Revenue Management FMCG: How to Generate Profitable Growth Faster 📈

It’s time to raise the bar in Revenue Growth Management (RGM) across the fast-moving consumer goods (FMCG) sector or risk leaving significant value on the table. But where should RGM teams start, and what approach should they take? What is the best approach to FMCG revenue management?

Heightened inflationary pressures, cost-of-living increases and lower consumer confidence are hitting FMCG hard. But the fundamental RGM capabilities built around pricing, promotions, assortment and trade investment are not adequately addressing these economic pressures.

What’s more, these RGM capabilities are struggling to capitalise on shifting consumer behaviours, customer value drivers, advances in data and analytics, and shifts to online. Pressure to get results faster is also increasing from investors, private equity and the board.

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In this article, we discuss the limitations of established RGM capabilities in FMCG businesses and how RGM teams can transition to more advanced capabilities effectively.

At Taylor Wells, we argue that FMCG companies must act fast to maintain a competitive advantage. They must also invest in building strategic RGM capabilities across the business.

How FMCG Revenue Management Can Drive Profitable Growth Faster

FMCG businesses can generate profitable growth faster by moving beyond traditional pricing, promotions, assortment and trade investment. They can do this by building stronger Revenue Growth Management capabilities. The following commercial capabilities support this shift:

1. Diagnose margin leakage and value capture opportunities to identify where profit is being lost.
2. Use customer and consumer insights, data and analytics to understand changing value drivers and purchasing behaviour.
3. Develop price pack architecture around how consumers buy, including price points, pack sizes and product price relativities.
4. Use advanced commercial modelling and hypothesis testing to improve pricing decisions.
5. Design and test experiments rather than relying on assumptions about willingness to pay.
6. Integrate pricing, product, marketing and sales teams so decisions are not made in silos.
7. Build an integrated commercial roadmap with clear priorities, deliverables and milestones.
8. Use targeted, personalised promotions instead of blanket discounts that can erode margin.
9. Embed proven RGM processes, systems and tools across the business so capability continues to deliver results.

These capabilities help FMCG businesses turn changing consumer behaviour and customer value into faster, more precise and more profitable commercial decisions. The next challenge is embedding them across the business rather than treating RGM as a short-term initiative.

Customer and consumer behaviour, along with macroeconomic conditions, are undergoing significant change. The best way to build RGM capabilities is to turn shifts in end consumer behaviour and customer value into actionable, profitable pricing decisions faster.

See whether your pricing is under control

Building Effective FMCG Revenue Management for Total Profitable Growth

The No. 1 Mistake of FMCG Companies When Managing Profitable Growth

The No. 1 mistake an FMCG business can make right now is treating pricing and product innovation as separate functions. When RGM and product teams make critical strategic decisions in silos, decision-making is often compromised. Teams can also work at cross purposes, resulting in loss-making decisions.

Our consulting research shows that RGM teams need critical insights from product innovation and marketing. Without them, price setting and decision-making can become myopic and cost-focused. Pricing strategy can also become short-term and reactive. What’s more, teams often use polarised and outdated pricing skill sets, disparate approaches and disconnected datasets. These approaches fail to leverage consumer insights and can lead to daily margin loss.

Reading the market correctly is essential for sustainable growth. An optimised commercial system can also align key departments and accelerate FMCG revenue management. A strategic price pack architecture should use multiple, up-to-date data sources and SKU-level analytics. Optimised commercial models can then support more profitable and precise RGM decisions.

Changes in Key Consumer Trends Influencing FMCG Revenue Management

Economic conditions can significantly influence consumer spending and purchasing behaviour.

Overall, household budgets are tightening as consumers actively cut back on spending.

For instance, Australian consumers continue to face significant grocery price pressures. CHOICE’s June 2026 Consumer Pulse survey found that 82% of Australians surveyed identified food and grocery costs as a major pressure on household budgets, reinforcing the importance of perceived value in FMCG purchasing decisions.

When household budgets come under pressure, consumers can trade down across categories and become more sensitive to price increases on essential items and best sellers. Many consumers are also seeking less expensive alternatives to reduce household spending.

At the same time, some consumers continue to trade up despite growing economic pressure.

Health and wellness also remain important value drivers, creating opportunities for FMCG businesses to develop products and pack formats that align with changing consumer needs.

There are also generational differences in spending.

Consumer preferences also vary across demographic groups, with factors such as brand familiarity, health, sustainability, convenience and perceived value influencing willingness to pay.

Across customer groups, then, price responses and sensitivity data are changing as a result of key shifts in consumer behaviour and value drivers. These shifts reflect changing attitudes towards health and spending. Economic uncertainty has also increased risk aversion and concerns about the future.

Clear price-rise planning and communication strategies will be key to addressing consumer concerns about price increases on essential items. A consumer-focused pack price architecture will enable FMCG businesses to charge higher average prices per kilo and litre without driving consumers away. Strategic price promotions will entice brand switchers and brand-loyal shoppers to choose new brands. 

Will Shoppers Pay More for a Better Retail Experience? 🛍 Podcast Ep. 90

Immediate Risks to Profit Associated with Changes in Consumer Trends

Based on our consulting experience, when FMCG companies do not put customer and consumer insights at the centre of their pricing strategy, legacy price structures quickly become a major source of margin loss.  

Take a typical FMCG pack price architecture as an example. Our research shows that legacy pack price architecture can create significant and recurring margin leakage. This occurs when leaders use it to drive the average price per kilo or litre. Our findings show that losses are more significant when pack price architecture is not structured around how, what and why consumers buy. Losses also increase when the structure does not allow optimisation of price tiers and price-point relativities as consumer behaviour and customer value change.

Our consulting research indicates that when FMCG firms do not align pricing, promotions and product innovation, they can struggle to protect margins and sustain profitable growth.

This highlights the risk of trying to drive new commercial strategies through legacy pricing structures and siloed ways of working.

Additional Risks to FMCG Revenue Management

Price Rises

When pricing is not aligned to end consumers, price increases often fail to offset inflation. Fixed price increases derived from bracket price structures do not address the full impact of inflation. This is particularly relevant to semi-discretionary categories, where consumers may be more hesitant to spend, and discretionary categories.

The main problem with fixed prices is that they do not take into account the evolving value equation required for consumers trading down or up. The main problem with bracket price structures is that price breaks are determined by movements in logistics costs rather than consumption patterns. 

A bracket price structure is therefore an inadequate basis for setting retail prices during inflation. Businesses attempting to anchor prices to customer value must set price breaks to critical consumption levels. Firms seeking new value channels should use customer value discovery, price trials and experimentation. They should also use end-consumer research.

Caution is advised when setting up experiments, price trials and tests. The same applies when choosing end consumer research providers. Their designs, samples and approaches may not align with strategic RGM capabilities and may therefore be unusable from a pricing perspective.

Pack Price Architecture 

When pack price architecture is outdated or misaligned with end consumer value and buying behaviours, FMCG firms struggle to offer the right products. These products must meet consumer needs at price points they are willing to pay.

A 2022 review of savoury snack package sizes found that industry perspectives commonly linked smaller packages with health consciousness, convenience and portion control.

The higher price per unit of smaller packs can also influence how health-conscious shoppers perceive their value. A higher price per unit can remind them to stick to their health regimes. At the same time, the optimised products and price points are small enough to offer ‘non-health focused’ shoppers a guilt-free experience. This can encourage impulse purchases when spending is tight. 

This means that willingness to pay can vary significantly across customer groups, product categories and consumption occasions, even during periods of economic pressure.

Some consumers value reminders of their health goals on packaging, pricing and product sizing. Others are willing to pay more for the convenience of small indulgences.

Outdated pack price architectures are problematic for FMCG firms for two main reasons. First, they lose sight of the end consumer and the subtle shifts that mean a lot in terms of willingness to pay.

They also lose the SKU-level granularity required to optimise price ranges, pack sizes and product price relativities based on changing end consumer preferences. These are fundamental requirements for protecting and expanding margins.

Price Promotions 

A further risk to the strategy is blanket promotions that fail to attract the right or enough customers. Blanket promotions are a scattergun approach to FMCG revenue management. They lack RGM precision and over-rely on low prices to drive revenue.

The main aim of blanket promotions is to shift products quickly and drive volume by leveraging significantly lower price points. Often, however, why, what or how consumers buy the product is not the main concern. In fact, the opposite is often true.

1. Promoted products are often selected based on internal views about products or revenue targets. This approach overlooks what end consumers want to buy from retailers.

2. Many price promotions target the wrong products, using the wrong pack sizes and price points because assumptions have not been tested and/or informed by consumer insights.

3. Trade incentives are often offered to retailers and supermarkets to encourage promotional activity. FMCG companies and supermarkets still seldom work together on targeted promotions. These promotions should be based on evidence about consumer spending and changing customer value drivers across different groups.

From our consulting experience, trade incentives can create problems for both FMCG companies and retailers. They can deliver benefits while also creating margin risks. First, incentives can encourage both parties to rely on discounts rather than the product’s standalone value to attract new customers. Secondly, giving discounts to shoppers who would have bought the product anyway simply hands over margin for nothing. Finally, despite the incentives and margin banked by supermarkets, many promotions are loss-making. This creates a problem for all parties involved.

Promotions can fail to generate enough incremental sales to offset lower promotional margins, particularly when discounts reach shoppers who would have purchased the product anyway.

This highlights a significant opportunity for teams to work together to deliver personalised promotions and optimal pricing.

The Costly Recovery in FMCG Revenue Management

At Taylor Wells, we have worked through the entire FMCG business transformation, advising leaders and supporting RGM and Innovation teams to move from cost-based to value-based pricing.

This journey includes a whole range of challenges: 

• Average prices per basket decreasing as customer basket sizes increased
• High-cost promotions failing to drive enough revenue to cover costs, grow market share or capitalise on share-of-wallet opportunities
• Fixed pricing strategies exposing the business to significant price discrepancies in highly visible subcategories and product ranges
• Inefficient and basic pricing techniques eroding margins daily
• Pack sizes that were completely opposite to how consumers were buying
• A core product portfolio of household brands losing margin YoY
• Pricing decisions based on the personal views of one or two individuals on the market
• Online pricing strategies that completely contradicted and often cannibalised in-store and local pricing strategies
• Loss-making price negotiations with supermarket retailers that focused on net price reductions

When teams lack the tools and expertise to fix broken processes and pricing structures, building sustainable FMCG revenue growth and RGM capabilities can take considerable time and lead to costly mistakes.

During this time, consultants are often employed to address one or two of the problems above, leaving internal teams to interpret PowerPoint presentations filled with bubble charts and price elasticity outputs.

Consultants leave within their contracted timeframe, with no detailed or clear handover or guidance on how to make it all happen. The business assumes that teams don’t need additional skills development as ‘experts’ have fixed their problems. 

However, the real problem is not really fixed at all, as teams continue to operate with a siloed company culture and the wrong tools and methods.

Within a matter of months, other FMCG businesses have caught up or gained an advantage by identifying the activities that directly support faster revenue growth. McKinsey’s 2022 research found that consumer companies that do RGM well typically see a 4–7% gain in annualised gross margins. The rest of the industry is explaining why it didn’t reach expected earnings to the board and investors. 

How to Accelerate Commercial Strategy for Profitable Growth

FMCG firms can strengthen profitable and sustainable revenue growth by continuously improving their pricing and RGM capabilities.

Take action now to build RGM capability at scale by developing these 9 core capability areas:

• Diagnosing margin leakage & value capture opportunities
• Data retrieval and big data management
• Data manipulation and analysis
• Customer value discovery
• Consumer research: design and execution of insights
• Price pack architecture development 
• Advanced commercial modelling
• Hypothesis testing
• Experimental design & set-up

These capabilities encompass new skills development, new behaviours, value-based mindsets, and strategic pricing techniques to support and further expand the company’s RGM strategy across pricing, promotions, assortment, and trade investment. 

RGM capabilities are built around customer and end-consumer insights. They take into account shifts in customer behaviour, customer value drivers, sales volumes, the simulated profit impact of price changes, competitive activity and net price elasticity.

The Solution to Achieving Profitable FMCG Revenue Growth and Effective Revenue Management

Build and embed strategic RGM capabilities across the business. This includes establishing the right organisational structures, integrating FMCG revenue growth management into core business processes, implementing incentives, such as performance reviews and evaluation scorecards for RGM teams and capabilities, and, critically, building, embedding and maintaining these capabilities at scale. 

Inevitably, the proficiency level will vary across teams, companies and roles, from RGM, sales and marketing to finance and supply chain, but the core RGM capabilities for sustained impact remain the same. Across the organisation, these new strategic RGM capabilities will provide all teams with the ability to manage, react to, and meet current commercial challenges like rising inflation. 

However, building capability without embedding it does not accelerate revenue growth. In fact, great ideas are lost and great RGM teams are under-leveraged.

To prevent RGM from becoming a short-term initiative led by a few consultants and business leaders, you need a process for building and embedding next-generation RGM capabilities across the business. This helps create sustainable value even when new challenges arise.

The Process of FMCG Revenue Management

To build and embed RGM capability across the business, you need an optimised commercial system: 

Start by:

• Centralising problem solving
• Integrating customer-focused RGM and product team structures
• Building a multi-year pricing roadmap with clear horizons, priorities, deliverables and milestones across 3-, 9- and 12-month periods and across 3-year, 5-year and 10-year periods
• Shifting revenue-generating team plans that feed into the pricing and RGM roadmap
• Developing integrated workflows, with cascading workstreams and tasks that achieve shared revenue targets faster
• Communicating and coordinating consumer insights across the business more efficiently
• Testing value-based pricing methods, customer-focused approaches and personalised promotions 
• Tracking systems for everything, including dashboard visualisations for every team and department
• Embedding proven resources, methods, models and processes in BAU 

See how pricing breaks in practice

Implications of FMCG Pricing and Revenue Management

Consumers are increasingly discerning and empowered. They like clear and logical price promotions, cues and signals. They do not like pricing or promotions that are confusing or misleading.

Simpler, more consistently achievable alterations to price pack architecture are required, such as changes in pack size, packaging or bundling, to safely generate more revenue and margin faster.

A profitable pack price architecture must reflect changing market and consumer trends, including demand for value, convenience, portion control and pack sizes that better match changing household needs.

Promotions should be based on multiple inputs and data sources, not just costs or simplistic price ladders. Consumers buy for many different reasons and occasions. Different segments display different purchasing behaviours. It is important to capture all of these subtle differences in order to set the right prices for consumers. Otherwise, price promotions will forever fall short of desired volume, revenue and margin targets.

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Bottom Line

Strategic RGM capabilities are built on a foundation of deep customer, consumer and shopper insights, and supported by sophisticated analysis of category, competitors and consumption data. 

Investing in strategic RGM capabilities enables FMCG businesses to make more granular choices about where to play and how to win in the face of new challenges. McKinsey research found that companies investing in capability building are 2.4 times more likely to capture and sustain value.

By developing a nuanced understanding of how consumers shop in the category, FMCG businesses can build highly specific short- and mid-term pricing strategies by region, channel, and stock-keeping unit (SKU).

With detailed insights into what types of consumers are buying your products, including where, why and when they buy, FMCG businesses can introduce new brands, packs and products that better align with consumer needs.

Developing RGM capability across the business depends on broad capability building. This can be achieved through targeted coaching and integrated team structures, systems and processes across the RGM team and the broader product, marketing and sales organisation.

Embedding RGM capabilities requires effective central coordination, ongoing testing and standardising proven RGM processes, approaches, systems and tools that deliver higher speed and consistent decisions.

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For a comprehensive view on how to build commercial capability to elevate teams to strategic pricing, download a complimentary whitepaper on How To Maximise Margins with Price Trials.

Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 9000 1115.

You can also email us at team@taylorwells.com.au if you have any further questions.