Majority of CPG execs say the price hike lever isn’t working as well as it used to

The survey result: Over half (51%) of consumer packaged goods (CPG) executives say they cannot count on price hikes to drive revenue growth this year, per Deloitte.

• While many CPG brands pulled the price hike lever time and time again to cover rising costs in recent years, several companies are finding that high prices push consumers to trade down and pull back.
• Case in point: Roughly a third (31%) of US consumers switched to cheaper or bargain grocery items in the last month, and 19% have done so for household necessities, per a recent Dentsu report.

Pricing strategies aren’t one-size-fits-all: When it comes to pricing strategies, what works for one brand doesn’t always work for another.

• WK Kellogg found that higher prices didn’t offset shrinking demand—after raising prices 3.8% YoY in Q4, sales fell 1.8% in dollar value and 5.6% in volume.
• Coca-Cola, on the other hand, proved more resilient—despite a 9% increase in price mix, sales still grew 6%, with volume up 2%.

The results show that brand strength matters. Consumers are more willing to pay up for brands they see as unique or essential—like Coca-Cola—while others that lack that premium positioning—like Kellogg’s Corn Flakes—risk losing volume when prices rise.

The private label challenge: The situation has gotten more challenging over the past few years as grocery shoppers are increasingly choosing private label brands over national brands.

• Store brand sales rose 3.9% YoY to $271 billion in 2024, compared with just 1.0% growth for national brands, per a report from the Private Label Manufacturers Association based on Circana data.
• That growth doesn’t just reflect buyers’ growing stinginess but also a sharp shift in perceptions of private label brands; 80% of consumers say store brands are “just as good or better than” name brands, per an Ipsos survey.

Our take: With lower- and middle-income consumers feeling the pressure of macroeconomic headwinds, CPG companies may need to shift gears and take their foot off the price hike pedal.

Innovation is key. That could mean:

• New product launches: Coca-Cola’s limited-time offerings like Sprite Winter Spiced Cranberry and Fanta Beetlejuice drove shopper interest and spending.
• Packaging tweaks: PepsiCo plans to roll out more variety in snack sizes, including single-serve options and smaller multipacks, to broaden its appeal across different budgets.

By focusing on fresh offerings and flexible pricing, CPG brands can keep shoppers engaged without relying solely on price increases.