Challenges and opportunities facing consumer companies in 2023

In today’s climate, if you ask any consumer company CEO what is top of mind, the response will likely begin with rising costs and end with price sensitivity. Supply chain disruption and geopolitical volatility have increased the cost of energy and raw materials, driving up inflation.

In turn, policymakers are increasing interest rates and tightening fiscal policies. Consumers are being impacted by wage increases that are not keeping up with rising prices and the cost of living. And consumer companies find themselves in a similar situation: costs are up, growth is hard to come by and debt is becoming more expensive to manage.

Regulatory scrutiny is tightening on sustainability, data privacy, harmful ingredients and product safety. Deadlines for social and environmental goals are looming large and must be met. The war for talent is intensifying — companies are building new capabilities while engaging a new generation of employees with different values and priorities from their predecessors. Successive waves of disruptive technology are driving investment in new business models and digital infrastructure. Consumer trends are fundamentally changing, with share of wallet shifting from ownership to rental, repair and spend on services and experiences. Managing these challenges is difficult, but tight competition makes it exponentially tougher.

There is much that companies can do to thrive in this environment. Volatility and frugality can be engines for innovation, efficiency and resilience, which could improve growth and margin. Weathering short‑term challenges should not distract leaders from delivering long‑term value to their companies as well as to people and the planet. Success depends both on how leaders run their companies and how they work with others to address industry challenges. Collaboration isn’t always possible, given the competition between companies. However, there is a substantial middle ground where collective action and cooperation optimize outcomes for all.

We believe that this middle ground is essential to good business practice.

In this spirit of collaboration, the EY Global Consumer team and The Consumer Goods Forum (CGF) developed this report for the CGF’s 2023 Global Summit. We interviewed the CEOs of prominent CGF members to explore the short and long‑term challenges and opportunities they and the wider industry face. We also asked how can help future proof their businesses.