Andy Searle
Partner & Managing Director - London
For five years, price has done almost all the work in European consumer goods.
Manufacturers pushed through a generation's worth of price increases without collapsing demand but that headline masks a volume base already eroding in the largest markets. The industry has leaned so far on one lever that it has stopped managing the other. Pricing is worth more to profit than volume, and it is far from dead. However, the headroom is likely gone in the markets that pushed hardest, and now private label, discounters, and weight-loss drugs are reshaping demand. The next winners will rebalance: still pricing with discipline, but with a refocus on volume and mix and managing the trade-off with far more precision than the annual price round allows.
Price has worked, but it has been carrying too much
The average price of a consumer goods unit in Western Europe is now roughly 31% higher than in 2020, the steepest run of increases in decades, yet units sold are still around 2% above their 2020 level (propped up by Europe’s smaller markets). Consumers absorbed the increases without a collapse in demand so far.
However, the modest aggregate masks sharp divergence: in the big four (France, Germany, Italy, and the UK), the volume base is already shrinking. Cumulative price growth reached 22% in France, 23% in Italy, and 27% in both Germany and the UK, and volume has broken first in the hardest-pricing markets: German volumes have fallen for four straight years; UK volumes turned negative at -0.4% even as prices rose +3.7%. France and Italy, which eased pricing soonest, are the only markets where volumes nudged positive. In the toughest markets, price is now buying revenue at the cost of the base, signalling that perhaps the pendulum has swung too far.
Three forces are driving this shift. First, the shelf has tilted: private-label now accounts for just over half of all units sold in Europe's largest grocery markets, 52% in the UK and Germany, 46% in France, 36% in Italy; in the UK, own-label reached a record 52.3% of grocery sales as early as January 2025. That level has risen only a few points since 2021. Still, private label captured roughly three-quarters of all unit growth and more than half of all value growth in edible categories over the last year, while brands, promoting at more than twice the rate of Private label, are running to stand still. Second, consumers remain wary, with the most negative general spending intent of any developed region: -33 in France, -21 in Germany, -20 in the UK, -17 in Italy.
Third, GLP-1 weight-loss drugs are starting to reshape food and drink demand. Adoption across the four markets is uneven but no longer trivial: around 8% of adults in Germany and 7% in the UK, roughly 2% in France, and Italy currently lower. France's recent move to approve the drugs, however, may well push its share higher towards UK and Germany norms. The current average of about 2% against roughly 12% in the U.S., then, is misleading. In addition, the impact of that share may well be concentrated in the consumers of the categories most exposed. Specifically, GLP-1 users cut daily calorie intake by 20-30%, and the effect falls hardest on specific calorie-dense categories: U.S. data shows GLP-1 households cutting savoury snacks by around 10%, sweet bakery by 9%, and biscuits by 7%, even as total grocery spend falls just 5-6%. A brand over-indexed to those categories can therefore face volume decline several times the market average, while protein, fibre, and functional lines gain. Every one of these forces points the same way: the next unit of growth must be earned through relevance, not simply taken through price.
Why volume, and why now
None of this means abandoning price discipline; it means recognising that the marginal return has shifted. After five years of price-led growth, the incremental point of price is likely to be more resisted by shoppers and retailers alike. Volume is the neglected lever, harder to move, which is exactly why it is where advantage now lies: rebuild penetration and repeat while competitors reach for another price round, and you create a base that compounds. For most European portfolios, this suggests five tightly linked elements calibrated for European realities.
1. Growth strategy
Start with a map of where volume can genuinely be won and where price still has room, so the push is targeted rather than indiscriminate. Chasing volume everywhere is as blunt as pricing everywhere, and leaks value from the less price-sensitive segments that carry the margin. The strategy has to explicitly choose which categories, occasions, channels, and segments to grow, hold, harvest, or exit. Penetration, frequency, and repeat must be tracked by retailer cluster, because the shopper mission, basket, and margin structure are not the same in a discounter as in a Tier 1 multiple or a convenience store. Without that map, investment is spread evenly across a market that is anything but even, and the returns disappoint accordingly.
2. Portfolio and price pack architecture (PPA)
PPA is where rebalancing happens on the shelf, and in Europe, every price-pack move is visible to small, frequent, price-comparing baskets. A strong architecture holds credible entry points that discourage price-sensitive shoppers from defecting to private label, builds real trade-up steps for the margin-rich segments, and tailors packs by channel, including a deliberate plan for discount, where many CPGs still under-invest. Get it right, and the same portfolio defends volume at the bottom and grows margins at the top; get it wrong, and it does neither.
3. Innovation
Innovation is the most powerful volume lever of all, the one thing branded players can still lead on. The categories that are growing in volume pair a genuine reason to buy (higher protein, functional benefits, better-for-you, plant-based, premium home care, convenience formats) with real investment in brand and consumer connection. It is also the sharpest answer to both private label and GLP-1: as store brands close the quality gap and GLP-1 users concentrate spend on protein and satiety, only branded innovation with a real functional or emotional benefit keeps a product in the basket. The regulatory bar is high too: UK restrictions on products high in fat, salt, and sugar (HFSS), nutrition rules in France, and tighter e-marketing rules mean innovation must be nutritionally credible and commercially executable. 'Me-too' line extensions, unsupported by genuine brand investment, risk being the first thing a retailer delists and the last thing a shopper notices, so they add cost without adding volume.
4. Trade terms and promotion effectiveness
Trade investment is the largest pool of spend in most portfolios, and the biggest single lever on the price-volume balance. The problem is undifferentiated promotion: broad price cuts that subsidise shoppers who would have bought anyway and reset the reference price lower. It shows in the promotion gap between brands and private label, 34% of branded units against just 14%. France's Loi Descrozaille has tightened food promotion rules, and discounters across Europe have made everyday low prices the norm. The prize is to rebuild the whole trade-terms architecture, promotions, listings, joint marketing funds, payment terms, and in-store support, around genuine incrementality. Tested that way, a large share of trade spend is found to fund volume that would have happened anyway – and redirecting even part of it toward brand and innovation changes the growth equation.
5. Salesforce and customer execution
Execution decides whether volume plans survive contact with the retailer. European retail is highly concentrated, with pan-European buying alliances negotiating jointly across markets, so the joint business plan is where volume is won or given away. Paying for a promotional feature – a price cut, an end-of-aisle display, a flyer slot – buys visibility only for as long as the discount lasts, and every deal trains shoppers to wait for the next one. A credible category-growth case and innovation roadmap earn something more durable: the shelf space, visibility, and data-sharing a retailer gives a partner in category growth rather than a line to squeeze. Promotions rent the shelf for a quarter; category partnerships earn it for the year. It is the latter that survives the range review.
From narrative to execution
Rebuilding volume is not a single-function, single-quarter task, which is part of why it has been neglected in favour of the price round any one team can run alone. It requires cross-functional alignment across commercial, marketing, revenue growth management, R&D, supply chain, and finance, owned at the executive committee. A price increase takes a quarter; rebuilding a volume base while protecting margin is an 18- to 36-month transformation and must be resourced as such. The reward is growth that no longer depends on price compounding forever, but on a widening base of households buying more often, the only foundation that makes pricing power durable.
What this means: for brands, for retailers, for suppliers
For brand owners. Future price-increase headroom is likely more limited, and businesses that keep targeting price alone will defend a shrinking base at rising costs. The harder, more valuable move is to rebuild volume through portfolio design, innovation, and brand investment, while holding price discipline rather than surrendering it. This is not a rejection of pricing but a recognition that volume and mix is now where the untapped return sits, and a hollowed-out base is the real threat.
For private label retailers. Capturing the lion's share of Europe's unit growth is a genuine structural win, but it raises the stakes rather than settling them. The retailers who extend their lead will keep sharpening their private labels in quality and innovation, and in premium tiers in genuine brand appeal, using their data advantage to convert value shoppers into loyal ones. The frontier is shifting from beating brands on price to matching them on relevance.
For suppliers to brands and to private label. The dual-track world is permanent, and demand shifts such as GLP-1 will reshape both tracks at once. Suppliers serving both should be explicit about what each path demands in capital, capacity, innovation, and margin. Because retailers and consumers are not homogeneous, some hedging is rational; the edge lies in managing that balance deliberately rather than by default.
