As Consumer-Packaged Goods (CPG) firms continue to navigate economic pressures and rising consumer expectations, pricing has become key to remaining competitive and profitable.
Increasing costs, dwindling consumer demand, and the push for transparency and sustainability has reshaped the industry’s pricing landscape.
Read on to understand why CPG brands are sharpening their focus on pricing, what we can expect in 2025, and how brands can prepare to meet these emerging challenges and opportunities effectively.
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Why are CPG brands focusing on pricing?
Although many CPG companies saw revenue growth in 2023, largely through price hikes, this strategy strained consumer demand, impacting brand loyalty. Major players like Nestlé, PepsiCo, and Unilever have already started revising and refining their pricing strategies. They are also investing in technology solutions to analyze consumer behavior and market trends, allowing them to adjust prices more precisely and effectively in response to market conditions.
Today’s consumers are increasingly value-driven, seeking brands that prioritize transparency and balance cost with quality. To thrive in this climate, CPG brands are adopting pricing strategies that are adaptive and segmented, ensuring affordability for cost-conscious customers while preserving profitability.
What to expect in 2025?
- Economic pressures
Inflation in the US is projected to ease to slightly over 3%, but supply chain disruptions are expected to persist into 2025, hitting raw material costs, labor and logistics. CPG brands are expected to adopt tiered or value-based pricing strategies to combat this. This method includes offering affordable options alongside higher-end products, enabling brands to appeal to a diverse consumer base. While inflation may force some price increases, brands will aim to provide additional value—through better product quality or bundled packages—to sustain consumer trust and spending. The primary goal will be to strike a balance between profitability and engaging price-sensitive shoppers.
- Increased focus on personalization
As advanced technologies continue to influence pricing strategies, brands are shifting their focus toward personalization driven by real-time data insights. Shoppers will see more custom experiences, like special discounts, unique offers, value bundles, and individual subscription plans aimed to build loyalty. This focus on personalization will not just improve customer satisfaction but will also help brands be noticed in a competitive market.
- Rise of private label brands
Retailers are increasingly developing their own private label brands to meet the growing demand from price-conscious consumers. Walmart’s Bettergoods and Target’s Dealworthy both launched in 2024 and were the two fastest-growing private-label brands of that year. As more shoppers seek quality alternatives at lower price points, there is a notable shift toward private label brands.
- Focus on loyalty programs amid dwindling brand loyalty
CPG brands, especially grocery and beauty segments, are doubling down on optimizing their pricing and product experience strategies, ensuring they remain attractive to value-driven customers. Customer loyalty programs would become a key lever to boost retention by offering discounts, exclusive products, or services that increase the switching cost for loyal customers
How can CPG brands achieve their 2025 pricing goals?
To unlock the potential of advanced pricing models and meet their 2025 aspirations, CPG brands must make focused, strategic investments. Here’s how they can position themselves for success:
- Embrace data-driven decision making
A robust data foundation is critical to contemporary pricing initiatives, so brands should leverage customer data and analytics tools that track consumer preferences in real-time. These tools help the brands to keep track of shifts in demand and control stock and prices more effectively, in real-time. With the use of predictive analysis, it would be possible to make the appropriate decisions before they happen, establishing the grounds for the pricing.
- Adopt dynamic pricing and real-time adjustments
Dynamic pricing models are set to dominate the industry in 2025. By leveraging real-time data, brands can adjust prices instantly based on demand fluctuations, consumer trends, and market shifts. Firms that use more dynamic models would have a competitive edge, adjusting prices to maximize revenue.
- Utilize Artificial Intelligence (AI) for personalization and demand forecasting
Firms will increasingly utilize AI-led demand forecasting tools to ensure that consumers do not face out of stock situations. Brands will also leverage personalized pricing to offer consumers tailored discounts, and promotions which correspond to the individual needs of consumers.
- Prioritize profitability over volume
CPG firms are moving from the traditional volume-centric sales approach to one that is increasingly focused on profit-based pricing. This makes it more critical to boost margins through improved execution of current price-change strategies, especially for high-end products. Tiered pricing in brands will be incorporated to appeal to different segments of customers, and both price increases and added value will ensure that consumers will feel that they get more than just a product.
- Address gaps in pricing models across channels
Brands are struggling in achieving flexible, transparent, real-time pricing across digital and physical channels. To overcome these challenges, firms are investing in integrated technology solutions which leverage data across channels. With the right tools and processes, brands can enhance their pricing strategies, achieving a consistency that aligns with 2025 goals.
- Partner with service providers and choose the right delivery model – SaaS vs. AIaaS
Partnering with service providers will play a key role, as CPG brands work to put in place cutting-edge pricing solutions. Firms that focus on AI and predictive analytics tools for flexible pricing will offer the tech and know-how brands need to refine their pricing plans. These partnerships let brands tap into new tech without the big costs of building it themselves and flexibility to choose between traditional SaaS vs customized AIaaS models. Additionally, providers can bring insights on market shifts, competitive analysis, and consumer behavior. This gives brands the power to make choices about pricing based on data, which can help them reach their long-term aims.
Conclusion
CPG brands should ensure that their pricing strategies are flexible enough to adjust to market conditions, while maintaining profitability by focusing on the right mix of data, technology, and strategic sourcing. The future of CPG pricing is about more than just numbers—it’s about creating value at every price point, meeting consumer expectations, and building long-lasting brand loyalty.
If you found this blog interesting, check out our recent blog focusing on Sustainability In Retail And CPG: A Reactive Approach Will No Longer Work | Blog – Everest Group, which delves deeper into another topic relating to CPGs.
We are actively tracking the evolution of revenue growth management strategies and their impact on the future of the Retail and CPG sector. To discuss the latest trends and their implications for CPG brands, retailers, technology vendors, and service providers, feel free to reach out to Abhilasha Sharma ([email protected]) or Shraddha Pandey ([email protected]).
