Consumer goods companies are bracing for supply chain challenges.
Consumer goods industry outlook: Key takeaways
Understanding the core consumer will enable strategies to drive margin improvement.
Investment in predictive analytical tools and data analytics platforms will be critical.
Consumer goods sector trend: Supply chain challenges
Navigating supply chain shifts and M&A challenges in 2024
As supply chain concerns resurface due to recent attacks on oceanic freight lines in the Red Sea, companies are once again evaluating the diversification of their supplier bases. Transitioning away from Asian manufacturing hubs presents challenges for consumer goods companies, although shifts to alternative hubs like Vietnam and India have been notable in recent years. Despite the complexity and cost of such transitions, geopolitical risks prompt a review of manufacturing strategies.
On the mergers and acquisitions (M&A) front, 2023 saw a decline in deal activity, attributed to economic uncertainty and valuation gaps. While some themes from late 2023 continue into 2024, such as increased earnout arrangements and add-on acquisitions, investor caution persists due to anticipated interest rate easing and political uncertainty surrounding the U.S. presidential election. Add-on acquisitions, particularly in consumer services sectors like home improvement and health, are becoming more prevalent as investors seek cost-effective growth opportunities. However, sectors catering to cost-conscious consumers, like mass-market consumer goods, face ongoing stress, while home services and beauty brands remain attractive to investors seeking strong multiples.
Consumer goods companies eye supply chain and deal uncertainty
Consumer goods companies will have a renewed focus on supply chains and more in the coming months.
RSM contributors
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