Confidence of consumer goods CEOs drops by half

Published at 09:56 AM on 03 February 2009

Leaders of consumer goods companies are less confident than ever about boosting their revenues. The figures from PricewaterhouseCoopers Annual CEO Survey highlight a significant reduction in CEOs’ optimism – only 27% of consumer goods leaders are very confident about boosting their companies’ revenues over the next 12 months, compared with 50% of respondents to PwC’s survey last year.

The survey of 130 consumer goods leaders indicates that the industry will undergo further cost-cutting as CEOs struggle to keep their companies afloat. Over 30% of respondents anticipate redundancies. However, surprisingly, 34% plan to hire more people, possibly due to the need to maintain a strong skills base. Almost all respondents rank the retention of key talent as important or critical to their company’s long term success. Despite this, 62% of those surveyed say that they have problems recruiting and integrating younger employees, while 56% report difficulties in providing an attractive career path.

A further aspect of cost-cutting is the shift by CEOs to reduce new product development initiatives. Less than 20% of consumer goods CEOs intend to focus on this in 2009. Instead 40% of respondents plan to focus on penetrating their existing markets more effectively, believing it to be the best opportunity for growth in the current economic climate. New product development should remain part of the CEOs strategy, however.

Despite the CEOs intent focus on challenges brought about by the downturn, they are still concerned about environmental issues. Over half believe that the world’s dependence on carbon-based energy sources will have a negative impact on their companies and as a result nearly 90% say they are reducing energy costs through operational improvements.

Consumer goods CEOs also worry about getting access to other natural resources - particularly fresh water. Three-quarters believe this pressure on natural resources will intensify. Some consumer goods businesses have already started to experience raw materials shortages and PwC expects this trend to increase, so a longer-term outlook is critical.

Supply chain risk is a further challenge. Extending a supply chain, especially into the emerging markets, brings considerable risks as visibility and control become significantly more complex. The economic downturn is likely to exacerbate these challenges, as companies will be trying to cut further costs. CEOs may also face sudden changes as suppliers go out of business and may have to be able to scale down as demand falls, without impairing their ability to ramp up production when consumer confidence recovers.

Carrie Yu, global retail and consumer leader, PricewaterhouseCoopers, concluded:

“Consumer goods CEOs now have to juggle more challenges than ever before. They have to contend with immediate problems like the global recession, while simultaneously taking into account long-term systemic risks such as climate change and the impact of demographic challenges on the talent pool. The ability to balance these sometimes conflicting demands is fundamental to staying competitive in the longer term to create a sustainable business.”


Notes to Editors:

For more details or a copy of the report please visit www.pwc.com/ceosurvey 

For more information contact:

Vanessa Shaw
Consumer and Industrial Products & Services PR Manager, PwC 
Tel:020 7212 1002 
Mobile:07989 572 425 

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