CPG INDUSTRY SALES GROWTH RISES: REPORT

WASHINGTON -- The consumer packaged goods industry grew a bit stronger in 2004, with median net sales growth rising to 7.8%, up from 6.9% in 2003, according to a CPG financial performance report from the Grocery Manufacturers Association here and Kurt Salmon Associates, Chicago.

said Todd Hooper, a KSA principal. "But the real winners are a group of industry leaders that use great brands, scale and productivity gains to drive shareholder value. These companies are the real muscle behind the industry's growth."

The growth came at a time when the costs of doing business rose. Reaching consumers and building brands became more expensive, and retailer demands for differentiated and customized offering only added to the bill, according to the report.

The greatest financial pressure came from the commodity price spike in 2004. Along with oil prices breaking $50 a barrel, food prices increased 15%.

Still, CPG manufacturers saw economic profit return rise nearly a point to 11.3% in 2004 while holding cost of capital nearly flat at 6.3%.

"The strong financial performers of the CPG industry continue to develop a compelling economic story for the entire industry," said Stephen Sibert, GMA's vice president of industry development and membership.

For the report, GMA and KSA asked respondents to name their most-admired companies. Procter & Gamble was named the most-admired manufacturer in the consumer packaged goods industry. Wal-Mart Stores, Target and H.E. Butt Grocery were chosen as the industry's most-admired customers.

The study collected data from 242 public and private companies, largely GMA member companies, and also compared results among sectors -- food manufacturers, beverage makers, and household and personal care manufacturers - as well as size and focus.