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Introduction

The Consumer Packaged Goods (CPG) industry is facing an increasing number of regulations globally, affecting various aspects of their operations including promotions, pricing, product portfolios, trade terms, and pack sizes. These regulations aim to promote public health and well-being and have both challenges and opportunities for CPG companies. The High Fat, Salt, and Sugar (HFSS) content restrictions in the UK, which came into effect in October 2022, serve as a prime example.

In addition to the HFSS restrictions in the UK, there are several other key regulations impacting the CPG industry globally, including:

• The EU Nutrition and Health Claims Regulation (EC 1924/2006) which regulates the use of nutrition and health claims made on food labels and advertisements.
  
  
• The California Transparency in Supply Chains Act (SB 657) in the US, which requires companies to disclose their efforts to eliminate slavery and human trafficking from their supply chains.
  
  
• The Brazil Health Surveillance Agency's Food Labeling Regulation (RDC N° 360, from 23rd of June, 2018) which requires companies to provide clear and concise information about the nutritional value, ingredients and origin of their products on the packaging.
  
  
• The Australia New Zealand Food Standards Code (Standard 1.2.7 - Nutrition, Health and Related Claims), which sets out the requirements for nutrition content claims, health claims, and other related claims made about food.
  
  
• These regulations have a significant impact on revenue growth management (RGM) and companies need to develop strategies to overcome these challenges while also taking advantage of any potential revenue growth opportunities.

To learn more about different regulations and how to best transform your revenue growth management, watch our free webinar on the topic.

Challenges and Implications for Revenue Growth Management

The introduction of regulations has a direct impact on the composition and offerings of a company's product portfolio. Companies may need to reformulate their products to meet new standards for HFSS content, or reduce the pack sizes of their products to comply with pack size restrictions. These changes can have a significant impact on a company's bottom line and must be carefully managed in order to minimize the risk of revenue loss.

For example, the pack size restrictions introduced in the UK in October 2023 will limit the maximum size of single-serve HFSS products. Companies will need to either reduce the pack size of their products or reformulate their products to meet the new standards. This will require significant investment in research and development, as well as careful consideration of consumer preferences and purchasing behaviors.

More specific information on the introduction of the hfss regulations in the UK can be found in one of our latest blogs.

Promotions and Pricing Implications

The restrictions on marketing and promotion of unhealthy products can limit a company's ability to promote its products effectively. The restrictions on pack sizes and trade terms can also impact the pricing of products, leading to the need for companies to find new and innovative ways to promote and price their products in order to remain competitive.

For example, the HFSS marketing restrictions in the UK prohibit the advertising of HFSS products in broadcast media before 9pm and in children's media at any time. This will impact a company's ability to reach its target audience and promote its products, leading to the need for companies to find new and innovative ways to reach and engage with consumers.

Impact on Promotions and Pricing

Regulations also impact a company's ability to promote and price their products effectively. The restrictions on marketing and promoting unhealthy products can limit a company's capacity to advertise their products and potentially result in reduced revenue. Additionally, pack size and trade term restrictions can impact the pricing of products, making it imperative for companies to find alternative methods of promoting and pricing their products.

Pack Size Implications

The introduction of pack size restrictions can impact the pricing of products, as well as the convenience and accessibility of products for consumers. For example, the pack size restrictions in the UK will limit the maximum size of single-serve HFSS products, making it more difficult for consumers to purchase large quantities of these products in a single transaction. Companies will need to adapt their product offerings to meet these new restrictions and ensure that their products remain accessible and convenient for consumers.

Managing Trade Terms to Optimize Revenue Growth

One of the key levers of RGM is managing trade terms, which includes managing relationships with retailers, distributors, and other partners to ensure that products are priced and marketed effectively. The introduction of various regulations has made this task increasingly complex, as companies must navigate restrictions on trade terms while still ensuring that their products reach their intended target market.

One way that companies can manage trade terms effectively is by having a strong understanding of the regulations that impact their products, and developing a strategy that takes these regulations into account. For example, companies must consider the restrictions on pack sizes and the impact that this may have on their trade terms, as well as the restrictions on promotions and the impact that this may have on their pricing.

In addition to developing a strategy that takes regulations into account, companies must also be proactive in their approach to managing trade terms. This means that they must continuously evaluate their relationships with retailers, distributors, and other partners to ensure that their products are priced and marketed effectively. Companies must also be prepared to adapt their strategies as the regulatory landscape changes, and be willing to make changes to their trade terms as needed.

Leveraging Advanced Analytics and AI to Optimize Revenue Growth Management

In order to effectively manage the challenges and opportunities posed by regulations, companies must leverage advanced analytics and AI to optimize all levers of RGM. By using data and advanced analytics, companies can better understand the impact of regulations on their business, and make informed decisions about pricing, promotions, and product portfolios. This can help companies to remain profitable and competitive, even in the face of increasingly stringent regulations.

For example, companies can use advanced analytics and AI to monitor the performance of their products and to identify areas for improvement. This may involve analyzing sales data, customer feedback, and other key metrics to identify trends and patterns that may impact revenue growth. Companies can also use advanced analytics and AI to model the impact of regulations on their business, and to identify the most effective strategies for navigating these regulations.

The Promise of Buynomics Solution

At Buynomics, we understand the challenges that CPG companies face in terms of RGM, and we are committed to helping our clients overcome these challenges and achieve their revenue growth goals. Our solution leverages advanced analytics and AI to optimize all levers of RGM, including pricing, promotions, product portfolios, trade terms, and pack sizes. By using data and advanced analytics, we can help our clients to better understand the impact of regulations on their business, and to make informed decisions about how to navigate these regulations in order to remain profitable and competitive.

The introduction of various regulations has posed significant challenges and opportunities for CPG companies in terms of revenue growth management. Companies must navigate restrictions on promotions, pricing, product portfolios, trade terms, and pack sizes in order to remain profitable and competitive. By leveraging advanced analytics and AI, companies can optimize all levers of RGM, and remain profitable and competitive in the face of increasingly stringent regulations. At Buynomics, we are committed to helping our clients overcome these challenges and achieve their revenue growth goals.