Inflation may have slowed, but volatility hasn’t.

Over the last few years, consumer packaged goods (CPG) companies were concerned with inflation. And rightfully so. However, current organizational shifts are forcing a turn toward operational structure and accountability necessary to understand and account for pricing pressures, cost changes and demand variability.

The CPG brands that protect margin and sustain growth in volatile environments don’t rely on short-term price reactions or snapshot in time, static reporting. They operate with a connected performance system that links pricing, promotions, execution and demand in one shared view. When decision impact is accessible and decisions reinforce momentum rather than fragmentation, volatility becomes manageable. When they don’t, margin erosion compounds quietly over time.

Performance doesn’t come from reacting faster. It comes from a clear understanding of the consequences of reactions.

Why inflation exposed the limits of traditional pricing playbooks

During inflationary spikes, many CPG teams asked similar questions:

• Do we raise prices if competitors don’t?
• Should we reduce discount depth or frequency?
• Is a test market the safest way to evaluate impact?

They’re reasonable questions. But they’re often answered in isolation and without robust data. They’re driven by short-term elasticity models or reactive competitive tracking. When pricing decisions aren’t connected to distributor execution, retail sell-through and channel dynamics, unintended consequences follow. Margin erosion becomes visible in unexpected places. Volume declines last longer than expected. Retail relationships strain.

The problem isn’t pricing strategy. It’s fragmentation.

Pricing decisions touch every part of the value chain, from trade spend to shelf execution to shopper behavior. Without a singular, connected view, disciplined pricing actions can distort perceived value and weaken long-term performance.

Why strategy must precede policy

High-performing CPG organizations don’t lead with policy changes. They align strategy first.

Before changing price or promotion mechanics, they step back and ask:

• Who’s the retailer trying to serve?
• Is the channel positioned for everyday value or destination shopping?
• Is the product competing as a commodity or as a differentiated brand?
• How do decisions in one channel affect performance in another?

Answering these questions requires more than historical reports. It requires an understanding of the effect of an action or set of actions into outcomes across distributors, retailers and consumers.

Short-term demand reactions matter, but they rarely reveal the entirety of the situation. In many cases, demand stabilizes after an initial response while margin gains persist. Organizations that overcorrect based on early signals often sacrifice long-term value for short-term comfort.

Competing on price alone isn’t sustainable. Competing with clear understanding, operational alignment and strategic execution is.

What performance leaders do differently

Recent inflationary cycles showed how performance leaders adapt under pressure. PepsiCo offers a useful example.

Rather than reacting uniformly across its portfolio, brand and bottler teams paid close attention to market-level performance signals. When new flavors gained traction in test environments, distribution and execution followed quickly. Displays were adjusted. Store teams understood the opportunity. Momentum was reinforced instead of ignored.

Concurrently, portfolio gaps were addressed through innovation rather than excessive discounting. Even as category consumption softened, strategic introductions and moderate price actions preserved brand value and margin.

The common thread was coordination. Pricing, product, execution and retailer collaboration moved together, supported by shared visibility into the full reality of the market.

Why data alone isn’t enough

Many organizations describe these outcomes as data-driven. However, access to data is only the starting point. True data-driven optimization requires access, visibility, understanding and accountability.

During volatile or growth periods, static reports arrive too late and slow data-driven reaction. Siloed dashboards contain varying data sets and tell vastly different stories. Teams spend more time reconciling numbers than acting on them.

However, performance leaders can break this cycle by embedding data into daily decision-making.

This provides an opportunity for individuals closest to the work to access and understand the outcome and impact of their actions. Leadership maintains transparency across the organization. Feedback loops shorten. And learning and adaptation accelerates.

This is where distributed management matters. When pricing analysts, sales leaders and operations teams share the same foundation for performance, adjustments happen faster and accountability becomes clearer.

From Volatility to Performance Advantage

Inflationary periods expose weaknesses in disconnected systems. They also reward organizations that treat performance as a continuous process rather than a periodic review.

When pricing, promotions and execution operate from the same source of truth, decisions reinforce one another instead of conflicting. Margin becomes easier to protect. Execution becomes more consistent. And improvement compounds over time.

The strongest CPG organizations don’t wait for stability to return. They build systems that perform under pressure. They align strategy before creating and enacting policy. They invest in access and understanding, not just reporting. And they empower individuals across the value chain to act confidently, knowing their decisions connect directly to value.

Volatility isn’t an endurance phase. It’s an opportunity for data-driven strategy to be implemented and tested.

This post has been updated and adapted from an archived post on the Salient.com website by Salient Senior Business Consultant, Kevin Conway.