Summary
The old CPG playbook has run its course. Drawing on McKinsey’s State of Food and Beverage report, this article breaks down five moves CPG leaders need to make now to reignite sustainable growth.
The CPG growth model that worked for decades is breaking down
Volume gains across food and beverages are stuck below 1% annually. Private label has moved from a niche threat to a mainstream preference and the post-pandemic pricing tailwinds that briefly masked these pressures have faded. Yet, many incumbent brands are still operating on a playbook built for a different era, one that relied on mass-market brand building, broad distribution, and price increases to protect margins.
That era is over. McKinsey’s State of Food and Beverage report by René Schmutzler and colleagues from McKinsey’s Consumer Packaged Goods Practice, identifies a clear set of actions that separate brands positioned to grow from those trapped in structural decline. The following five moves come directly from what McKinsey calls Agenda 2: the performance imperative every CPG leader needs to act on now.
1. Win on Product, Not Just Price
Years of price-led growth and cost pressure have hollowed out the value proposition for many CPG products. These products are neither meaningfully better than the competition nor more affordable, leaving consumers questioning what they are actually paying for.
Restoring volume growth means deciding, for every brand in the portfolio, how it competes on value. McKinsey identifies four dimensions where superior products win: functional benefits, format, texture, and flavor. These do not have to be entirely new innovations. Improvements to existing products count, as long as they make the product more responsive to what consumers actually want.
The Nerds Gummy Clusters story illustrates this well. After Ferrara acquired the brand, consumer data pointed to rising demand for multi-textured candy. Rather than overhauling the brand or launching a sub-brand, the team iterated on existing manufacturing capabilities and developed a product combining a crunchy shell with a soft gummy center. The result generated roughly $500 million in sales in 2024 and helped drive at least a fourfold increase in brand sales growth between 2021 and 2025. The key was that the renovation reinforced the brand’s equity rather than diluting it.
Winning on product is not just an R&D brief. It requires aligning every function, procurement, supply chain, marketing, and sales, around a shared consumer-backed definition of what better means.
2. Redesign Price-Pack Architecture for the Market You Are Actually In
Affordability is not the same as lowering prices. That distinction matters enormously right now. As price sensitivity increases across consumer groups, brands that fail to offer credible entry-level and mid-tier options risk losing shoppers not just to private label but to value-focused branded competitors that meet their needs more effectively.
In McKinsey’s global consumer survey, 61% of consumers say price matters more to them today than it did two years ago. The move leading CPG players are making is to redesign price-pack architecture to match consumer willingness to pay by occasion, channel, and region. In practice this means differentiated assortments: premium or family packs in grocery and club stores, opening-price or single-serve formats in convenience, and tightly engineered value packs in discount channels.
PepsiCo’s Sting energy drink is a clean example. Rather than discounting flagship brands, PepsiCo built Sting as a distinct offering at more accessible price points in emerging markets, protecting premium equity while competing effectively at the lower end.
Affordability has to be engineered, not discounted into. Brands that simply cut prices on existing products without rethinking the cost to produce and support them end up eroding margin without winning loyalty. The smarter move is to treat pricing, packaging, and promotion as one integrated decision, designed together around a clear value proposition rather than managed separately after the fact.
3. Stop Retargeting Loyalists. Refill the Funnel
Here is the harder truth many CPG incumbents have been avoiding: household penetration has been eroding for years. In too many cases, brands allowed this to happen while relying on price increases to sustain revenue, protecting the P&L in the short term while quietly shrinking the consumer base.
Refilling the funnel means going beyond retargeting existing loyalists. It requires an honest assessment of which consumer segments have disengaged, and what it would actually take to win them back.
Winning brands are borrowing tactics from disruptors: sampling, field marketing, experiential moments, and culturally resonant content that drives trial. Guinness is a useful example. Between 2023 and 2024, Diageo more than doubled the brand’s social sharing by leaning into ‘Splitting the G,’ a pub-born pouring ritual amplified by Guinfluencers on social media. A 267-year-old brand found a new generation of buyers not through media spend but through cultural relevance.
Also worth noting: 28% of consumers globally say they purchase more private-label products today than two years ago, rising to 34% among US respondents. Rebuilding penetration is not optional. In a margin-pressured retail environment, brands that expand the total category profit pool become more valuable partners to grocers than those fighting for existing volume.
4. Invest in How Consumers Discover Products Today
Discovery has changed. Among US consumers who report using generative AI to discover products, brands, and services, 31% say they do so for grocery purchases, according to McKinsey ConsumerWise research. Millennial and Gen Z consumers are even more likely to rely on these tools, and that share will only grow.
This means that being findable on a shelf or appearing in a paid search result is no longer sufficient. CPG brands now need to show up in AI-generated recommendations, and that requires a different kind of investment, one McKinsey describes as generative engine optimization (GEO).
In practice, GEO means ensuring product descriptions are complete and consistent across retailer and brand websites, with clear explanations of ingredients, benefits, and use cases that both consumers and AI systems can interpret. It also means actively managing customer reviews, encouraging verified buyers to leave feedback, responding to complaints, and building a credible base of ratings that AI systems recognize as a trust signal.
Brands that coordinate their digital shelf content, retailer data, and consumer feedback will show up in AI recommendations reflecting their intended positioning. Those that do not will be represented by whatever fragmented or outdated picture exists in the market.
5. Use AI to Fund the Reinvention, Not Just Protect Earnings
The final move is the one that makes all the others possible. McKinsey’s analysis suggests that the next wave of AI and technology adoption has the potential to unlock 200 to 300 basis points of cost reduction across the P&L. Front-runners are already using AI to accelerate marketing effectiveness, redesign trade and revenue growth management, transform procurement, automate finance and back-office processes, and optimize supply chains.
But the critical distinction is what happens with those savings. In the past decade, productivity gains flowed directly to quarterly earnings. That discipline needs to continue, but with a sharper purpose. Leaders who treat AI-driven productivity as a funding strategy, and commit to reinvesting a meaningful share of savings back into brand renovation, innovation, and penetration building, create a growth flywheel: efficiency funds investment, investment restores volume, and restored volume compounds performance.
Danone offers an early example. The company is piloting AI and machine learning use cases to better forecast costs and develop should-cost models for each product ingredient. The goal, as McKinsey frames it, is not just incremental savings but structurally more responsive operations that convert better decisions into both margin improvement and reinvestment capacity.
Treating this as a CEO-level choice, setting explicit productivity targets and making clear that savings will be redeployed into growth, is what separates brands that reignite growth from those that simply manage decline.
The Window Is Now
The pressures facing CPG incumbents, affordability constraints, private label momentum, shifting discovery pathways, and eroding household penetration, are not going away. But they are navigable for brands willing to make deliberate choices about how they compete.
The five moves above are not theoretical. They are what the brands pulling ahead are already doing. The question for every CPG leader is whether they are making these choices proactively, or waiting until the pressure forces a reactive response.
The brands that commit now will be the ones that compound performance. The ones that wait will keep chasing it.
About the Source
The insights in this article are drawn from State of Food and Beverage: How CPG Leaders Can Renew Growth, published by McKinsey and Company. A special thank you to René Schmutzler, Partner at McKinsey and Company and one of the report’s authors, for the rigorous research behind these findings.
