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Culture Makers and Risk Takers: The Evolving CPG CEO
Article
From 1980 to 2012, the consumer packaged goods (CPG) industry followed a set playbook: building compelling brands, expanding with growing markets and channels, and managing costs to generate more brand-building capital. This approach delivered consistently high-performance and reliable top-line growth. But as population growth slowed, grocers consolidated, and consumer attention and preferences fragmented in the early 2010s, the industry could no longer rely on this strategy.1
In the years following the pandemic, a series of disruptions—including supply chain challenges, morphing shopping habits, price increases, geopolitical uncertainty, inflationary pressures and climate change—led to stagnating returns. As a result, CPG CEOs were forced into a constantly reactive mindset.
Then, in 2024, industry changes that had been percolating for several years suddenly accelerated. Shifts in consumer behaviors, an evolving relationship between CPG and retail organizations, volume recovery imperatives, rising interest in private label, and continuous digital and ecommerce evolution all highlighted that reactive leadership approaches are no longer sufficient. Instead, CPG CEOs need adaptive thinking, opportunity-focus, and predictive mindsets.
To help CPG organizations better understand how these shifts are reshaping the industry landscape, as well as how their CEOs need to respond, Russell Reynolds Associates gathered insights from our CPG experts across the globe, identifying the leadership personas necessary for CPG CEO success in 2025 and beyond.
What does the current CPG environment look like?
Shift in consumers behaviors
In recent years, consumers have grown accustomed to relentless uncertainty, including high inflation and rising prices, making them far more adaptive to change. They are increasingly open to new products and services, as they seek more value to make the most of what they are purchasing. While consumers are trading down on some items, they’re also selectively willing to pay more for higher-quality “premiumization” products.
Changing relationship between CPG and retail
Retailers are exercising their leverage over CPG organizations by cutting prices, investing in private label, demanding more supply chain excellence and reducing the commercial teams that collaborate with CPGs.2 As the lines between retail and CPG blur, relationships have become understandably unsettled, with each taking on parts of the other’s traditional role.
Volume recovery
Raw material and production costs rose substantially between 2021 and 2023. In response, manufacturers passed these costs on to consumers in multiple rounds of price increases, which led to significant revenue growth. However, this lowered overall volume sales, as consumers reduced their spending due to the high inflationary environment. As CPGs are unable to continue to increase prices, they can no longer price themselves to hit their performance plans. Therefore, driving revenue growth through unit growth has been both a top priority and a challenge for many CPG organizations.
Rise of private label
Private label has been on the rise for several years, accounting for an estimated 25% of sales in Europe and 14% in the US today.3 As consumers adopt value-seeking behaviors, including switching to private label as a more affordable alternative, they have discovered a significant quality improvement and are now less willing to switch back to branded goods.
Digital acceleration
Digital transformation remains enormously important within the CPG industry. Ecommerce sales have continued to increase across CPG categories post-pandemic, with consumers increasingly making online purchases for their groceries, beauty, personal care, and household items. CPG organizations are also leveraging direct-to-consumer and partnerships with ecommerce platforms like Amazon, Walmart, and other ecommerce-focused retailers. Finally, CPG organizations are leveraging their digital capabilities for supply chain optimization, revenue growth management solutions, personalization and customization via customer data, and more.
What are CPG organizations doing in response?
Portfolio reshaping
As CPG organizations seek growth and shift to being proactive in their strategy, they’re reshaping their portfolios with an emphasis on promising categories and geographies. Reckitt Benckiser announced its intentions to reshape its brand portfolio, prioritizing its market-leading, higher growth and margin brands, allowing them to shift to a more efficient model.4 Many organizations are using portfolio reshaping as a tool to simplify their businesses and focus on who they feel they are at their core (e.g., Unilever spun off its ice cream business, General Mills sold its yogurt business, the Campbell Soup Company rebranded to The Campbell’s Company).
Brand consolidation
CPG companies have historically leveraged mergers, acquisitions, and divestitures to generate growth via portfolio changes. The industry experienced many brand divestitures over the last few years; however, now with interest rates declining and regulations expected to relax, we are starting to see more brand consolidation (e.g., Mars acquired Kellanova). Looking forward, successful CPG organizations will likely take a hybrid approach to M&A, including large portfolio consolidation acquisitions and investments in small, high-growth companies.5
Consumer-centricity
Consumer-centricity has always been a CPG operating tenet; however, over the past few years, CPGs were focused on commercial execution over consumer connection. Going forward, there is strong interest in reestablishing relationships with consumers, understanding their motives and desires, and developing growth strategies based on their behaviors.
Innovation, branding & marketing
CPG leaders are emphasizing innovation that will lead to differential growth, while also reverting back to traditional marketing approaches to help drive consumers to stores. “Flavor flankers” and other incremental innovations will continue to serve a purpose, but companies (and consumers) are seeking more transformational offerings to influence purchase decisions and address changing consumer needs. Similarly, organizations must also be willing to revolutionize their marketing practices. This could be in the form of leveraging AI to access proprietary insights, accelerating brand innovation, adapting creative content, and optimizing media campaigns and spend.
Relationships with customers
CPG organizations understand that strong strategic partnerships with retailers ultimately rely on deep category insights. Commercial excellence is critical to maintaining their relationships with retailers, including implementing digitally-enabled revenue growth management solutions, among others.
Leveraging digital & AI
CPG companies are using technology to modernize the traditional levers they use to drive growth and win back consumers. To set up the right AI infrastructure, many CPG organizations are prioritizing data and analytics, creating internal teams dedicated to ecommerce, metaverse, innovation, and customer experience—all of which leverage data from internal sources like CRM, credit card, and digital transactions. CPG companies also continue digitizing supply chains in anticipation of future disruptions and to handle demand influxes from increased promotional activity.
Building cultural agility
Over the last few years, CEOs of CPGs have increasingly invested in their organization’s culture, understanding that it can be a competitive advantage. However, being sensitive to existing culture strengths is just as critical as making adjustments to it. Creating cultural agility allows an organization to modify approaches, adjust practices and shift strategies to address changing needs, without destabilizing the organization. Culture is the fuel that allows CPG organizations to adapt to the changes happening around them. If CEOs can build a culture that embraces continuous improvement, adaptability and change, then the entire organization can move in harmony during change.
What does this mean for CPG CEOs?
These new industry currents have caused shifts beneath the surface that are fundamentally changing CPG CEO leadership. The rate of change will continue to accelerate, making leadership contexts more complex and unpredictable. How CPG boards identify, develop, and select the right executives for CEO leadership, and how they create the conditions for them to succeed, has never been more nuanced.
To help boards understand the best predictors of success among leadership teams within the overall changing business context, RRA developed Leadership Portrait.
Built upon years of proprietary research, this model assesses an executive’s readiness to meet immediate challenges, as well as their future potential to continue to learn and grow in the face of change. Our new approach helps boards identify CEOs with the agility to stay in front of the change curve, the self-possession to accelerate their own learning in the face of uncertainty and the vision to lead enterprise-wide transformation.
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*Please see our article, “The New Leadership Portrait: Understanding & Unlocking Senior Executive Potential,” for complete definitions and methodology behind this assessment and development approach.
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A leader’s current readiness to embrace immediate challenges embodies two components—experience and competencies (indicated in the top half of the graphic). This includes leaders’ career history and notable achievements, as well as their ability to span between the seemingly contradictory dualities of leadership. Our Leadership Span Model™ evaluates an individual’s ability to cope with four major dualities (pragmatic vs. disruptive, measured vs. risk-taking, vulnerable vs. heroic and connecting vs. galvanizing) that characterize the transition into senior leadership roles. While each span may seem contradictory – how can someone be both vulnerable and heroic? – the most successful executives can embody both traits simultaneously.
A leader’s ability to fully realize their potential recognizes that the most successful CEOs are capable of balancing between two types of change-readiness that predict potential: growth factors and potential realization (indicated in the bottom half of the graphic).
Growth factors help identify the executive’s capacity to meet dynamic shifts in environmental and organizational demands, while potential realization helps assess whether an executive possesses the self-knowledge and clarity of purpose to realize their potential in a sustainable way. These growth factors include systems thinking, curiosity and adaptability, drive and resilience, and social intelligence. While potential realization embodies a leaders’ deep self-knowledge, a clear view of their values and aspirations, and an unwavering commitment to their personal legacy and wider impact across the organization, sector, and society.*
Crucially, this new model recognizes that making it to the top job is not the realization of potential. As the world grows more complicated, roles will change and the bar will continually reset. As such, potential realization is an ongoing journey that even the most senior executives must contend with as the context and challenges around them change.
Because the qualities that unlock an executive’s full potential are multi-faceted, layered, and often deeply personal, we no longer view potential as static or innate. Rather, a leader’s potential is dynamic and evolving, influenced by a variety of factors.
Reflecting on today’s CPG landscape and key business drivers, we applied a CPG lens to these Leadership Portrait learnings, identifying five CPG-specific leadership personas that are critical to a CPG CEO’s success and ability to fully realize their potential. As change keeps accelerating and the demand for immediate results increases and grows more complex, we’ve observed that CPG CEOs who can flex among the following leadership personas are most likely to succeed.
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Culture shaper & talent makerAs organizations weather massive change, leaders must learn to strike a balance between preserving what’s working in their organization’s culture and fostering a future-focused agility. Leading an organization through cultural transformation requires CPG CEOs with strong social intelligence, as well as a clear view of the wider impact they want to drive across the organization—and beyond. As one CPG CEO told us, “We want to evolve from a culture of knowing to one of learning.” Furthermore, investing in talent development and curating a world-class executive leadership team that is empowered to make important decisions will bolster the odds of scaled, sustainable success. |
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Future-focused risk takerSuccessful CPG CEOs need to confidently drive impactful decisions and value taking risks, while also possessing the conviction and resilience needed to make those hard decisions. In order to win in the market, they must move quickly when thinking about new opportunities, be able to look beyond today, and make decisions based on what’s coming vs. what’s already happened. |
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Consumer obsessed strategistCEOs who possess a highly strategic mindset, as well as a genuine enthusiasm for the consumer, will be winners in the CPG landscape going forward. Articulating a vision to deliver commercial success, selecting attractive geographic and/or demographic markets, and executing through dynamic consumer environments will manifest the systems thinking and adaptability noted in our growth factors above. |
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Transformation & innovation builderHaving an appetite for innovation, building up R&D functions, and leaning into business transformation is key to adapting to the changing environment. If a CEO is unable to lead meaningful innovation across a range of functions —or worse, if they’re unable to recognize that they can’t lead innovation forward—they won’t be able to successfully drive results. |
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Capital allocator and dealmakerCapital allocation is key to the portfolio reshaping required to shift a company’s weight from the back to the front foot. CPG CEOs must demonstrate necessary systems thinking around value-creating M&A—including both additions and subtractions, assessing potential deals, decisively recommending actions, and taking calculated risks—especially as deal flow likely will rise (inversely correlated with the US’s expected deregulation, in particular). |
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The speed of change will continue to accelerate, making CPG leadership contexts more complex. CPG boards must not only look at a CEO’s readiness for the role in the short-term, but understand the CEO’s ability to adapt, flex and grow along with their role, including the leadership personas listed above, to hold on to a sense of direction amidst setbacks, and to operate effectively in first-time conditions. How CPG boards identify, develop, and select the right individuals for leadership, and how they create the conditions for them to succeed as a team, has never been more important.
Authors
Andrew Hayes leads Russell Reynolds Associates’ global CPG practice. He is jointly based in New York and Houston.
Dick Patton leads Russell Reynolds Associates’ Americas Consumer sector. He is based in Boston.
Sotiria Pericli is a member of Russell Reynolds Associates’ Consumer Knowledge team. She is based in New York.
References
1Jessica Moulton, Pavlos Exarchos, and Warren Teichner, Rescuing the decade: A dual agenda for the consumer goods industry, McKinsey, 11th June 2024
2 Ibid.
3 Ibid.
4 Reckitt, Reckitt to Sharpen Its Portfolio and Simplify Organisation for Accelerated Growth and Value Creation, 24th July 2024, https://www.reckitt.com/media-landing/press-releases/2024/reckitt-to-sharpen-its-portfolio-and-simplify-organisation-for-accelerated-growth-and-value-creation/
5 Harris Atmar, Jeff Cooper, Stefan Rickert, and Rodrigo Slelatt, Consumer goods: A changing landscape for successful M&A, McKinsey, 29th February 2024