• by Karlene Lukovitz , June 3, 2009

The consumer packaged goods industry outperformed the rest of the market last year, and food marketers performed best of all, according to a new report from the Grocery Manufacturers Association (GMA) and PricewaterhouseCoopers.

The 2009 Financial Performance Report was compiled from research, interviews and financial data on 157 companies in the food, beverage and consumer products sector.

CPGs outperformed both the S&P 500 and Dow Jones Industrial averages by at least 10 points, the data show.

CPG manufacturers' median sales grew approximately 10%, down just slightly from their 2007 median sales performance. Reflecting consumers' growing tendency to cook and eat at home, the food sector experienced sales growth of 10.2%. The beverage sector saw 9.9% sales growth, and household products 9.1% growth.

Median shareholder returns for CPG companies were down by slightly more than 25% -- which was actually significantly better than the rest of the market. Again, the food sector performed best, showing a median decline in shareholder returns of "just" 21%.

GMA President/CEO Pamela Bailey said the data confirm the success of the CPG industry's focus on "giving consumers the quality products they need at an affordable price," innovating and investing in the future.

Selling, general and administrative (SG&A) spending relative to sales remained steady from 2007 to 2008, indicating that companies are actively marketing and innovating within existing product portfolios and investing in the future marketplace.

Investment in core brands -- including a strategic, metrics-based approach to marketing -- was one of several commonalities found among top-performing companies.

Marketing and advertising (along with procurement, packaging and core process operations) is one of the areas in which outstanding performers are finding ways to achieve significant savings without damaging effectiveness, according to the report.

Companies that have not already consolidated marketing/advertising vendors are looking at leveraging scale, "and those that have are scaling back on spend that is viewed as marginally effective or poorly targeted," the analysts sum up.

One of many examples cited is ConAgra, which is increasing its advertising spend to support the Healthy Choice relaunch designed to leverage consumers' increasing desire for healthier, easy-to-prepare foods. ConAgra CEO Gary Rodkin is quoted as stressing that the company was "determined to transform the business through more aggressive and creative innovation, marketing and selling our three power brands: Healthy Choice, Marie Callender's and Banquet."

"Like everyone else in the marketplace, CPG companies have learned a lot this year and are continually adapting priorities for the future," Brooke Weizmann, GMA senior manager, industry affairs, tells Marketing Daily.

"They are working harder than ever before to better understand the consumer base, and this year will see significant realignment of marketing efforts toward a more value-driven consumer. The value-minded consumer is a much different person than they were a year ago, and there are more of them. I think you can look to manufacturers to focus in on core brands to suit this expanding consumer base, with new and existing products marketed to meet very specific consumer needs."