3 CPG Industry Expectations of the State of the Union

President Biden will enter the House chamber for his first official State of the Union on Tuesday. He will deliver his speech at a time when the eyes of the world are fixed on Ukraine and life in America is shrouded in uncertainty, on everything from COVID-19 to inflation.

After two years of living in a pandemic and the shocking Russian actions that began Wednesday night, Americans are losing interest in political theater. They want to hear it directly. While we might expect the president to do a resume reading from his first year in office, his goal should be to prove he understands the issues that keep Americans up at night and that his political goals are aligned with solving these problems.

Much of what keeps Americans up at night is shared by the consumer packaged goods industry. As manufacturers of food, beverages, cleaning and personal care products, our industry is an integral part of consumers’ daily lives. Throughout the pandemic, the industry has proven essential – and consequential.

What affects the CPG industry affects the consumers we serve. And government policy affects the industry. We hope to hear smart policy proposals from President Biden that support the industry’s ability to meet consumer needs.

We appreciate the challenge the President has before him. The State of the Union demands multitudes and, this year, a substantial and necessary focus on Ukraine. We hope its content will also include three important issues for the CPG industry, detailed in a series of articles from the Consumer Brands team:

Fight inflation, don’t mask imaginary opponents

It’s not an easy economic environment. There are no easy answers or easy villains. We hope the president’s plans to fight inflation are focused and hard-hitting — and come with the recognition that fighting inflation means tackling the root causes, not pitting imaginary opponents against each other.

For months we have seen indicator after indicator continue their inexorable ascent. The demand is on the rise. Wholesale prices are on the rise. Shipping costs are on the rise. Labor costs are on the rise. And, yes, consumer prices are rising. And all of these threaten to rise even higher as uncertainty over Russian equities hits energy and commodity markets. Inflation is not transitory as the administration had once hoped. It is time to take a closer look at the role of government. Read more…

Offer answers on the labor shortage

Despite an unemployment rate of 4.0% – barely above the pre-pandemic low of 3.5% in February 2020 – the United States is facing a labor crisis. As the big resignation takes hold, consumer packaged goods companies and other businesses struggling to hire are surely expecting to hear about President Biden’s plan to deal with the labor crisis.

If we don’t address the labor crisis, the consequences will be untenable for American consumers. Corn there are limits to what companies can do alone to deal with this crisis. Paying more — in the case of CPG manufacturing workers 8.3% more than last year — and increasing benefits doesn’t change the equation. There is a role for government here and it must be a priority for the Biden administration. Read more…

Integrate recycling into the environmental agenda

The Biden-Harris administration has put environmental sustainability at the heart of its agenda — and with good reason. As the planet heats up and the stakes rise, the need to take a holistic view of sustainable actions has never been greater. Improving the US recycling system must be part of any overall environmental strategy.

Recycling is only one component of the environmental agenda, but an important component that should not be overlooked in State of the Union or American policy. We don’t have to accept a stalled recycling rate as our fate, even though we can’t expect results if we don’t fix what’s broken. President Biden must reinforce a renewed commitment to fix America’s recycling system. Read more…

Andrew B. Reiter