The last year has seen a sharp rise in commodity costs, as well as increases in freight rates and packing cost rises for materials such as aluminium and cardboard. Staff shortages due to quarantining have also disrupted supply chains and put pressure on workforce costs. The global economic recovery is the key driver as consumer pent-up demand outpaces supply for goods from big ticket items to FMCG consumable products. Most recently in the U.K., the fuel crisis and lorry driver shortage has added further challenge.

Additionally, there has been cost pressure on FMCG companies to invest in innovation as consumer behaviour has responded to the pandemic with a pivot to shopping online and the self-evident climate change emergency has focused the attention of the consumer further on sustainability and the environment requiring additional investment from manufacturers to compete and maintain share. Hedging strategies that may be in place are running out in many cases, and for those without pass-through price increase clauses in customer contracts, it is prompting the reality of having to pass price rises on to consumers.

Current pricing activity in market, the consumer awareness of cost pressures and the publicity around price across sectors offers the opportunity to take decisive action. Consumer Goods companies can benefit from applying a structured, rapid and comprehensive approach, and for this A&M advises six clear steps.

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