable years, focused firms outperform because clarity, efficiency, and capital discipline command a valuation premium.

This is why the CPG industry never sits still. The pendulum swings back and forth, following the rhythm of the market.

The Emerging Middle Ground: Focused Diversification

The smartest companies today are learning not to choose sides. They are mastering focused diversification, staying disciplined around a strong core, but extending into adjacencies that make strategic sense.

So Where Does This Leave CPG Leaders?

There are two main considerations when speaking about focus or diversification.

• The need to be deliberate: knowing when to pivot, when to double down, and when to let go. This starts with understanding company assets and skills. This is based on making explicit decisions following an ongoing review of the company category portfolio.

• The opportunity to go beyond traditional financial and vision triggers and look at the possibility of combining categories that together can offer higher-level solutions to consumers. This unleashing increased value driving consumer preference and contributing both to top and bottom line development.

At Sevendots, we help CPG companies make deliberate, insight-driven choices, identifying where to focus, where to diversify, and how to build value through consumer-led higher level solutions.

We rapidly assess current and new categories, mapping the most relevant opportunities for growth. Our approach combines an external, unbiased perspective and the latest market dynamics with deep understanding of company assets and culture.

In short, we help our clients shape portfolios that are not just efficient, but meaningful to consumers and built for long-term relevance.

Want the Full Analysis?

If you want to receive the full analysis: “The CPG Pendulum: Focus vs. Diversification in the Age of Portfolio Reinvention” contact Sevendots at growth@sevendots.com.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Source:

• Sevendots Growth Series on Portfolio Management, 2024, BCG “For Long-Term Market Performance, 2025, Bloomberg, 2025, Reuters, 2025

We’ve been working on something for the past few months to further enhance the knowledge exchange with key players in the CPG industry and it’s now live.

The Growth Builders is a new weekly publication on CPG strategy — built on the same underlying principles behind the Sevendots Growth Series, and going considerably further.

Practical, grounded, no filler.

What’s already live:

• 10 articles published — covering brand penetration, portfolio management, geographic expansion, the CPG value equation, category growth, and more

• Written by practitioners who have worked across the largest CPG companies in the world

• Free to read — no paywall, no account required

What’s coming:

• 30 articles in total over the next 4 months

• Three structured knowledge tracks launching in June: Penetration, Portfolio Management, and Top CPG Company Benchmarking

• Each track will provide further depth - case studies, frameworks, and diagnostic tools for CPG leaders

• An optional paid tier launching alongside the tracks in June for those who wish to access the full toolkit

Access to the ongoing publication is free for those who subscribe. You’ll get every article directly in your inbox.

→ Read the first articles and subscribe at growth.sevendots.com

We’d love to know what you think.

The Growth Builders — Sevendots

Price-led growth has reached its limits, while volume growth increasingly depends on deliberate penetration strategies.

Capital-intensive industrial assets remain essential but are no longer the primary source of competitive advantage or shareholders’ returns.

CEOs recognize the need to rethink business models. Yet legacy structures and investment footprints complicate the transition.

Sustained value creation will require combining penetration led growth with new business models that rebalance assets, insight, and adaptability.

Why CPG’s growth challenges are structural, not cyclical

The CPG growth model that delivered decades of shareholder value is no longer fit for today’s market. Price-led growth is reaching its limits, volume growth is stalling, and capital markets are signaling that traditional scale is no longer enough.

Large Consumer Packaged Goods (CPG) companies are facing a growing structural challenge. In an environment characterized by accelerating change, fragmented consumer demand, rising competitive intensity, and increasing channel complexity, many CPG leaders are finding it harder to sustain volume growth. This difficulty is now cascading through the value equation: margins are under pressure, price increases are losing effectiveness, and shareholder returns are increasingly disconnected from broader market performance.

This situation is not cyclical. It reflects a misalignment between how value is created in CPG today and how markets and consumers now reward value creation.

Over the last several years, even the best-performing CPG companies have delivered meaningfully lower returns than broader equity markets, a signal that scale, brands, and industrial excellence, while still essential, are no longer sufficient on their own to support long-term value creation.

In recent years, much of CPG growth has been sustained through pricing. This strategy has bought time, but not a solution to the underlying problem that has been simmering for a while.

Private labels, insurgent brands and local players continue to gain share across markets while an increasing number of consumers trade down or fragment their spend across brands, channels, and solutions. At the same time, promotional intensity and marketing efficiency have deteriorated, further eroding the effectiveness of traditional levers.

The implication is clear: price can no longer compensate for weak demand fundamentals.

In 2025 for the top 11 CPG companies volume growth has been negative. In 2024, roughly three-quarters of consumer products sales growth came from price increases.

Over the past 5 years, consumer staples (proxied by XLP) delivered ~8.0% annualized CAGR vs. ~15.0% annualized for the S&P 500 (SPY). In 2025 the top 11 CPG companies’ share price growth was on average at 0% vs. double digit growth of the relative stock exchange indexes.

This creates a new mandate: CPG must reinvent the consumer value equation, while still extracting medium-term value through disciplined penetration-driven volume growth.

CEOs recognize the need for a reset

This reality is now reflected at the highest level of corporate priorities. Recent global CEO surveys show that business model change ranks as the number one priority, ahead of price increases, marketing spend, headcount optimization, or M&A.

Price increases remain high on the agenda, but they are increasingly being viewed as tactical levers, not sustainable engines of value creation.

Similarly, an excessive focus on the premium categories or segments is leading to two consequences for global CPG players:

• Inevitable excess capacity in production plants as a lower number of consumers are being focused on, those who can afford to pay more

• Leaving the bulk of category volumes in the hands of regional/local players in the mid tier price segments

• Allowing smaller brands and private labels to first control the lower price segment and then start to ladder up.

For CPG in particular, this shift is significant. The industrial model that historically underpinned competitive advantage, capital-intensive assets, scale manufacturing, and fixed-cost leverage, is now acting, in many cases, as a constraint on adaptability.

Why industrial scale alone no longer drives CPG value creation

Manufacturing scale, operational excellence, and industrial know-how will remain critical components of any successful CPG model. However, they can no longer sit in isolation at the center of the value equation.

Three structural tensions are emerging:

• Capital intensity limits experimentation and speed

• Traditional category boundaries constrain innovation and relevance

• Indirect routes to market reduce access to consumer insight and learning velocity.

As a result, optimizing the existing system delivers diminishing returns.

Yet this does not mean CPG companies are “out of growth.”

The medium-term opportunity penetration-led volume growth

In the medium term, large CPG companies can still sustain value creation through volume growth, but the nature of that growth is changing. The most credible path forward is penetration-led volume growth, not indiscriminate expansion. This requires deliberate choices involving three dimensions:

Portfolio choices become critical.

Growth increasingly depends on focusing portfolios on consumer jobs to be done and occasions where penetration headroom still exists, on adjacent or redefined spaces where brands have permission to stretch, and on managing explicitly the difference between cash engines and growth engines, each with distinct roles, economics, and expectations.

Channel development is equally decisive.

Penetration today depends on structural advantage in the channels that are gaining relevance like discounters, e-commerce, quick commerce, specialized platforms, Away From Home and digital B2B ecosystems. As pointed out by Justing Sargent in our recently published article “The Collaboration Dividend” growth can come also from existing channels.

Geographic footprint must also be addressed more selectively.

Growth is increasingly uneven across markets, requiring targeted geographic bets, localized propositions, and tailored pack-price and route-to-market architecture rather than uniform global rollouts.

Penetration-led growth, therefore, is not primarily an execution challenge. It is a design problem, requiring a different way of thinking about where and how growth is created.

Disruptive innovation as the bridge between growth and new business models

This is where disruptive innovation becomes essential, provided it is understood in a broader and more holistic sense than traditional product innovation and it is fully consumer centric. At its core, penetration-led growth must be built around a consumer-first engine structured on three elements:

• Jobs & occasions (demand definition)

• Access & interfaces (demand access)

• Portfolio & economics (value capture).

Disruptive innovation, therefore, is not just about new products, but about designing and activating this system end-to-end.

In CPG, innovation has long been associated mainly with new products, formulations, or line extensions. While these remain important, they are no longer sufficient to unlock sustainable penetration growth or to support the emergence of new business models.

Disruptive innovation today operates at the system level. It reshapes how value is conceived, created, delivered, and captured, often without immediately challenging the core product itself. In doing so, it allows companies to explore new growth logics while continuing to leverage existing industrial and brand assets.

In practice, this broader form of innovation spans multiple, interconnected dimensions:

• Consumer innovation, redefining the consumer job to be done and reframing categories around outcomes, occasions, and routines rather than products

• Business model innovation, experimenting with new revenue logics, subscription mechanisms, service layers, and ecosystem participation

• Route-to-market innovation, redesigning channels, partnerships, and digital interfaces to accelerate reach, learning, and penetration

• Operational and capability innovation, embedding data, AI, and automation to increase adaptability and decision speed

• Organizational and governance innovation, enabling faster experimentation, cross-functional collaboration, and different risk profiles.

Crucially, this systemic view of innovation is what makes penetration-led growth sustainable.

By redefining occasions, simplifying access, improving relevance, or lowering adoption barriers, disruptive innovation expands demand rather than merely increasing intensity among existing buyers.

At the same time, it creates protected spaces where new ways of generating value can be developed and tested without destabilizing the core business.

Clearly some of these routes are harder than others and overall ROI can be different.

To manage disruptive innovation properly aligning the right resources and capabilities becomes crucial as well outlined by our Partner Mauro Piloni in his recent article “Unlocking Growth in the CPG Industry in a World of Uncertainty”.

Why business model innovation becomes unavoidable

Even with disciplined penetration-led growth, the limits of the traditional CPG model remain. This is why leading players are exploring new business models, not as experiments at the margin, but as ways to redefine how value is created.

Across the industry, five model directions are emerging:

• Direct-to-Consumer DTC 2.0, not as a volume channel but as a strategic control tower for data, insight, and innovation and to reduce dependency from large retailers.

• Ecosystem and platform models, where value is created across connected products, services, and partners. Think here at how wearables have been able to build a market as a health and data companion.

• Service-led and outcome-oriented propositions, shifting from selling items to delivering results and covering higher level consumer needs. This provides more rounded solutions to consumers.

• Circular and bioeconomy models, where sustainability becomes a core operating logic driven by regulation and economics. I.e. in many markets, refill models already exist at scale, for example, returnable glass bottle systems, and could be reinvented through electrified logistics and digital tracking.

• AI-enabled decision systems, i.e. across dynamic pricing, demand sensing and portfolio optimization.

These models rebalance the mix between tangible assets and intangible value, between scale and adaptability.

These five models are not alternatives. They are different expressions of three underlying transformation pillars being:

• Demand definition – How can I tackle new, or better addressing existing, jobs to be done and occasions through a mix of physical products and services?

• Demand access – How can I reinvent route-to-market leveraging new interfaces?

• Operating adaptability – How can I better leverage data and AI pairing it with new organization models?

The real challenge transitioning without breaking the base

While CEO ambition to redefine business models is clear, the path to get there remains uncertain. Capital investment and industrial footprint, once the primary drivers of value, now act as potential barriers to transformation.

The challenge is not to abandon the existing model, but to transition from it deliberately, funding the future while protecting the present.

This requires:

• Clear transition architectures, not isolated pilots

• New performance metrics beyond volume, margin, and share

• Explicit trade-offs between short-term optimization and long-term optionality

Across all emerging models, three enablers consistently determine success:

• Access to fresh, clean, harmonized internal and external information

• Experience-based, multidisciplinary, future-oriented human judgment

• A seamless combination of the two, where technology ampli es, not replaces, human insight

This is where many transformations fail: not for lack of data or technology, but for lack of meaningful synthesis and direction.

The Sevendots perspective

At Sevendots, we have been consistently advocating for some time that the CPG value equation must evolve, both to secure long-term shareholder returns and to better align with consumers’ rapidly evolving expectations. Not only have we been beating this drum, but we have been working with multiple companies to kick start and manage the required change.

What differentiates our work is not the identification of growth opportunities, but the ability to sequence penetration-led growth and business model evolution without breaking the industrial base.

More recently, we have been promoting our strong belief that large CPG companies can still grow volumes in the medium term, provided growth is driven by penetration rather than short-term intensity.

Supporting this, we have developed a clear and pragmatic penetration-growth framework that helps companies identify where real demand headroom still exists and how to unlock it through the right combination of portfolio choices, channel design, and geographic focus.

In practice, we work with leadership teams to:

• Identify penetration opportunities across consumer jobs, occasions, and adjacent need states

• Redesign portfolios to clearly differentiate between cash engines and growth engines

• Translate strategic intent into concrete channel and route-to-market choices that accelerate reach and learning

• Prioritize geographies where penetration-led growth is structurally achievable rather than assumed.

Beyond penetration, we are actively working with and alongside clients on the broader set of transformations required to redefine value creation in CPG. This includes sharing experience, co-designing solutions, and supporting execution across topics such as:

• Moving beyond traditional category definitions toward consumer- and solution-led growth spaces

• Rebalancing tangible and intangible elements of the value proposition

• Designing higher-level consumer solutions that aggregate products, services, and data

• Rethinking routes-to-market, including DTC, digital B2B, and ecosystem-based models

• Exploring open and collaborative ecosystems where cross-company partnerships improve efficiency and quality of the offer

• Leveraging disruptive innovation and AI-enabled capabilities to accelerate insight, adaptability, and decision-making.

Across these engagements, our focus is not on isolated pilots, but on helping organizations manage the transition from today’s industrial model towards more adaptive, insight-driven business models while protecting the economic engine that funds the journey.

Closing thought

In 2026, the question for CPG leaders is no longer whether they can protect margins in the short term.

It is whether they can reconcile penetration-led volume growth with a fundamental redefinition of how value is created.

Business model evolution is no longer optional. It is the condition for sustainable growth and long-term shareholder returns

For CPG leaders, the real risk is no longer disruption from the outside but clinging too long to a value equation that markets and consumers have already moved beyond.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Sevendots Top 12 CPG Companies Monitor, 2026

• Penetration Under Pressure: Evolving the Core Driver of Brand Growth, Sevendots Growth Series, 2025

• Navigating Effective Complexity: New Insight into Portfolio Management, Sevendots Growth Series, 2025

• Yahoo Finance, 2026

• The C Suite Outlook 2026, The Conference Board, 2026

• M. Piloni, Unlocking Growth in the CPG Industry in a World of Uncertainty, Sevendots, 2026

• Justin Sargent, The Collaboration Dividend: The secret sauce CPG leaders use to drive volume and profitability, Sevendots, 2026

The Case for Simplification

Simplifying a product portfolio involves reducing the number of brands or SKUs, standardizing formulations, and eliminating underperforming products. This approach can lead to streamlined operations, cost savings, and improved supply chain efficiency. By focusing on high-performing products, companies can allocate resources more effectively and respond swiftly to market changes.

P&G, similarly to many other manufacturers, claimed that the bottom 25% of SKUs in the categories it operates in deliver a very small contribution to absolute retail sales. So, in 2023 they partnered with major retailers in the US, to leverage POS data and their own proprietary algorithms, to determine which SKUs they should focus on across all regions and all categories. (1)

The Imperative of Shopper-Centric Customization

Conversely, today’s consumers increasingly expect personalized experiences. A study by McKinsey highlights that 71% of consumers expect companies to deliver personalized interactions, and 76% become frustrated when this doesn’t happen. (2)

This expectation extends to product offerings, with consumers seeking products that cater to their specific preferences. In a study conducted by Moment10 in 2022, on more than 1,500 consumers across USA, France and China, 54% of respondents claimed that personalization in consumer goods allows them to buy products best suited to their personal taste and needs. (3)

Additionally, the retail landscape is becoming more fragmented, with products distributed through various channels such as multiple retailers, wholesalers, online platforms, and niche marketplaces. This fragmentation poses unique challenges for businesses aiming to reach their target audiences effectively.

As an example, social commerce is on the rise and will play a fundamental role in the next years. All the major platforms are improving the shopping features following a growing consumer interest to discover, evaluate and buy products without leaving the social media app. Shoppable posts, live events and more personalized shopping experiences will be fundamental features for successful CPG brands. (4) This requires specific adaptations and formats, which impact portfolio choices.

Navigating the Contradiction

The challenge lies in reconciling the drive for simplification with the necessity for customization. While simplification aims to reduce complexity, shopper-centric customization inherently introduces it, by requiring tailored products for different consumer segments and channels.

Strategic Portfolio Optimization: A Balanced Approach

To address this dichotomy, CPG companies should adopt a strategy of strategic portfolio optimization, which involves:

1. Eliminating Non-Value-Added Complexity: Identify and remove products or variations that do not significantly contribute to revenue or consumer satisfaction.

2. Investing in Value-Added Customization: Develop tailored products or packaging for high-value channels or consumer segments where personalization can drive growth.

To successfully implement this approach, CPG companies must harness the power of data and technology. By leveraging advanced analytics, they can gain deeper insights into consumer preferences and channel performance, allowing them to make informed decisions about where customization will have the greatest impact. This data-driven strategy ensures that personalization efforts enhance value without introducing unnecessary complexity.

Conclusion:

In conclusion, while portfolio simplification offers clear operational benefits, it must be balanced with the growing consumer demand for personalized products and the complexities of a fragmented retail environment. By strategically optimizing their portfolios, CPG companies can reduce unnecessary complexity while delivering tailored offerings that meet the diverse needs of today’s consumers

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

1. Consumer Good, 2023 - https://consumergoods.com/pg-trimming-skus-part-collaborative-commerce-strategy

2. McKinsey, 2021, https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying?utm_source=chatgpt.com

3. Moment10, 2022

4. Cool Nerds Marketing, 2025, Top Social Media Trends for CPG Brands in 2025

“More diversified portfolios with more proactive management, will allow CPG companies to cope more effectively with the emerging macro forces.”

Today, different macro forces are violently and rapidly shaping the CPG industry of tomorrow.

In the past, a lot of attention and money was directed towards avoiding complexity and simply focusing on increasing scale which justified the role and importance of mega brands.

Today, and even more so tomorrow, complexity is becoming a key asset in the value equation. Portfolio management needs to recognize the importance of this dimension and provide a strong combination of bigger and smaller brands to answer different needs. Of course, this requires new governance, industrial and distribution models. Similarly, measurement needs to adapt to capture the real performance of the portfolio as a whole.

More diversified portfolios with more proactive management of them will allow international CPG companies to cope more effectively with the emerging macro forces.

The traditional approach of delegating portfolio decisions exclusively to marketing and commercial functions represents a fundamental misalignment with the realities of modern CPG operations. While these functions undoubtedly possess crucial market insights, portfolio optimization extends far beyond consumer preferences and promotional strategies—it’s a complex orchestration that directly impacts operational capacity, financial performance, and strategic resource allocation.

The financial implications of siloed portfolio management extend well beyond immediate P&L considerations, creating cascading effects that demand C-suite oversight and cross-functional integration. Finance teams possess unique visibility into working capital implications, margin structures, and resource allocation trade-offs that marketing-led decisions often overlook. Operations teams understand manufacturing constraints, capacity utilization, and the true cost of complexity that can make seemingly attractive products financially destructive. According to KPMG’s ² survey of 600 organizations, 49% of organizations had suffered a project failure in just a 12-month period, often due to inadequate cross-functional input during critical decision-making phases. When portfolio management becomes a C-suite responsibility with mandatory cross-functional input, companies unlock an optimized allocation of firm resources with maximized market share and revenues, transforming portfolio decisions from marketing exercises into strategic value creation engines.

The following diagram provides a visual representation of the interplay between different functions. When portfolio decisions engage the full C-suite in a cross-functional dialogue, companies unlock superior strategic outcomes by aligning marketing insights with operational realities, financial constraints with growth ambitions, and innovation priorities with supply chain capabilities, ultimately delivering more robust and executable portfolio strategies.

Portfolio Strategic Decisions

Growth and portfolio decisions are strongly linked. In fact, they help to prioritize investment, optimize the product mix and steer the strategic direction.

There is value in trying to understand how different growth strategies impact the portfolio management decisions both in terms of the primary level they need to focus on (categories, brands, SKUs) and the triggers (strategy, financial, consumer, customers).

The following table summarizes the decisions and approaches to have a Strategic Portfolio Management:

Portfolio Need: Revitalization

Reinvigorate underperforming assets and restore competitive positioning.

Strategic Approach:

• Brand identity and Brand Purpose review
  Realign brand positioning with evolving consumer values and market dynamics.

• Complexity Optimization
  Streamline Category/Brand/SKU architecture to eliminate low-performing variants and reduce operational burden.

• Innovation pipeline acceleration
  Fast-track product development cycles to close competitive gaps.

• Channel strategy reformation
  Optimize go-to-market approach and distribution partner alignment.

Portfolio Need: Expansion

Capture new growth opportunities while managing risk and resource allocation.

Strategic Approach:

• Adjacent categories analysis
  Evaluate brand extension, partnership and licensing opportunities leveraging core competencies and consumer equity.

• Geographical expansion analysis
  Assess market entry strategies with localization requirements and regulatory considerations.

• M&A strategic fit analysis
  Evaluate acquisition targets for synergy potential, cultural alignment, and integration complexity.

• Digital ecosystem expansion
  Leverage e-commerce and direct-to-consumer channels for market approach.

• Foresight forecasting
  Quantify expansion scenarios across multiple strategic dimensions (risk, equity and complexity).

• Strategic Supply Network Design
  Configure operational infrastructure to support scalable growth trajectories through integrated technological, logistics, and digital capabilities, while embedding ESG principles and organizational development as foundational elements for all expansion strategies.

Portfolio Need: Profitability

Optimize value extraction and margin enhancement across the portfolio.

Strategic Approach:

• Strategic Revenue Management
  Implement dynamic pricing strategies and promotional optimization frameworks. It considers the mix between products, customer segments and distribution channels.

• Premiumization
  Elevate product positioning through innovation, packaging, and brand storytelling.

• Design to Consumer Preference (DCP)
  Engineer products that maximize willingness-to-pay while optimizing cost structures.

• Portfolio architecture optimization
  Rationalize product lines to focus resources on highest-margin opportunities. This may include assets divestiture assessment.

A hint for long-term sustainable growth: Stop bleeding cash cows!

Long-term Total Shareholder Return requires balanced cost structure interventions to ensure sustained growth. According to BCG⁴, revenue and costs drive three-quarters of financial performance over five-year periods, making their optimization critical for shareholder value creation.

Strategic decisions regarding high-margin core SKUs must balance sustained volume growth, profitability, and competitive differentiation. These SKUs, representing major portions of both revenue and income, face two primary challenges:

1. Continuous cost pressures that risk quality degradation through incremental reformulations using cheaper ingredients and lower cost sourcing strategies, ultimately jeopardizing long-term brand equity.

   

2. These SKUs receive less attention in relation to innovation products, behind these potential reasons:​ concern in touching a major sales contributor​, quest to keep up with emerging consumer needs​ and need to respond to competition​.

The breakthrough solution is to apply Sevendots Design to Consumer Preference (DCP) methodology which combines the wealth of your internal knowledge with external knowledge on consumer understanding and product and process benchmarking​. This proven methodology will allow to extract more value from the core products and moving their design into today's and tomorrow’s consumer preference.

Design to Consumer Preference is a proven five steps methodology:

The process results into tangible deliverables:

1. Comprehensive understanding of competitive landscape and consumer trends​.

2. Consumer feedback on current brand and product design vs competition and benchmark products​.

3. Evaluation of tradeoff between top line and bottom-line growth​.

4. Development of Business Case

5. Implementation plan and timings

A case study of applying DCP comes from Unilever Ice Cream in Indonesia.

Conclusions

Multinational CPG companies face a pivotal moment. Overcoming stagnant volume growth and ensuring long-term shareholder returns necessitates strategically portfolio management. Companies applying the right methodologies to balance immediate opportunities with long-term strategic growth will achieve sustained market success and superior shareholder value.

At Sevendots, we advise CPG companies on how to win in today’s dynamic environment. If you are looking to extract greater value from your core business and evolve the design of your core products to align with current and future consumer preferences, we would be glad to support you through the application of our Design to Consumer Preference methodology.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

1. 2024. “Portfolio Management Growth series”

2. KPMG International. 2005. “Global IT Project Management Survey.”

3. Sevendots. 2025. “Design to Consumer Preference”

4. BCG 2025

The Context

In today’s world, attention is more fragmented than ever, and brands are constantly searching for new ways to grow without losing their ethos. Traditional campaigns may refresh awareness, but partnerships, when done with intention, can become one of the most effective ways to expand reach, attract new audiences, and strengthen equity by borrowing complementary strengths.

When designed strategically, partnerships can serve three very different purposes: they can help a brand reach new audiences, deepen engagement among existing ones, or combine complementary strengths that elevate both sides. For partnerships to work, it all depends on a single condition: clarity of purpose. When that clarity is missing, collaborations risk confusing consumers or weakening the brand’s identity. When it is present, partnerships can become a disciplined and creative engine for growth.

Although most of the examples in this article come from categories outside CPG, the underlying principles apply directly to it. In fact, CPG often lags other industries in partnership innovation, relying mostly on limited-edition flavors or tactical collaborations. The opportunity ahead is to borrow with pride from more advanced categories such as fashion, technology, sports, and payments, and translate those learnings into long-term platforms rather than momentary activations. The benefit for CPG brands is clear: the same three paths can unlock penetration, deeper loyalty, and renewed meaning when applied with discipline and imagination.

Among the three paths, the third is often the most transformative. It is where two brands combine different strengths to create something neither could achieve alone. New product lines, new categories, and even new business models emerge when brands complement each other naturally. These equity-building partnerships show how rational trust and emotional meaning can coexist—and why the best collaborations are rarely about reach, but about reinvention.

Path #1: Expanding to new audiences

Growth in mature categories almost always comes from attracting new buyers.

Partnerships can accelerate this process by letting a brand borrow credibility from a trusted name that already connects with the desired audience. Consumers transfer trust from one brand to another, making trial both faster and more natural.

Some brands typically struggle with younger groups, so it is common to see partnerships trying to gain some of the point-of-market-entry consumers. Although not everyone does it right, here are a couple of examples that were very successful.

The collaboration between Crocs and the anime franchise Naruto is a clear example. Crocs, long associated with comfort and utility, entered the world of fandom and self-expression through limited-edition character designs and collectible “Jibbitz.” Each release sold out within hours. The brand saw a surge in online searches and social mentions, and overall revenue grew by thirty-three percent in 2023, partly driven by these collaborations. Crocs, which in the past could not win among some generations, has lately been able to remain true to its playful and customizable personality while opening the door to a younger, culture-driven community.

An example within CPG can be found in Oreo’s collaborations with artists such as Post Malone and Selena Gomez. The Oreo versions were created by the artist, and the name of the artist were bigger than the Oreo logo in the package. Net, these partnerships were very successful attracting new buyers to the franchise while also creating a spike in relevance among younger fans.

A more unexpected case comes from Louis Vuitton and Supreme. What began as a provocative meeting of luxury and streetwear quickly became a cultural phenomenon. The joint collection sold out instantly and contributed to a seventeen percent sales increase for LVMH’s Fashion and Leather Goods division that year. For Louis Vuitton, the partnership brought credibility among younger consumers who valued creativity over tradition. For Supreme, it provided entry into the world of luxury. What might have seemed like opposite worlds revealed themselves as two expressions of craftsmanship and confidence.

Expansion succeeds when the new audience sees the partnership as additive, not opportunistic.

Path #2: Maximizing within the same audience

When two brands share a tribe, partnership turns presence into belonging.

Some partnerships focus less on new audiences and more on deepening the brand’s role in the lives of those it already serves. When two brands share a similar consumer base, they can work together to create richer experiences that increase frequency, loyalty, and cultural relevance.

The collaboration between Nike and Spotify illustrates this perfectly. Nike’s mission to inspire movement and Spotify’s ability to power that movement made them natural allies. By integrating playlists and training challenges, they turned workouts into multisensory rituals. The partnership led to higher engagement across both platforms and increased completion rates for Nike Training Club sessions. It was not about attracting new users; it was about becoming indispensable to existing ones.

A broader version of this synergy is the long-term alliance between GoPro and Red Bull. Both brands speak to adventure seekers but from different angles: GoPro provides the camera, Red Bull provides the stage. Together they built a global ecosystem of extreme-sports content that redefined how adrenaline is filmed and shared. GoPro’s revenues surpassed 1.6 billion USD at the height of the collaboration, while Red Bull’s sales grew past six billion cans annually. Rather than chasing new audiences, they deepened ownership of a cultural territory.

Path #3: Complementing equities and leveraging strengths

When one brand’s strength fills another’s gap, both become stronger.

The third path to growth involves the most interesting route: combining different types of strength between brands that partner to complement one another. Some brands bring rational credibility; others bring emotion and cultural energy. When the two come together, they can elevate each other’s meaning and create entirely new forms of relevance.

The collaboration between IKEA and LEGO demonstrates this beautifully. Their BYGGLEK collection of boxes—part storage and part play surface—sold out upon launch and later became a permanent product line. IKEA contributed practicality and design discipline, while LEGO added imagination and family warmth. The result was an idea that felt inevitable: organization and play, united in everyday life.

Another illustration is the partnership between Microsoft and the NBA. By applying Microsoft Copilot technology, the league offered fans data-rich, personalized viewing experiences that brought analytics to life. Microsoft gained emotional connection with younger, sports-focused audiences, while the NBA enhanced its reputation for innovation. Engagement in the NBA app increased by double digits in 2023, and Microsoft’s image evolved from corporate and functional to human and culturally fluent. This was not about co-branding logos; it was about blending intelligence with emotion.

A striking recent example of complementary equities is Y-3, the enduring partnership between Adidas and Japanese designer Yohji Yamamoto. Originally launched in 2002 as an experiment in fusing sportswear and avant-garde design, Y-3 has evolved into a full expression of fashion performance. What began as an aesthetic collaboration is now reshaping an entire category. In the 2024 and 2025 ATP seasons, most Adidas-sponsored tennis players, including several top-ranked men and women, have taken the court wearing Y-3 instead of the traditional Adidas line. This shift signals more than a design preference; it marks the arrival of a new era where performance and style coexist seamlessly. Y-3 gives Adidas a new visual and emotional language, one that elevates tennis from functional gear to fashion expression, while Yohji Yamamoto gains global reach and cultural relevance in a sport long defined by convention. This partnership shows how innovation and artistry merge to create not just a new product line but a new category where sport becomes an act of style.

Perhaps the most systemic example comes from the world of payment networks, where collaboration is not a novelty but a defining feature of the business model. Brands like Visa and Mastercard are experts in co-branding since their logos rarely appear alone. Whether it is a credit card issued by a bank, a digital wallet using their payment rails, or a major sports or music sponsorship such as the FIFA World Cup or the Grammy Awards, these partnerships demonstrate how functional trust and emotional connection can coexist.

The network provides the infrastructure that guarantees security and reliability, while the partner brand—whether a bank, an app, or an event—adds personality, aspiration, or local relevance. Together they create value that is both rational and emotional. It is a constant reminder that in payments, credibility is built on the invisible, but connection is built on the emotional layer of partnership.

Growth without distortion

No matter which route, a brand partnership takes, expanding to a new audience, maximizing within an audience, or complementing equities, the goal is always to stretch intelligently without losing clarity. The strongest partnerships feel like natural evolutions, not forced experiments. They build on the brand’s existing truth while opening it to new expressions and audiences.

Growth achieved in this way is both creative and disciplined. It respects the brand’s essence while allowing it to evolve alongside culture. In a marketplace that rewards novelty but values authenticity, the brands that master this balance will continue to grow confidently, clearly, and without distortion.

In the end, great partnerships are not only a way to grow faster; they are a way to grow truer to what the brand can become.

At Sevendots, we help brands identify which of the three paths best unlock their next wave of growth and design partnerships that stretch the brand with clarity rather than compromise.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Crocs x Naruto: https://www.highsnobiety.com/p/naruto-crocs-collab-2024/

• LVMH x Supreme: https://ww.fashionnetwork.com/news/Lvmh-scores-15-rise-in-total-revenues-in-first-half-of-2017,854385.html

• GoPro x RedBull: https://www.reuters.com/article/technology/red-bull-deal-gives-gopro-wings-idUSKCN0YF2IZ/

• IKEA x Lego: https://www.ikea.com/us/en/files/pdf/35/cf/35cf8a5c/bygglek_press_release.pdf

• Microsoft x NBA: https://www.microsoft.com/en/customers/story/859765-nba-media-entertainment-azure

• Adidas x Y-3: https://news.adidas.com/racket-sports/y-3-reimagines-tennis-style-with-disruptive-new-performance-collection-and-striking-campaign-featuri/s/8050b2e2-b331-48bb-9625-d005fa57810e

• Mastercard x Grammy Awards: https://www.grammy.com/news/2024-grammys-brands-partners

presents advice for decision makers to better leverage growth strategies in the CPG industry.

The evolution of portfolio management

In 2019, as part of our Sevendots Growth Series, we released a pivotal study on portfolio management within the Consumer-Packaged Goods (CPG) industry. At the time, our exchanges with senior brand owners revealed a surprisingly limited focus on this critical area. Also, it appeared that many decisions surrounding portfolio management were being made without a clear strategic roadmap in mind. To address this gap, we developed a straightforward framework linking the three levels of portfolio management (Categories, Brands and SKUs) with their corresponding decision triggers, providing a clear snapshot of both passive and active decision-making processes.

Adapting to new dynamics of product portfolio management: the 2024 update

If we fast forward to today, the landscape has evolved significantly due to various trends and events that have reshaped the CPG sector. The pandemic, followed by high inflation and the devastating consequences of wars in different regions have further impacted CPG companies’ priorities and focus. Our updated study delves deeper into how these changes have influenced approaches to portfolio management. The above framework remains valid, but we have also explored the correlation between portfolio management and business growth, hypothesizing a logical connection between these decisions and tangible business outcomes.

In fact, as many studies and reports proved over the years, one of the most effective ways for a company to sustain long term Total Shareholders Return is through an active management of its portfolio both making sure to revisit it periodically and ensure resource allocation and investment occurs in the most productive way, prioritizing these in alignment with the wider business strategy(1).

Exploring growth strategies to your product portfolio: a four-pronged approach

There is value in trying to understand how different growth strategies impact portfolio management decisions both in terms of the primary level they need to focus on (categories, brands, or SKUs) and the triggers (i.e. strategy, financials, consumers, customers). After having reviewed many cases, data sets and literature we identified four prevailing CPG company growth strategies that can be related to portfolio decisions. They are represented in the slide below and the implications of each are then analyzed.

Mergers and acquisitions (M&A) driven growth

M&A remains a dominant strategy and revolves around buying companies that can provide an accretive margin level and a more solid growth trend versus the existing business. For example, Unilever’s attempted acquisition of GSK’s consumer health business aimed to capitalize on the high margins of the consumer health sector. Unilever offered a very high purchasing price (considered too high by some analysts) but the bet was to expand profit considering that consumer health, in addition to double digit projected growth, is generally running at 15%-25% net margin(2) vs. Unilever’s which is just above 10%(3). At the same time, the recent decision from Unilever to sell off their ice cream business can be seen as a reactive decision to remove lower margin business among their five business areas(4). These actions highlight the strategic use of M&A to refine company portfolios and enhance financial performance.

M&A driven growth can be valid also within the same category, allowing companies to increase their market share, but in this case, the way to get accretive margin is mainly linked to scale and operational efficiencies (besides the possibility of reaching a new segment of the market or a new geography). However, we can see that the bet associated with these acquisitions is generally bigger as they represent a higher risk of failing to meet expectations. A well-known example of this was the Coty acquisition of P&G beauty brands in 2016 that did not produce the expected results and drove the company to take a nearly $1bn write down on the assets in 2019(5).This is why we see that M&A growth strategies are increasingly linked to a category level decision within the portfolio, with the main driver being expansion.

Growth from scale

This is a strategy based on further leveraging existing assets. As in the M&A growth strategy, we can see a shift from scaling an existing brand in the same category to stretching it across different categories, mainly adjacent ones. In this case, scale is reached primarily through intangible (and sometimes tangible) brand equity elements that are spread across different categories (normally through a selected single or multiple stretching driver). This is the concept of ‘Powerbranding’: the ability for a brand to cover a much broader territory. A great example of this growth from scale is represented by Nivea. With a well-structured and long-term stretching strategy, Nivea became a €5 Billion plus revenue brand in 2023(6). Nivea strongly expanded its territory with close to 100 different products, and is now seeing its future more in beauty (where margins could be more interesting) than in personal care(7). This expansion was well governed and reinforced the equity of the brand, and was made possible mainly thanks to strongly differentiated and highly performing products. The main driver of this growth strategy is well governed and smart stretching.

Higher margin development

This could be considered as an ongoing premiumization strategy, where the company periodically substitutes the lower margin units from its portfolio in favor of new higher margin ones. This can normally be played both at a brand and SKU level.

A good example within the first area was Danone YoPro (with slightly different branding from country to country). This was a successful protein-based dairy brand that boosted and targeted more specifically the functional element of the yogurt category. The strong and well-articulated targeting exercise attracted fitness and sport-oriented individuals, which allowed the brand to build a broad consumer base and a strong brand profile. Also, the product, thanks to its functionality linked to high protein content, is premiumizing the category by developing a new segment The high-protein platform in 2022, just after a few years from the launch, sales exceeded €500M in sales (8). The main driver of this growth strategy is mainly innovation and or renovation.

Cost-cutting margin expansion

This growth strategy is focusing mainly, but not only, on the bottom line. It aims to streamline the portfolio, removing those items that not only have a low margin but also a low rotation. Cutting low rotation items can boost the performance on other items that better leverage their scale. An example here is P&G USA. For the company, the bottom 25% of SKUs in the categories it operates in, deliver a very small contribution to absolute retail sales. In an initiative created in conjunction with the customers, P&G leveraged POS data and their own proprietary algorithms to determine which SKUs they should focus on across all regions and all categories(9). In this case the main driver of this growth strategy is a well thought and grounded rationalization.

The synergy of strategies

While these growth strategies may appear distinct, they are often employed in synergy to enhance a company’s growth trajectory. It could be relevant to look at a distinction between proactive and reactive portfolio management decisions that impact incremental or decremental units within the portfolio. This simple perspective can provide CPG companies with a robust framework to evaluate possibilities as well as measure the potential impacts on revenue and margin growth.

While a reactive approach, accompanied by removal of low value items, should remain an integral part of an ongoing portfolio optimization process, strengthening competitive advantage through a more proactive approach should also be a considered as a strategic priority.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

(1) BCG, 2016, McKinsey, Harvard Business Review

(2) Reuters, 2022

(3) IQVIA, 2022

(4) Unilever, 2024

(5) Financial Times, 2019

(6) Beiersdorf, 2024

(7) Cosmetic Design, 2022

(8) foodbusinessnews.com. 2024, Danone, 2023

(9) consumergoods.com, 2023

The CPG landscape is undergoing a seismic shift. According to data from fiscal year 2024 presented at the CAGNY Conference in February 2025, less than 15% of growth from the world’s top brands is volume-driven. This is not just a post-COVID anomaly—it reflects a multi-year trend, noted in recent reports including Nielsen’s 2024 Annual Marketing Report and Euromonitor’s Global Inflation Tracker Q1 2023 , where top-line growth has increasingly relied on pricing and mix rather than genuine consumer expansion. For big brands, the message is clear: change must happen now.

This volume stagnation isn’t just a financial concern—it’s a strategic one. Without sustained volume growth, the long-term viability of innovation, investment, and brand equity erodes. This is not the first time CPG players have been warned. But years of economic and pandemic-related uncertainty gave companies permission to delay deep change. Those conditions no longer hold.

The Rise of Small Brands: Speed, Storytelling, and Relevance

Small brands have outpaced legacy players across numerous categories. Their winning formula combines:

• Agility: The ability to anticipate or quickly respond to evolving consumer trends.

• Engagement: Building meaningful relationships with consumers through relevance and values alignment.

• Societal purpose: A visible contribution to issues like sustainability, equity, and health.

• Omnichannel fluency: Effective use of eCommerce, direct-to-consumer (DTC) platforms, and social media to reach and retain audiences.

These qualities have allowed small brands to gain traction not only in premium niches but increasingly in mainstream, high-velocity categories—ranging from pet care and functional beverages to personal care and home cleaning.

What Big Brands Are Already Doing: Early Signs of Change

While the urgency is high, the good news is that many large CPG companies are acting. According to recent analysis by Sevendots based on 2024 financial reports, shareholder communications, and presentations from a group of the largest global multinational CPG companies, leading players are focusing their efforts in three strategic domains:

1. Portfolio Optimization

• Streamlining SKUs and removing clutter from assortments.

• Divesting low-growth or margin-dilutive brands.

• Prioritizing and entering functional, health-forward, or premium segments where demand is rising.

2. Geographic & Channel Expansion

• Reallocating resources to high-growth emerging markets (APAC, LATAM, Africa).

• Strengthening presence in away-from-home (AFH) channels.

• Embracing quick commerce, digital-first retail, and non-traditional retail partners.

3. Digital & Productivity Optimization

• Using AI for dynamic pricing, demand forecasting, and trade optimization.

• Enhancing marketing ROI through precision targeting and content optimization.

• Rewiring supply chains for agility and resilience.

These moves, while necessary, will only deliver impact if paired with a new model of growth leadership—centered on relevance, reinvention, and recommitment.

Big Brands Must Play to Their Strengths

On top of what large CPG companies are already working on, there are additional elements to consider in order to compete effectively with smaller brands:

1. Purpose & Sustainability at Scale

• Big brands have the infrastructure, partnerships, and budgets to deliver purpose at scale. From regenerative agriculture to sustainable packaging to ethical sourcing, their commitments must be bolder—and measurable.

2. Emotional Reconnection through Heritage and Human Truths

• Many iconic brands were built on enduring emotional propositions—joy, connection, empowerment, comfort. These should be rediscovered, reinterpreted, and re-expressed for new generations and touchpoints.

3. Innovation & Personalization

• It’s no longer enough to launch new SKUs. Breakthrough innovation is about platform thinking, consumer co-creation, and embedding personalization from formulation to packaging and messaging. Big brands have access to deep consumer data and testing capabilities—they must use them.

  

Efficient Product Introductions: The Execution

Breakthrough innovation means nothing without disciplined execution. Efficient Product Introductions have become mission-critical. This involves:

• Aligning brand, R&D, and commercial functions around a shared brief

• Involving retailers and trade partners early

• Integrating regulatory, category, and shopper insights

• Investing in launch readiness, supply visibility, and retail activation

This is where many CPG players still fall short. Too many innovations fail to scale, or are introduced without clarity, cannibalizing existing portfolios and eroding brand equity. This unlocks both speed to shelf and sustained presence.

Conclusion: Reclaiming Volume, Reclaiming Relevance

Volume-led growth isn’t dead. But it requires a different mindset—one that embraces reinvention over iteration, collaboration over control, and clarity over clutter. Big brands still have unmatched assets: reach, resources, trust. What they need now is resolve.

The time for cautious pilot projects and surface-level tweaks has passed. It’s time to act with boldness, purpose, and precision. The next decade of CPG leadership will belong to those who can scale not just efficiency, but relevance.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Nielsen (2024). Annual Marketing Report: Earning Trust, Measuring Performance

• Euromonitor International (2023). Global Inflation Tracker Q1 2023

• Mintel’s Global New Product Database (GNPD) (2024)

The real opportunity is not where the category is big but where it is small.

Penetration growth will come mainly from creating new buyers, not fighting for the existing ones.

Slowing volume growth, untapped penetration opportunities

Large multinational CPG companies are facing a structural challenge: volume growth is slowing, a pattern observed in our ongoing analysis of the top global industry players.

In many cases, the issue is not brand strength. Nor is it portfolio breadth. The real constraint is penetration.

Across markets, most global brands still reach only a fraction of potential buyers. If volume equals penetration × frequency, and frequency growth is structurally limited, then penetration remains the most powerful lever for sustainable expansion as confirmed also in our recent study on the topic. In today’s environment, growth is no longer primarily about winning share — it is about expanding the pool of buyers.

Traditionally, companies have relied on three pillars to grow penetration:

1. Portfolio strategy

2. Channel development

3. Geographic expansion

It is the third pillar, geographic expansion, that now deserves a fundamental rethink.

The traditional model: enter where the category is already sizeable

For decades, geographic expansion followed a relatively straightforward logic:

The bet was simple:

Large market + strong brand + heavy SOV = assured share gains.

This model worked. Many global icons scaled precisely this way. A brand like Oreo expanded globally through a highly standardized model, often achieving modest share in each geography, but creating massive scale through breadth of presence.

Oreo benefits from the consolidation of moderate market share across 200 countries

Besides US and China, Oreo generally has a single digit market share in the cookie category across a very high number of geographies.

The underlying assumption was that market maturity reduced risk. If the category is big, consumers already understand it. You just need to win them over.

But that equation is becoming less reliable.

Why the ROI of the traditional model is declining

Two structural shifts are changing the economics of expansion:

1. Media fragmentation makes effective SOV more complex and/or expensive.

Reaching dominance is harder when attention is scattered across platforms and formats.

2. Meaningful differentiation is increasingly difficult to sustain.

Insurgent brands and growing private labels fragment the offer. Innovation cycles are faster. Competitive imitation is quicker. Distinctiveness decays more rapidly.

As a result, the classic formula, enter big markets, outspend, out-differentiate, is delivering lower ROI than it did 10 or 20 years ago. Growth is increasingly competed for, rather than created.

This doesn’t mean the model is obsolete, but it does mean it is no longer sufficient.

The alternative: expand where the category is still underdeveloped

There is an alternative path, one less explored by large multinationals, that shifts the game from competing for existing demand to actively creating new demand.

Instead of entering where the category is already strong, companies can target geographies where the category is still underdeveloped.

In this model, the objective shifts:

From stealing share – To building the category

The strategic focus changes accordingly. Rather than investing primarily in brand differentiation, the emphasis moves to:

• Category education

• Usage expansion

• Cultural embedding of the need state

• Prioritizing lower cost targeted engagement channels, including influencers

• Removing barriers to entry

In short: grow penetration by growing the market itself. This approach is based on a simple premise: those who build the category are best positioned to capture its growth.

Higher risk but potentially higher return

This alternative model carries higher initial risk as category demand is uncertain and must be developed. Infrastructure may be weaker, requiring additional investment to enable category development. Overall, the short-term ROI is lower, and the payback periods are longer.

However, the upside can be structurally stronger. When a company helps build the category the competitive intensity is initially lower and private label pressure is limited. At the same time brand leadership can become structurally embedded as loyalty and mental availability can be established earlier.

While the traditional approach may still generate more attractive short-term returns, its efficiency is declining.

The “category building” approach, though slower, can generate disproportionate long-term value, especially for companies able to deploy scale, patience, and system-level capabilities.

In other words, the model trades short-term certainty for long-term structural advantage.

Penetration is the strategy — Geography is the lever

From a penetration perspective, the question becomes:

• Are you competing for buyers in mature demand pools?

• Or are you creating pools of new buyers altogether?

Geographic expansion is no longer just a market selection exercise. It is a strategic choice between:

• Share competition in developed categories - which is getting close to being a costly zero sum game

• Addressing new demands in underdeveloped ones – driven by sociodemographic development or by establishing new occasions and behaviors.

For CPG companies seeking sustainable volume growth, the second path may increasingly represent the next true penetration frontier.

From strategy to execution: how to identify where to play

Translating this into action requires a different way of assessing geographic potential.

The traditional mechanisms remain in place and don’t go away: identifying and then moving into geographies where penetration levels, and resulting market size and trends, are already attractive, checking the commercial conditions for doing business and assessing the retail and media landscape to successfully break in.

However, an additional and increasingly valuable lens takes into consideration category expansion potential and associated levers where current penetration levels are relatively low.

For example, consider the following:

In East Asia, roughly 90% of people do not use deodorants. This is partly due to genetic factors that reduce body odor. However, consumption is not purely functional, it is also cultural.

As norms evolve, new usage behaviors could emerge. Companies that proactively shape these behaviors may unlock significant long-term penetration growth.

In Brazil 23% of individuals are heavy snackers (eating three or more snacks daily) while 51% are light users and about one quarter of the population does not engage in regular snacking at all. With the right offer, occasional/light buyers could represent a significant growth opportunity, given the lower barriers to consumption. This represents both a frequency opportunity and a penetration play across new consumption occasions.

Essentially, the model to assess penetration and volume growth potential becomes:

Categories are structurally composed of three groups: regular buyers, occasional buyers, and potential buyers among non-users. The job to be done for each group is different:

• Regular buyers – attract them through meaningful differentiation, mental and physical availability

• Irregular buyers - raise frequency unlocking new motivations and occasions

• Potential buyers – enter their consideration set by tapping into unmet needs or redefining the category equity.

The size of each group varies significantly by category and geography and defines the true growth opportunity.

This perspective is increasingly shared by leading industry players. A recent statement by Ramon Laguarta, CEO of PepsiCo, speaking during the Q4 2025 earnings call further supports the idea of looking beyond current category buyers:

“We’re thinking about growth in two main dimensions. One is making sure that our core brands continue to grow. Then we’re innovating in the periphery of the category where we’re seeing growth: there are consumers out there that are looking for us to give them excuses to come into the category.

These are mainly younger households. We’re thinking about innovation from a category-building point of view, bringing more consumers into the category, and obviously, driving frequency of the category.”

To tap into the two potential pools:

• Digital media and marketing innovation is much less risky, faster, and less expensive than new product development

• New product development is more likely to disrupt and bring new users into the category but high risk, high investment, and takes 24-36 months.

A resulting growth program should consider two dimensions:

• Short-term ROI/Growth - Optimize/innovate creative, content, and messaging to drive increased usage with lighter users

• Long-term ROI/Growth - Identify and build ideas for disruptive innovation that will bring in new users.

How to get started on this new path

Sevendots has developed an original approach with AI-powered Penetration Accelerator™ to profile and tap into both category light users/irregular buyers and category non-users/non-rejectors,

• Qualifying the different segments

• Identifying ways of engaging them

• Quantifying the incremental volumes at play.

Below there is a classic example of high penetration but structurally constrained volume.

Unlocking your next penetration frontier

In closing, if your brand or portfolio growth has slowed and global penetration has flat-lined or even declined recently, our team at Sevendots can help you think through a new growth strategy unlocking new sources of penetration by uncovering and prioritizing innovative geographic expansion opportunities for the next decade and beyond.

We help you driving penetration by identifying where to compete, where to create demand, and how to do it.

Our senior multidisciplinary team combines strategic rigor with hands-on execution to identify and activate high-potential geographic expansion opportunities based on optimized penetration.

Contact us to explore how you can unlock new sources of penetration and drive sustainable growth through smarter geographic expansion.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Sevendots Top 11 and Top 35 CPG companies Monitoring, 2026

• Sevendots, Penetration Under Pressure: Evolving the Core Driver of Brand Growth, Growth Series, 2025

• East Asia deodorant: NBC News, June 2024

• Brazil snacking: Statista 2025,

• Italy candy market data: CAOBISCO, BVA Doxa, CREA/EFSA

• PepsiCo Earnings call, February 2026

The year marks the end of price-led complacency and companies must rapidly evolve to adapt.

5 key takeaways from 2025 performance

2025 has marked a systemic inflection point for large global CPG companies.

The narrative is no longer about inflation, temporary elasticity, or tactical adjustments. The data shows a widening divide in volume, in scale, and increasingly in financial performance.

Based on our review of 12 among the top global CPG players, five key takeaways stand out.

1. Volume remains negative across major CPG companies

Unlike 2024, when volume growth was modest but still positive (+0.3%), 2025 shows a negative volume trend across all four quarters.

As we already highlighted in our analysis of the Q2 2025 CPG Results, early signs of structural volume pressure were already visible.

It’s now even clearer that this is no longer cyclical softness. It is persistent.

Several forces are converging:

• Shifting consumer behavior and higher price elasticity

• Geopolitical instability and tariffs variability

• Commodity cost inflation

• Retail destocking in selected markets

• Limited disruptive innovation

Pricing has supported topline growth in recent years. But pricing alone does not expand physical scale. And in 2025, volume weakness became visible across most large players.

2. Large CPG companies underperform the market

The overall CPG market grew faster than the large multinational players analyzed.

The growth gap: 1.3 percentage points.

More importantly, the difference is primarily volume-driven.

While market volume remained positive, large CPG players on average experienced negative volume growth, building a 1.5 pp gap.

When leaders grow below market, scale erodes. And when scale erodes, share shifts.

Where is growth going?

• Private Labels, growing above the market across regions and strongest where historically underdeveloped

• Insurgent brands, faster overall (particularly in innovation) and more aligned with emerging consumer trends

• Local players, leveraging proximity, agility, and cultural relevance

Private Labels, in particular, follows a consistent path across regions. Europe represents the most advanced stage, with some markets exceeding 50% share, a potential preview of a long-term evolution elsewhere.

The competitive set has fundamentally changed.

3. Only a minority of global CPG leaders consistently grow volume

Out of the top CPG players analyzed, only four delivered volume growth in 2025.

The performance gap is striking, with a 3.4 pp divide between volume growers and volume non-growers.

Even more telling: the companies that grew volume in 2025 were largely the same that grew in 2024 (with only one exception). This suggests that volume growth is not random. It reflects structural choices.

• Clear portfolio prioritization.

• Geographic discipline.

• Channel expansion.

• Execution rigor.

Volume is becoming a discriminator of strategic coherence.

4. Lack of volume growth impacts margin and TSR

There is a growing volume-margin tension.

In 2024, companies were able to expand margins despite limited volume growth. Pricing and productivity offset weak physical expansion. In 2025, average negative volume growth had a negative impact on margins.

Without scale, operating leverage weakens.

The impact extends to capital markets.

Average share price performance across major players in 2025 was 0%.

But within that average:

• Volume growers: +8%

• Flat or negative volume players: –8%

Markets reward physical growth. Not pricing-led revenue.

The case of Mondelez illustrates the tension. Organic growth remained stable year-over-year (4.3% in both 2024 and 2025), but the mix shifted dramatically, greater volume loss offset by stronger pricing. At the same time, margins declined significantly Gross margin declined by almost 600 bps and operating margin by 300 bps, partly driven by cocoa inflation.

Volume and value are not independent.

Persistent volume erosion can create a vicious cycle.

5. Penetration-led strategies separate winners from laggards

If volume is the problem, penetration is the solution.

The correlation between volume and penetration is significantly stronger than between volume and frequency. This structural relationship is explored further in our Penetration Analysis Growth Series. Yet penetration remains underleveraged across many large CPG portfolios.

The average global household penetration of the top 50 brands is just above 20%. The upside remains substantial.

Few multinational players have more than a handful of brands in the global top 50. Unilever stands out with 12; a few have four or six brands, most others have only one or two.

Driving penetration requires disciplined choices:

Portfolio

Systematic review at category, brand, and SKU level.

Unilever provides a clear example, sharpening its focus on Beauty & Wellbeing and Personal Care, which today represent 51% of revenue and are planned to grow to two-thirds of the portfolio, divesting structurally declining segments, and explicitly adopting a volume-led execution model.

P&G’s 2025 volume challenges, with only one macro-category growing, reinforce the need for portfolio reassessment.

Portfolio assessment should be periodic and holistic.

In many organizations, reviews are driven either by centralized financial metrics or by BU-level consumer and market insights. Sustainable growth requires combining both, integrating financial performance, consumer demand, competitive and retailer dynamics, alongside broader external factors such as regulation, sourcing risk, and geopolitical volatility.

The Sevendots framework links portfolio decisions at category, brand, and SKU level to these integrated triggers, supporting more disciplined and strategic allocation choices.

Channels

Channel fragmentation is accelerating.

L’Oréal and Nestlé demonstrate strong momentum in e-commerce; Nestlé and others also leverage Away-From-Home. Danone reports faster growth outside mass retail.

Expanding distribution reach and strengthening execution across channels directly fuels penetration.

“In 2025, channels outside mass retail grew significantly faster than mass retail. We are reaching more people in more places at all stages of their lives.”

Geography

Geographic expansion remains underexploited.

The Coca-Cola Company Q4 2025 pivot, with volume accelerating ahead of value, reflects renewed focus on emerging markets where many beverage occasions remain unbranded.

“More from more markets” is not just rhetoric, it is a penetration strategy.

L’Oréal illustrates disciplined geographic alignment. In 2025, the company grew across all regions, with particularly strong performance in Latin America and SAPMENA-SSA, two of the most dynamic global CPG regions. By aligning its footprint with higher-growth markets, L’Oréal benefits directly from regional momentum, reinforcing geography as a foundational driver of penetration and scale.

Geographic prioritization should not be limited to evaluating the current size of a category in a market — a conservative approach often seen in large organizations. The real opportunity lies in identifying where a company can build category leadership and capture disproportionate growth. Expansion decisions should therefore be linked to the potential to shape demand, drive penetration, and establish a defensible position — not merely to participate in existing scale.

Innovation

True innovation remains under-leveraged. As discussed in our Consumer-Facing Innovation Growth Series, structured innovation discipline is directly linked to long-term shareholder return. Global new product intensity has declined. Yet companies that focus on structured, disciplined innovation consistently outperform in shareholder return.

Innovation must be differentiated between renovation and real disruptive expansion.

Innovation requires clarity. It should begin with a clear definition of its expected contribution and then follow differentiated paths. Renovation and proximity innovation aim to optimize and reinforce existing assets, while disruptive innovation demands dedicated scouting, scoping, and development logic. Treating these streams distinctly enables more disciplined resource allocation and more consistent long-term impact.

Strategic imperatives for 2026

The lessons from 2025 are clear:

1. Rebalance from price-led to volume-led growth

2. Elevate penetration to a board-level KPI

3. Prune portfolios aggressively

4. Double down on high-growth geographies

5. Expand distribution reach and strengthen execution across channels

6. Make innovation selective and transformational

2025 did not simply expose temporary weakness but it revealed a structural divide where volume now discriminates winners from laggards.

The performance indicates that scale underpins margins and that physical growth drives valuation. For large CPG leaders, the question is no longer whether volume matters, but whether strategy is aligned to deliver it.

How Sevendots supports penetration-led growth

Translating these imperatives into execution requires structure and discipline.

At Sevendots, we work with leadership teams to design and implement penetration-led growth strategies grounded in data and strategic clarity. Our work spans large multinational CPG leaders and medium players across categories and geographies.

Our framework for penetration planning and optimization allows companies to:

• Map and assess current assets across categories, brands, and SKUs

• Conduct deep portfolio diagnostics combining financial performance, consumer dynamics, and external market variables

• Identify where penetration potential is structurally underleveraged

• Define clear choices on where to focus, expand, simplify, or exit

• Align channel and geographic expansion with portfolio priorities

• Redefine innovation ambition and ensure resources are allocated to initiatives that expand scale, not just sustain mix.

Penetration does not increase by chance.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Companies quarterly and FY financial reports, 2025, 2026

• Companies earnings calls, public statements and conferences, 2025, 2026

• Companies CAGNY presentations, 2026

• Yahoo Finance, 2026

• Sevendots, Portfolio Management Growth series, 2024

• Sevendots, Consumer Facing Innovation Growth Series, 2023

• Sevendots, Private Labels, The Elephant in The Room, 2026

• Sevendots, Private Labels Growth: What CPG Brand Owners Need to Know, 2024

• NIQ, PL Analysis, 2025

• Kantar, Penetration Analysis, 2024, 2025

• BCG, Innovation Wake Up Call for CPG Businesses, 2023

Organic Growth is Slowing. Volume Pressure is Rising.

In 2025, so far the average volume growth of the world’s largest CPG companies The headline is clear: organic sales growth is decelerating. The average organic growth rate across the 11 companies fell from 3.9% in FY 2024 to 1.5% in Q1 2025. But more critically, the volume trend has turned negative – from +0.5% in 2024 to -1.0% in the first quarter of this year. Six of the 11 companies posted flat or declining volumes.

Q1 2025 shows a further deterioration of growth, especially in terms of volume

Companies largely point to external consumer and market dynamics as the root cause:

• Inflation fatigue, especially in North and Latin America with consumers downtrading, delaying purchases, and reducing pantry loading.

• Input cost inflation – particularly in cocoa, dairy, and packaging – forcing pricing actions that are impacting elasticity.

These qualities have allowed small brands to gain traction not only in premium niches but increasingly in mainstream, high-velocity categories—ranging from pet care and functional beverages to personal care and home cleaning.

Category and Geographic Structure Matter

Divergences in performance underline the strategic impact of portfolio structure and market exposure.

Take the reported performance of The Coca-Cola Company vs. PepsiCo. Coca-Cola is reaping the benefits from a focused beverage portfolio and prior rationalization efforts. Its shift toward higher price-per-liter products, such as functional beverages, supported +5% value growth coupled with +1% volume growth. Its broader international exposure, especially in emerging markets, helped offset U.S. softness.

In contrast, PepsiCo’s dual portfolio (45% beverages and 55% food) is more exposed to complex sourcing and formulation costs. The food side of the business, including snacks, carries higher COGS and is more susceptible to input inflation and tariff pressures. A stronger reliance on the U.S. market further dampened volume, which declined by -1.3%.

Food-centric companies more broadly – Mondelēz, Kraft Heinz, General Mills, and PepsiCo – are disproportionately affected by rising commodity costs and volume softness. For instance, Mondelēz’s strong +6.6% value growth was more than offset by a -3.5% volume decline, largely driven by price adjustments attributed to cocoa cost inflation.

Balanced Growth is a Differentiator

Two companies stood out in delivering a better balance between value and volume.

Unilever posted +3.0% growth, with volume contributing +1.3%. It appears to benefit from strong presence in AMEA markets, where consumer spending remains more dynamic and well-calibrated pricing strategies in emerging markets. Also, Unilever is claiming an effective in-market execution, especially in Personal Care and Wellbeing.

Danone also delivered a well-balanced performance, with +2.4% value and +1.9% volume growth, supported by a clear focus on functional health-oriented products and strong operational execution.

Time to Reconfirm – or Rethink – Strategic Priorities

As growth becomes harder to secure, large CPG companies need to reinforce or review key decisions:

• Intensify focus on strategic portfolio management, reassessing performance and potential at category, brand, and SKU level and driving true innovation. Companies proactively working on their portfolios seem to benefit a better growth.

• Make deliberate geographic choices, with sharper market prioritization and related resources investments. Companies with a broader geographical scope seem to better sustain their organic and volume growth.

• Expand route-to-market models, including better coverage of new retail formats. Companies developing presence in new channels tend to better preserve their top line growth.

At the same time, productivity and operational efficiency remain essential levers for protecting margins and funding reinvestment. The companies that will outperform in the next quarters are those that can align portfolio choices, geographic coverage, and executional excellence to the evolving consumer landscape.

Contact Sevendots today to discover more about CPG industry transformation?

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• Nielsen (2024). Annual Marketing Report: Earning Trust, Measuring Performance

• Euromonitor International (2023). Global Inflation Tracker Q1 2023

• Mintel’s Global New Product Database (GNPD) (2024)

This is not only visible in company results, but even more clearly when comparing large CPG players to the broader market.

Volume: the missing engine of value creation

In 2025, so far the average volume growth of the world’s largest CPG companies remains negative. Among the top 11 global players, volume is down on average by –0.6%, while across the broader group of the top 34 companies the decline deepens to around –1%.

By contrast, NIQ data shows that the overall CPG market is still growing in volume by +0.9% globally, highlighting a persistent and structural gap between market dynamics and the performance of the largest manufacturers.

This gap is not cyclical. It reflects a progressive loss of penetration and relevance of large brands versus local players, insurgent brands and, most importantly, Private Labels. After a period of stagnation, Private Labels has started to grow again in many geographies, benefiting from affordability, sharper value propositions and faster adaptation to local needs. In parallel, a number of retailers whose business model is not reliant on major branded products – Aldi & Lidl for example – have been gaining ground with consumers.

The crucial role for penetration

If volume is the outcome, penetration is the mechanism. Sustained volume growth can only be achieved by reaching more households, expanding usage occasions and scaling brand assets across geographies, channels and categories.

This requires deliberate trade-offs. Scaling a brand is not about doing more everywhere, but about making clear choices on:

• where a brand has the right to win,

• which channels genuinely expand reach rather than dilute focus,

• and which categories allow the brand to stretch its territory without losing meaning.

At Sevendots, we have developed a Penetration Growth Framework precisely to address this challenge. It helps brands understand how penetration drivers evolve at different stages of brand development, and how to arbitrate between focus and expansion, scale and relevance, short-term gains and long-term value creation.

Geography matters: a tale of diverging consumers

NIQ data, based on comparing Year End June 2025 with 2024 on 54 markets, shows stark contrasts across regions.

CPG volumes in North America have been flat in 2025 but volume growth rates in LatAm and MEA have continued to be particularly dynamic

Total CPG Volume Growth per Geographic Region Year Ending June 2025 vs 2024

Source: NIQ, Total CPG across global 54 markets, 2025

North America volumes are essentially flat at –0.3%, confirming a deep structural challenge. Affordability is becoming a dominant decision factor for a growing share of consumers.

As Susan Morris, CEO of Albertsons, recently stated: “In Q3 shoppers traded down to smaller packages and private labels, used more coupons and stuck to lists.”

This behavior directly penalizes brands that rely on premiumization and pricing rather than penetration and accessibility.

Latin America, on the contrary, stands out with +3.1% volume growth, the strongest performance globally. Importantly, large CPG multinationals tend to be relatively strong in this region in terms of revenue incidence, meaning they are well placed to benefit from this dynamic. Notably, LatAm combines strong volume growth with strong price growth, showing that affordability does not automatically mean margin dilution when propositions are well calibrated.

Middle East & Africa also show solid momentum on both volume and value, while Europe and Asia-Pacific sit in between, with more heterogeneous patterns.

Categories tell an equally polarized story

Looking across categories, volume performance reflects both consumer shifts and pricing elasticity.

Global volume growth has been particularly challenging for Alcoholic Drinks and Snacks, more positive for Health & Beauty, Beverages and Food

Total CPG Volume Growth per Category Year Ending June 2025 vs 2024

Source: NIQ, Total CPG across global 54 markets, 2025

Alcoholic Drinks are among the most impacted, with volumes down –1.5%. This decline is structural, driven by changing consumption habits, particularly among younger consumers who drink less and drink differently. Large players are reacting by reshaping portfolios around premium-and-less-occasions strategies, while accelerating investments in non-alcoholic beer, fermented drinks and adjacent soft drink categories.

Snacks & Confectionery volumes are down –0.8%, heavily affected by cocoa cost inflation. Over the past years, companies have passed these costs on to consumers through pricing, boosting value growth but eroding volume and frequency. Big manufacturers need to rethink their over-reliance on cocoa trying to rebalance their portfolios from chocolate-based products to other recipes still able to sustain a good price per kg.

Health & Beauty clearly stands out, with +2.1% volume growth, reflecting rising consumer attention to wellbeing, personal care and preventive health. This is one of the few categories where large CPG companies are, in some cases, keeping pace with the market. Unilever, for example, delivered +1.9% volume growth in Beauty & Wellbeing in Q3 2025, almost fully aligned with the segment’s underlying growth.

Value grows, but often at the expense of volume

Across categories, NIQ data shows that value growth averages 2.6%, roughly 2.5 times volume growth.

Value growth for the different categories is 2.5x volume development

Total CPG Value and Volume Growth per Category Year Ending June 2025 vs. 2024

Source: NIQ, Total CPG across global 54 markets, 2025

Health & Beauty is again the most balanced category, with value and volume contributing equally to its 4.2% overall growth. At the opposite end, Snacks & Confectionery and Health Care show the strongest imbalance, with pricing increases compensating, and arguably impacting, volume decline. Alcoholic Drinks sit in the middle, where value barely offsets volume losses, resulting in a marginal +0.2% overall growth.

Geographically, Latin America and MEA are the only regions where value and volume grow in tandem, reinforcing the idea that penetration, affordability and relevance can coexist with healthy value creation.

LatAm and MEA show the strongest dynamic both in value and volume growth

Total CPG Value and Volume per Geographic Region Growth Year Ending June 2025 vs. 2024

Source: NIQ, Total CPG across global 54 markets, 2025

The strategic implication: scale needs to be earned again

The evidence is consistent and increasingly hard to ignore: volume is the key engine of sustained value generation in the CPG industry, and penetration is the primary lever through which volume can be rebuilt and defended. Price and mix can support growth for a time but without expanding or at least maintaining reach, scale advantages erode, brand relevance weakens and long-term value creation is structurally compromised.

Re-anchoring growth strategies on volume requires large CPG companies to fundamentally rethink how and where they compete. This means aligning strategic priorities more closely with category and geographic dynamics, rather than applying uniform global playbooks.

Different categories are being shaped by very different consumer needs, from wellbeing and functionality to indulgence, moderation and affordability, and growth strategies must reflect these realities as well as reconsidering category boundaries to answer consumers’ higher level needs.

Similarly, geographic performance is diverging sharply, with regions such as Latin America MEA, and parts of APAC offering structurally stronger volume opportunities than mature markets under acute affordability pressure.

At the core of this realignment sits a deeper understanding of evolving consumer needs, expectations and behaviors. Consumers are not simply trading down; they are redefining value, reassessing occasions and becoming more selective about where brands truly add meaning. Penetration growth therefore depends on brands’ ability to remain relevant, accessible and credible across different consumer segments, channels and usage moments.

Finally, volume-led strategies cannot be disconnected from sourcing, supply chain and broader value-chain realities. Input cost volatility, constrained commodities, geopolitical disruptions and sustainability requirements are no longer just external factors: they directly shape what can be offered, at what price, and at what scale.

In a market that is still growing in volume, losing volume shouldn’t be seen as inevitable. But restoring it requires making penetration a deliberate strategic priority and aligning categories, geographies, consumers and value-chain choices around that objective.

At Sevendots, we help CPG companies put volume back at the center of sustainable value creation.

We support leadership teams in making deliberate portfolio, category and geographic choices that strengthen penetration and scale brand assets over time. Our work combines deep industry expertise with robust analytical and penetration-focused frameworks, enabling companies to align growth strategies with evolving consumer needs, channel dynamics and value-chain constraints.

Contact Sevendots to explore how we can support you in building volume-led growth strategies and restoring long-term value creation.

Premium access for CPG leaders ready to go deeper.

Unlock expert frameworks, in-depth case studies, and practical diagnostic tools designed to help consumer goods businesses navigate complexity, uncover growth opportunities, and drive measurable results with confidence.

Sources:

• NIQ, Total CPG across 54 global markets – Volume and Value Growth by Region and Category, Year Ending June 2025

• 2025 Companies Quarterly Financial Reports

• Albertsons’ Q3 2025 Earnings Call

• Sevendots Growth Series on Penetration, 2025

• Sevendots 2024 Top 11 CPG Companies Analysis, 2025

• Sevendots Quarterly Top 11 CPG Companies Analysis, 2025

• Sevendots Quarterly Top 35 CPG Companies Analysis, 2025