The End of Price-Led Growth

This episode of FMCG Weekly examines the structural shift from price-led growth to Real Internal Growth (RIG) in 2026. With global volume growth stalling at 0.9% and private label penetration hitting 40%, the "pricing ceiling" has been reached. We analyze how leaders like PepsiCo, Nestlé, and Coca-Cola are utilizing "right-sizing" and occasion-based Price Pack Architecture (PPA) to drive volume. A key focus is the shift from gross promotional lift to "Source of Business" logic—decomposing volume into incrementality, cannibalization, and stockpiling—and the emergence of "failure rebates" in manufacturer-retailer negotiations to ensure mutual value creation.

FMCG Weekly - News and trends curated by Accuris, the leading independent consultancy for revenue growth management

Transcript

Welcome to FMCG Weekly, brought to you by Accuris. 

For three years, from 2022 through 2024, FMCG manufacturers rode a powerful wave. Inflation gave them cover to push through aggressive price increases, and top-line growth followed. But that era is now over. Manufacturers across Europe and the United States have hit a pricing ceiling — a point where further increases don't just slow growth, they actively destroy it through volume loss and brand erosion.

Look at the numbers: global FMCG value growth sat at roughly three and a half percent in 2025, but volume growth was stuck at 0.9 percent. That disconnect tells you everything. Meanwhile, private label share in Europe has crossed 39 percent and is heading toward 40 or beyond. Consumer price sensitivity has gone from high to what we'd now call extreme.

Leading firms recognize that the primary driver of shareholder value in 2026 is Real Internal Growth — RIG — a metric that strips out the distorting effects of pricing and exchange rates. The emphasis is shifting from raising prices to capturing trips and baskets.

One of the most critical levers in the 2026 toolkit is Price Pack Architecture. The industry has moved away from shrinkflation — which became a PR liability and a regulatory target — toward what's called "right-sizing," where pack sizes are tailored to specific shopping missions.

France led the regulatory charge, mandating that supermarkets must explicitly warn consumers when product quantities have decreased while prices stayed the same. Fines of up to 15,000 euros effectively forced manufacturers to abandon deceptive downsizing and instead communicate clear value-per-use to shoppers.

The really interesting development is channel-specific architecture. PepsiCo, for instance, now maintains a two-euro entry point for daily snack missions in convenience stores while offering a ten-euro family pack at twenty percent lower cost per gram for pantry stock-up in supermarkets. Brands that are winning have clearly defined the role of every pack — entry packs to protect shelf access, premium SKUs to drive margin.

Next, promotions. 

This is where things get really compelling. The reinvention of promotions starts with a deceptively simple question almost no company can answer rigorously: where did the incremental volume actually come from?

For every promoted unit sold, you need to know: did the buyer switch from a competitor — that's genuinely incremental? Did they switch from another SKU in your own portfolio — that's cannibalization, zero-sum or worse? Did they simply buy earlier what they would have bought anyway at full price — that's stockpiling, margin-destructive? Or did a new buyer enter the category — the holy grail?

This Source of Business logic, pioneered by Accuris, is the analytical leap the industry must make. Traditional trade promotion systems were accounting tools. The shift now is from gross promotional effects to net effects, with rigorous accounting for the side effects that destroy value.

And here's where it connects to PPA: occasion-based packaging is emerging as the new promotional mechanic. Rather than discounting a 500-gram box by 20 percent, you introduce a smaller grab-and-go format at a higher per-unit margin for a different consumption occasion. The consumer sees an affordable price point. The manufacturer captures better margin per gram. And the purchase is genuinely incremental because it serves an occasion the larger format never captured. Coca-Cola's $1.29 mini can is the textbook example — instead of promoting the existing architecture, they changed the architecture itself.

The manufacturer-retailer relationship is also transforming. One of the most interesting innovations is the "failure rebate" — where a supplier agrees to compensate a retailer if a proposed price increase or new pack fails to meet agreed volume thresholds. This shifts the conversation from "cost inflation" to "mutual value creation," backed by data.

Companies with Source of Business capabilities report fundamentally different retailer conversations. Instead of negotiating based on "last year plus five percent," they can demonstrate which promotions genuinely expand the category versus those that merely redistribute existing demand.

Let me highlight three standout cases.

PepsiCo cut 20 percent of its U.S. SKUs, implemented sharper everyday value pricing, and closed three plants to fund price relief. Q4 2025 revenue hit $29.3 billion — a 5.6 percent beat — with margins up 140 basis points. Simplification protecting profitability while lowering price barriers.

Nestlé under new CEO Laurent Freixe made RIG the company's primary objective, betting on six innovation plays like Nescafé Espresso Concentrate and Maggi air fryer ranges to capture new consumption occasions. Organic growth accelerated to 4.3 percent, and in segments where they increased investment, sales grew four times faster than the group average.

Coca-Cola expanded their 7.5-ounce mini-can strategy, placed 14 million cold drink equipment units globally for impulse capture, and now uses Freestyle machine data to track real-time flavor preferences for localized product launches. Digital-first, data-driven, architecture-led.

The era of broad-based price increases is over. The companies that thrive from here will master a fundamentally different playbook — built on source decomposition, occasion-based PPA, promotional precision, and the relentless pursuit of genuine incrementality.

The question is no longer "how much can we charge?" It's "how many transactions can we earn?"

That is it for this week’s episode of FMCG Weekly! See you next week!