Amid the push to reshore manufacturing, consumer packaged goods (CPG) companies are caught in a conundrum. From cleaning products to over-the-counter medications, many categories of consumer-packaged goods are already commonly made in the U.S. However, that’s not necessarily the case for their materials. Domestic canned food manufacturers, for instance, rely on imports for 70% of the tin-mill steel that goes into their cans.
As a result, CPG companies may be highly exposed to tariffs even if the products they sell come from U.S. factories. This risk was borne out recently for the canned food industry as the U.S. government slapped a 50% levy on imported tin-mill steel. At that rate, the price of canned goods on the grocery shelf could rise as much as 15%.
Consumers are tired of price increases. According to a July 2025 L.E.K. Consulting survey, 45% of consumers believe they’re already paying prices that are higher than they deem acceptable. CPG companies know this, but they need to respond and maintain their own profit margins.
In a high-tariff environment, the first instinct is to look to the supply chain for mitigating strategies. While that’s entirely appropriate, CPG companies have other tools at their disposal. In this article, we’ll show how revenue growth management, or RGM, is a powerful way to defend against tariffs and position the business for more resilient growth.
The basics of RGM
RGM — or, as it’s sometimes called, strategic revenue management — is the holistic optimization of four data-driven disciplines.
- Price pack architecture (PPA). PPA is about offering the right product variations to different consumer segments, then matching those variations to relevant channels. The goal is to boost margins and define the stock-keeping unit, or SKU, portfolio more effectively.
- Strategic pricing. Also known as price curve optimization, strategic pricing uses analytical tools to determine the ideal price for each product, considering the competition and consumer willingness to pay. Improved margins are a goal here as well, along with demand management to minimize wasted supply.
- Trade spend. Through trade budgeting and promotion analysis, CPG companies can evaluate the effectiveness of their promotions, find new promotion opportunities and more effectively negotiate with retail partners to manage trade spend. Outcomes include improved retailer partnerships and greater volume return on investment per trade dollar spent.
- Mix management. Product mix and assortment optimization is also critical to protecting margin. But this capability is about more than just SKU rationalization. We advise our clients to simplify to enable growth, which involves distinguishing good (value-creating) complexity from bad (value-destroying) complexity in the supply chain.
Real-world applications
CPG companies can coordinate all four RGM components to increase profitability. That’s the approach we took for one client facing profitability challenges. It turned out that some products were underpriced relative to consumer value, while others were getting more trade investment than necessary to drive target volumes. Consumer research revealed which brands had stronger equity and which product types consumers were willing to pay a premium for.
Another client with a large, complex supply chain wanted to know which SKUs were worth the complexity. As part of a mix management assessment, we looked at sources of raw materials as well as how the product was made and distributed to identify ways to unlock capacity, optimize costs or improve availability. This helped us understand which SKUs should be evaluated for bad complexity, making them candidates for removal from the portfolio. From there, we worked with the client to create ground rules for bringing complex SKUs to market.
A critical line of defense
As effective as RGM can be, it’s also challenging since it asks companies to optimize growth with precision in a world of ambiguity. Data is complex and often imperfect. Decisions can be politically sensitive (think discontinuing a favorite but unprofitable SKU or scaling back trade support for a major customer). The systems and tools to activate RGM strategies aren’t always there. And shopper behavior is ever shifting.
Against that backdrop, the following principles can keep an RGM-driven tariff response on track.
- Optimal pricing is value-based, not cost-plus. Tariffs create an opportunity to revisit pricing and PPA. That includes determining whether certain SKUs or product lines have a more premium perception and should be priced above mainstream offerings. There’s also the opportunity to look for core-range innovations that allow the company to charge more for product features that consumers value.
- Trade strategy goes hand in hand with price resets. Many CPG companies tackle trade by looking at what they did the previous year and making some slight adjustments. But a more extensive review of trade best practices — to optimize frequency, depth and promotional bundling — is called for when resetting prices.
- A simpler supply chain is a more profitable supply chain. Although one-time SKU rationalizations help offset tariff impacts, ongoing “simplify to enable growth” initiatives help build resilience. By making complexity scoring and review part of business as usual, CPG companies can ensure a simpler and healthier supply chain.
To learn more about revenue growth management and supply chain optimization, please visit our pages here and here. And if you’d like to discuss RGM strategies in the context of your own organization, please contact us.
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