Turning Commodity Price Volatility into CPG Advantage
For Revenue Growth teams in the Consumer Packaged Goods (CPG) industry, managing commodity price volatility has been a constant part of their job. However, the period since 2020 has ushered in an era of heightened, more complex, and often unpredictable fluctuations across essential inputs, such as the sharp rise in cocoa prices and drops in copper prices.
This sustained volatility is compressing margins, complicating commercial decisions, and demanding a fundamental shift in how we approach Revenue Growth Management (RGM).
The scale of this challenge is clear. At the beginning of the year, Buynomics identified commodity price volatility as the top RGM challenge for 2025, and something to consider in your pricing strategy for 2025. True to this, 51% of attendees of a recent Buynomics webinar cited commodity volatility as their number one business concern. .png?width=1812&height=987&name=Visual%20Chart%20Page%20Iteration%202%20(1).png)
Source: Buynomics Webinar poll results
What does this mean for RGM teams today? Organizations with more mature RGM capabilities are better positioned to respond quickly, protect profitability, and even gain market share in volatile conditions. This article explores what’s driving commodity price volatility and how RGM teams can manage it more effectively by improving their RGM maturity.
Why Traditional RGM Approaches Are Not Enough to Deal with Commodity Price Volatility
Volatility is no longer purely cyclical or confined to specific commodities. It's more structural, widespread, and requires constant vigilance. We see higher baseline costs punctuated by sharper, more frequent peaks driven by diverse, often interacting, causes..png?width=1200&height=800&name=Commodity%20Price%20Index%20Evolution%20(Jan%202015%20=%20100).png)
Data Source: World Bank
“We take the prices of the raw materials and packaging materials, and this impacts the cost of production.RGM is the function that has to juggle those costs somehow and smartly pass them on to consumers, or find a smart solution within the portfolio.”
Ivan Tretyakov, Buynomics
The Revenue Manager of Tomorrow
Leading CPGs must adapt rapidly, viewing this intensified volatility as an opportunity to build more robust commercial capabilities. This requires enhancing existing strategies and adopting new ones, leveraging all RGM levers, and accounting for market conditions and competitor moves is key. All of this is possible with an enhanced RGM maturity level, as it requires a move from descriptive to prescriptive analytics.
How Can Enhanced RGM Maturity Help With Commodity Price Volatility?
In our article Revenue Growth Management Redefined we looked into different stages of RGM maturity and how manufacturers can move from descriptive analysis to prescriptive actions. RGM maturity starts with putting the right process in place within the organization, with the right people driving the change, and finally, using the right technology. This is usually AI-powered RGM software that enables manufacturers to access predictive and prescriptive analytics.
The more mature the organization, the easier it is for it to adapt to the changing market conditions that drive commodity price volatility. Here are some of the key steps manufacturers can model when tackling commodity price volatility.
1. Adopt Strategic Pricing Measures
To effectively navigate rising cost pressures or the impact of tariffs, companies must move beyond blanket price hikes and implement surgical price adjustments. This refers to precise, targeted changes in pricing—often at the SKU, channel, region, or customer segment level—designed to achieve a specific outcome without broadly disrupting the market.
Looking for a quick overview on the strategies RGM teams can use to navigate the impact of tariffs? Download our cheat sheet to explore the pros and cons.
Embracing dynamic pricing models, a strategy where prices change in real time based on factors like demand, competition, and customer behavior to maximize revenue, is also an option. This works particularly well in channels like e-commerce or B2B, where faster responses to market shifts can help preserve competitiveness and margins.
2. Price Pack Architecture Strategy Changes
Continuously analyzing and optimizing your Price Pack Architecture can help you to stay competitive in turbulent markets. This can involve introducing new pack sizes, such as smaller packs for affordability and larger packs for value shoppers, aligned with shifting cost structures and consumer needs. Adjusting relative pricing across the portfolio can also guide consumers towards more margin-resilient options.
Manufacturers can also proactively seek opportunities to reformulate products or redesign packaging using alternative, more cost-stable materials or suppliers, while maintaining consumer value perception. Innovation can be oriented towards products inherently less susceptible to cost shocks – using stable ingredients, simpler formulations, optimized packaging, or leveraging local sourcing advantages.
Find out more about what it takes to get PPA right in volatile markets in our PPA roundtable webinar.
3. Optimized Promotions
Critically evaluating the return on investment (ROI) of significant discounts, which become riskier with volatile input costs, is essential. Manufacturers can consider shifting their spend towards Everyday Low Price (EDLP) strategies, targeted promotions, or strategic events that build brand equity alongside volume growth.
Alongside this, it is important to have an agile promotion calendar. Creating this involves analyzing promotional effectiveness, minimizing cannibalization, and optimizing timing in relation to competitor actions, seasonal demand, and anticipated cost fluctuations.
Want to find out more? Our case study demonstrates how a snack producer successfully modeled a price increase and various promotional strategies, enabling data-driven decisions to offset rising compliance costs.
Want to find out more? Our case study demonstrates how a snack producer successfully modeled a price increase and various promotional strategies, enabling data-driven decisions to offset rising compliance costs.
Combating Commodity Price Volatility with Cross-Functional Integration
When it comes to RGM maturity, the people aspect is one of the most important elements. On one hand, building an effective RGM function requires placing the right talent in the right roles, with clearly defined responsibilities and decision rights. On the other hand, the inherently cross-functional nature of RGM means the department must actively collaborate with teams like Sales, Marketing, Supply Chain, and Finance, providing the insights they need to make confident, data-driven decisions.
Furthermore, encouraging your RGM team to touch base with other teams across your business will enable your RGM department to monitor the policy landscape more effectively, stay informed about potential policy changes (trade, environmental, and agricultural) that could impact costs, and incorporate this into any future prescriptive analyses.
RGM teams are uniquely positioned to connect departments across the organization. Their cross-functional perspective enables them to see the bigger picture and ensure that every commercial decision is made with a holistic understanding of its impact.
Ensuring that there are no silos within your organization will foster tight integration and communication between RGM, Sales, Marketing, Finance, Procurement, and the Supply Chain, allowing for a shared understanding of risks, opportunities, and potential responses, allowing confident decisions even in volatile markets.
Our whitepaper, The Revenue Manager of Tomorrow, provides more on the revenue manager's integrated role.
Take the First Step Towards Overcoming Commodity Price Volatility
In today's CPG landscape, effective revenue leaders don't just react to volatility – they proactively plan for a range of potential disruptions, whether market, climate, or policy-driven. They do this by maturing their RGM organization, moving from descriptive to predictive, and eventually, prescriptive analytics.
"RGM maturity is the defining edge between organizations that safeguard profitability and those that drive growth. It’s not a finite goal or a standalone team, but a cultural mindset—reflected in how every sales team member thinks, decides, and acts. AI plays a critical role in embedding this mindset at scale, enabling smarter, faster, and more consistent commercial decisions across the organization."
Ivan Tretyakov, Buynomics
With Buynomics, it takes up to 12 weeks for RGM leaders to transform their departments from descriptive to prescriptive. Our team is here to support and guide RGM teams through every step. To start, fill in our RGM maturity assessment to receive a personalized report in minutes. This report will benchmark your performance in key categories and provide you with best practices and actionable next steps!
For more tailored guidance on how you can navigate increased commodity price volatility and drive sustainable growth despite turbulent markets, schedule a demo with our team today and see how Buynomics can support your organization’s success.
