The CPG Industry's Strategic Pivot: How Innovation is Outpacing Cost-Cutting in 2025

Navigating a New Era: CPG Bets on Growth and Innovation

The consumer packaged goods (CPG) sector is at a crossroads. The 2025 State of Smart Manufacturing Report, published by Rockwell Automation, discovers that there has been a radical change of direction. While inflation and economic uncertainty were the chief concerns in 2024, CPG leadership is presently more preoccupied with sustainable growth and innovation as a means of addressing heightened competition from private-label brands and changing consumer behaviors. Instead of simplistic cost reduction, companies are strategically investing in order to remain ahead.

Shifting Away from Cost, Towards Innovation

The research indicates a sharp trend away from low-end technology pilots to solutions that provide measured value back to the entire company. This strategic move is due to the need to handle complexity and build deeper, competitive businesses. Leaders in CPG understand that consumer affinity is fragile, and the route to securing it is through faster innovation, more personalization, and more open, sustainable products.

The Human-Centric Model of Technology

It's maybe one of the most intriguing findings: the human-centered model of technology adoption. No longer is it just a question of imbuing new tools; it's a question of whether these technologies will function well with the people who will be using them. For this reason, usability and scalability are today key factors in technology decisions. In fact, CPG executives value even softer skills like communications/teamwork (86%) and adaptability/flexibility (85%) just as much as they value technical skills. This reveals a balanced sense of understanding that even the most advanced technology only functions as well as the team backing it.

AI and Data Paving the Way Forward

No surprise that robotics and AI are the investment of choice, with 70% of CPG manufacturers investing in them for long-term development. Contrast this to last year when technology was focused almost exclusively on sales analytics. Today, those tools are being utilized for fundamental operational activities like quality control, logistics, and cybersecurity. The report further shows growing data maturity, with 44% of the manufacturers now using data to drive decision-making, a rise from 40% in 2024. The contribution of AI towards it has been highly effective, with 5% outperformance of the overall average for data usage.

Evolving Workforce Strategies

Workforce strategies are shifting as well. While 2024 was all about hiring talent, 2025 is all about developing the talent already in-house. Notable by 34% of manufacturers is dedicating time to training current employees on new processes, and another 33% want to manage change well and improve employee retention. This proactive strategy signifies a deeper investment in building a sustainable and resilient workforce from the ground up.

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