The industry must rekindle growth when it’s scarce and reduce costs when a lot has been done. Leaders will take on more portfolio changes and capability builds than in past decades. The consumer goods industry was an investor darling for decades, delivering a reliable formula of more than 5 percent growth at healthy, stable margins. Over the past ten years, however, top-line growth has faded away. While consumer packaged goods (CPGs) have searched for it, they have ended up scrambling to generate the earnings growth they need through cost reduction.

But investors love a growth story. Industry shareholder returns have dropped from the top to the bottom quartile. Now, as inflation slows, it is time to graduate from this shaky position. Winners will rally around an ambitious change agenda that includes both Agenda 1, portfolio (using mergers, acquisitions and divestitures [M&D&A] to improve growth exposure; reallocating resources to invest in growth and push down the cost to serve elsewhere; and entering entirely new businesses to establish a “second leg”) and Agenda 2, performance (commercial capability builds to propel share steal, market expansion, and premiumization; fundamentally higher productivity through demand reset and automation). It’s a full-change agenda, and leaders are moving.