John Morris - Consumer goods 

Hello, I’m John Morris, European Head of Consumer Goods at KPMG.

Earlier this year, KPMG undertook a survey of over 3000 business leaders across Europe. When looking at the results from the FMCG respondents, an interesting disconnect emerged around the topic of sustainability.

Fifty-eight percent of respondents agreed that sustainability will increasingly be used as a source of innovation, while only seven percent disagreed.

However, when asked about current priority business themes, only nine percent of respondents ranked sustainability as one of their top three current priorities.

This disconnect between wanting to use sustainability for innovation and actually focusing on it now makes me think that when the going gets tough, sustainability concerns are dropped from the agenda.

I think it’s the sort of topic which naturally attracts a lot of rhetoric and publicity on emotive issues such as embedded water. Yet I remain unconvinced that the idea of using sustainability as a strategic driver has really made the transition from nice-to-have to need-to-have.

A further hypothesis of ours suggested that the supply chain will be squeezed even harder as manufacturers continue to seek to operate as ‘lean and mean’ as possible.

Not one single respondent felt compelled to disagree with this; indicating the depth of feeling on this subject as margins come under increased pressure.

As consumers trade down in their brand choices and rising input prices become harder to pass on, respondents find themselves squeezed at both ends of the P&L account.

As a result, companies are looking for short term gains from cost efficiency programmes – but such initiatives can only run so far before running out of things that can be cut.

Accordingly, I expect to see a lot more portfolio management as businesses break down their portfolios in an effort to weed out poorly performing businesses.

In addition, I think there will be strong questions asked of how consumer goods businesses interact with their customers. Established, traditional routes to market may well come under the microscope and I expect significant investments to be made in coming up with new alternatives.

If you want to find out more information about our survey, go to: www.kpmg.eu/businessagenda.