By: Flaka Ismaili    May 13, 2022

We focus on providing the highest and most thorough level of tax planning and consulting for our clients, and frequently our compliance and tax return work is simply a side effect of those bigger picture endeavors. Our clients come from a variety of industries and stages of life, and include a number of closely-held businesses, family groups, real estate businesses, tech companies and those with interests beyond the U.S. borders. We also do a good deal of work with individuals – those that own their businesses and those that work for others too.

Deloitte surveyed 150 consumer products executives from an industry-proportional mix of food and beverage, household goods, personal care, and apparel companies in November 2022. Most of the companies are multinationals, all with more than $500 million in revenue. We conducted additional surveys with executives in Japan and China to expand our view into those unique consumer markets. As mentioned, profit margins are always a key part of income statement analysis, but profit margins in CPGs can be unique. This is because many CPG companies have developed streamlined production facilities with the advantage of economies of scale to lower the overall cost of goods sold and create a higher gross profit margin. Consolidated ERP instances with automated data reconciliation increase speed nearly to real time and improve business-process quality, such as forecasting accuracy, due to an integrated and comprehensive database.

Strategy & Operations

They produce goods primarily in the consumer staples category, with streamlined production facilities that can take advantage of economies of scale and lower overall costs of goods sold . The consumer packaged goods industry is highly competitive due to higher barriers to entry as well as high saturation and low consumer switching costs. Using solutions like QuickBooks Online, Bill.com, Expensify, Gusto, and Fathom, clients can expect efficient bookkeeping and accurate information. For food entrepreneurs specifically, Accountfully has extensive experience using the following inventory management systems and shopping carts. Our revenue management consultants know that decision-support tools account for just 10% of a client’s success in net revenue management; the other 90% stems from strengthening key capabilities. For this reason, we reinforce our approach to net revenue management in CPG and FMCG with five enablers to help clients build the revenue growth management capabilities vital for ensuring ongoing success.

Consumer packaged goods companies are traditionally high-margin, high-volume businesses with streamlined production facilities that can take advantage of economies of scale and lower overall costs of goods sold. We augment our core approach to revenue growth management with next-generation capabilities. For example, through the sophisticated use of AI and advanced data and analytics, we help clients develop decision support tools that enable frontline teams to tackle their toughest net revenue challenges. To achieve this, we bring deep industry knowledge and unparalleled data analytics capabilities to each engagement. Our qualifications for net revenue management in FMCG and CPG include in-house expertise in digital technologies, advanced analytics, and AI.

Discover a new vision for trade

A business process–excellence team is often incubated as part of a transformation office but, over time, becomes a separate dedicated function focused on continuous improvement. CPG companies that have adopted a zero-based mindset have identified up to 20 percent in indirect-spend savings in less than six months. With this attitude of reexamining the status quo and reimagining it from a blank slate, CPG companies can embrace change and develop radical new ways to do business—and gain value in the process.

Most digitization projects involve significant changes in processes, organization, and ways of working. Should create a tailored engagement that fits the business’ specific challenges and needs. Because no two businesses require the same approach, it’s important for the bookkeeping and accounting firm to understand the business owners goals before proposing a solution. Generally speaking, a business owner can expect the following from an outsourced bookkeeping and accounting engagement that has been designed to help food entrepreneurs and CPG business owners.

• An investigation into the company’s systems, suppliers, and operations revealed that inefficiencies in sales and distribution, operational processes, and supply chain were resulting in higher costs and reducing profitability.
• Consequently, it impacted the company’s ability to invest in brand building and growth.
• Accountfully bookkeepers and accountants handle the day-to-day bookkeeping operations.
• There is significant variance across industries, with IT firms spending 11 percent, healthcare companies spending 14 percent, and energy providers spending 4 percent on SG&A expenses.
• Beyond making your day-to-day CPG accounting responsibilities easier, a strong chart of accounts also gives potential investors clear insight into your business’s financial health.
• This process ensures everyone is aware of what is held on the balance sheet and can manage the balances properly.

For many Consumer Packaged Goods companies, accounting principles aren’t top of mind during the early growth stages. Considering founders have to juggle many moving pieces, it’s easy to see how accounting best practices take a back seat. However, we can’t understate the importance of disciplined CPG accounting and financial practices — especially early on.

A family may opt to squeeze a few more years from an outmoded washing machine, rather than upgrade to a newer model. By contrast, sales of CPG staples like bread, milk, and toothpaste are less affected by market fluctuations. Like most CPGs, cosmetics typically have limited shelf lives, as these products quickly deteriorate if exposed to extreme temperature fluctuations.

Watching Activity Ratios

Many CPG and fast-moving consumer goods players are turning to revenue growth management to boost their top and bottom lines. They’re also striving to build the capabilities essential for strengthening net revenue on their own. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

And from day one of each engagement, we focus on enabling clients to build the capabilities that are vital for maximizing net revenue—long after the engagement ends. As consumer product companies struggle to obtain the inputs and commodities they require, they also face a changing geopolitical and business environment. This involves governmental restrictions on technology transfer, fraught relations between the world’s greatest powers, and increased regionalization of supply chains. It also involves new efforts by global companies to reinforce supply chain resilience and redundancy, partly by diversifying supply chain processes and no longer depending on just one country or supplier. As a result, we may begin to see a consumer products industry emerge that is, in many ways, more diverse than before.

A leading global food and beverage enterprise wanted to unlock new value by deploying next-generation revenue growth management solutions, including partnering with a key retailer to use AI to drive value for both companies. Our revenue management consultants helped the client activate an AI-driven analytical engine, which featured automated promotion recommendations and calendars tailored to each company’s strategic and business constraints. Close collaboration and data sharing, along with savvy change management helped deliver impressive results—including a 3% to 5% uptick in category retail sales and an improvement in margins of 300 basis points.

Key Takeaways

Read the complete how to calculate stockholders equity products industry economic outlook by downloading the report. In fact, if you are someone who appreciates that planning for your individual and business taxes is a year-round endeavor that requires detailed knowledge and personal attention, we are likely a good fit for you. We realize that every client situation is unique, so every client gets personalized treatment and advice. Additionally, every client is assigned a team of experts that includes at least one partner. This way, regardless of who is away from the office, you can get your questions answered or issues addressed in a timely manner.

Lipstick, blush, eye shadow, and foundation are cheaply sold in individual packages, and after using the products, consumers either discard or recycle the empty vessels. Although CPG makers generally enjoy healthy margins and robust balance sheets, they must continuously fight for shelf space in stores, and they must ceaselessly invest in advertising, in an ongoing effort to increase brand recognition and stimulate sales. For the balance sheet, make sure all the accounts are properly reconciled. Then have a meeting to review and understand the detail behind the accounts with everyone up to the CFO. Any issues can be resolved with others throughout the organization, and cleanup can happen over time. These are simple steps and can be started with little effort, and the results can be dramatic even in a short time.

BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Assurance, tax, and consulting offered through Moss Adams LLP. ISO/IEC services offered through Cadence Assurance LLC, a Moss Adams company.

Large Indian CPG’s Vietnamese business was experiencing slow growth and low profitability for five years. Consequently, it impacted the company’s ability to invest in brand building and growth. The company needed to identify the reasons causing its slow top line growth and dipping profits.

Accurate and consistent information ensures accurate forecasting and helps prevent overspending. You can create a better roadmap, based on tight data sets that guide efficient growth and scaling. Your data will tell you everything currently happening in your business, from your most popular products to underperforming sales channels. You have to handle product creation, inventory purchases, retail negotiations, and much more. It’s no surprise if you put accounting best practices on the back burner while you focus on growing your business. Inconsistent data is a common issue for new companies, which leads to convoluted financial roadmaps.

More often than not, food entrepreneurs and CPG business owners don’t have enough bookkeeping knowledge or industry experience to successfully oversee and execute their accounting needs. They can muddle through things in QuickBooks Online for a certain amount of time, but add co-packers, trade spend deductions, distributors, and/or manufacturer charge backs and things become instantaneously overwhelming. As your business grows, the key to financial success is knowing your cash inside and out.

The implementation should be supported by a dedicated transformation office that manages the transformation program and establishes the engine to push progress forward and drive value to the bottom line. This office should be forward-looking, running proactive interventions to overcome challenges. It should build capabilities for S/4HANA and beyond at scale so that it can both deliver and benefit from the solution. Fully capturing and sustaining value from the transformation requires continuous improvements driven by a small, dedicated team.

An investigation into the company’s systems, suppliers, and operations revealed that inefficiencies in sales and distribution, operational processes, and supply chain were resulting in higher costs and reducing profitability. The Vietnamese division of an Indian consumer packaged goods company increased revenue and operational efficiency by reducing sales and supply chain costs, supported by digital transformation of its business. This could range from an Excel file that tracks each separate promotion by customer to a stand-alone module designed specifically for trade-spend management.

As an emerging CPG company, your data sets are your transactions, accounts payable, inventory changes, invoices, and so on. Whether you use a financial system like QuickBooks or Xero, you must standardize your data recording process. Implementing a data strategy will help you create a financial roadmap, identify trends, and expose financial constraints or issues. Beyond making your day-to-day CPG accounting responsibilities easier, a strong chart of accounts also gives potential investors clear insight into your business’s financial health.

You can start the cash flow forecast today by managing and understanding what is going in and out of the company’s bank account. Then use those same inflows and outflows to map out the next week, month and quarter. Consider this a rough guide, so it doesn’t have to be perfect, but rather directional in nature. It can even help to work through a full year of forecasting cash this way. For SAP-based systems, CPG companies can optimize processes by making them “fit to standard”—that is, conforming them to SAP standards. That way, the companies can avoid costly, overly intricate system customizations that are expensive to not only design but also maintain.

Flaka Ismaili

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