CPG pricing power faces volume-driven pushback
Consumer packaged goods (CPG) companies are losing relevance and volume growth because they have pushed prices too close to their perceived value, eroding consumer surplus.
The argument
The speakers argued that CPG companies have masked declining unit volumes with price increases and shrinkflation. They noted that consumers are increasingly performing mental math and switching to private labels like Costco's Kirkland brand because the value proposition of premium brands like Tide is no longer clear.
The thesis, stress-tested
✓ What validates it
- ✓Continued market share gains for private label brands in key categories like household detergents
- ✓CPG quarterly earnings reports showing flat or negative volume growth despite revenue increases
▸ Risks discussed
- ▸Premium brands successfully introducing genuine product innovations to justify higher price points
- ▸Input cost deflation allowing brand manufacturers to run aggressive promotional campaigns
Hear it yourself
"And, you know, the the idea that these consumer packaged goods companies are pushing price up closer to the value proposition, and so there's no consumer surplus, which is, you know, impacting their their relevance, and their ability to raise prices in the future."
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