From NZ Manufacturer magazine, February 2025.

Chris Foord, Partner, Argon & Co New Zealand

As we look forward to 2025 the outlook for business and NZ are improving. Many businesses in 2024 were focused on the “survive till 2025” mindset, controlling costs and avoiding discretionary spend. Very few though forgot about the consumer/customer and the need to continue to serve, surprise and delight with excellent product, service and pricing. Most FMCG businesses will be looking to return to better margin positions in 2025 and indications are favourable that this is achievable.

The inflation beast has been tamed, so interest rates have fallen and are predicted to drop further (albeit not by a huge amount) through 2025. Business sentiment is on the rebound. Consumer confidence is at its highest level for two years, which in turn improves business confidence. Whilst the signs are positive, navigating from the survival mindset to a thrive mindset doesn’t happen without intent.

So, what are some helpful tips to consider as FMCG businesses transition into what should be a period of growth, and importantly how to create value and embed sustainable profitability. Here are some areas to consider and explore:

• Align operations to execute your business strategy
• Plan to drive profitable growth
• Unlock, deliver and celebrate quick wins
• Create and embed a continuous improvement culture
• AI: Proof of Value

Align operations to execute your business strategy

Operations is where the rubber hits the road for your business strategy. Are your operational teams involved in the key decisions as you launch new products, drive innovation, review range, pricing and promotional plans? If not, they should be. They operationalise strategy, plans and tactics into reality. Get them onboard early and you will realise value faster and more effectively.

Plan to drive profitable growth

Continue your focus on productivity. 2024 taught most to drive efficiency through their existing business operating model as very few invested in capital options due to the cost of borrowing. With more capital projects likely in 2025 remember and retain the behaviours that got you through 2024.

Growth should be profitable, but if not done correctly it can cost you as bottlenecks, capacity constraints, people/process/system capability gets challenged. Plan it out, assess your readiness to change, model outcomes, test and learn and integrate your teams to ensure success is embedded and sustained.

Unlock, deliver and celebrate quick wins

With large scale transformations and major capital projects (infrastructure, digital, automation) likely back on the cards for 2025 don’t forget to capture value on the way through. There is no better way to drive and sustain a transformation than getting runs on the board early, celebrating the success and showing yourselves, your teams and your customers that you are driving change in the right way.

Create and embed a continuous improvement culture

Adopt lean techniques and tools, adapt them to your business, your team and ways of working. They are proven globally over many decades and stand true today as fundamental to value creation and growth mindsets. Build and nurture this capability in your leaders and teams – and most importantly don’t stop….it is called continuous for a reason.

AI: Proof of Value

Is it possible to write an article on trends and predictions for 2025 without referencing AI? Probably not. It is here, it is real, and it can and should be super valuable. It can also be daunting to know where to start and some have spent lots of money or time for little benefit.

Our recent survey of the Food & Grocery sector told us that 74% of businesses have or are planning to invest in Generative AI over the next 3 years. AI adoption is no longer polarised by age group – we are all giving it a go. Get clear on your use cases for AI, where and how it can add value, reduce repetitive tasks, provide deeper more holistic insight. Start small, build it, proof the value, then keep going.

 

Here’s to 2025.