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The Guardian
5 days ago
- Business
- The Guardian
Fewer than 1% of households with multimillions in super could struggle to pay Labor's tax, study finds
Fewer than 1% of households with multimillion-dollar super balances could struggle to pay for Labor's additional tax on retirement balances above $3m. New ANU research also reveals that households liable for the extra earnings levy have 12 times the wealth of other households, including an average of $3.2m outside super and the family home. They also have more than two-and-a-half times the disposable income. Ben Phillips, an associate professor from the ANU's Centre for Social Policy Research, said the analysis undermined claims that many individuals would struggle to find the cash to pay for the proposed 15% earnings tax on balances over $3m, which is applied to notional gains rather than realised profits. Phillips said he had done the research to inform what he called the 'unprecedented' public debate of a relatively minor policy change that affected a very small proportion of wealthy Australians. 'These are very wealthy people with a lot of other assets, and also with a lot of income. It would be very, very surprising if all but a small handful of people would struggle to pay this tax,' he said. In particular, Phillips and his colleague Richard Webster, a senior research officer, wanted to test claims that taxing unrealised gains could force some to sell big assets – most notably farms – to pay the impost. With the farming lobby group mounting a campaign against the super tax, the research estimated about 2,400 people with large super balances are farmers. The farming lobby has claimed that cash-strapped but asset-rich farmers could be forced to sell farm land to raise money to pay the tax, which is calculated on the annual notional change in the value of their super balances. The modelling of ABS survey data showed that only 0.6% of the estimated 87,000 individuals with large balances, or 500 people, could struggle to find the cash to pay for the extra earnings tax. 'They are sort of 'unicorn' cases, and even then we don't know what's in their super accounts,' Phillips said, which he reckoned were likely to include enough liquid assets to pay the tax. 'That's not to say it's necessarily a good tax, but we are not seeing any barriers to these people paying a bit of extra tax on their super.' Sign up for Guardian Australia's breaking news email The paper models a scenario where an individual with $4m in super records a 10% gain, which – assuming for simplicity no contributions or withdrawals – incurs an extra tax of about $19,000. If that extra tax is more than 10% of the household's disposable income and other wealth (that is, wealth not in super or in the home), then that household fails the stress test. In this case, the household could struggle to pay the tax if they are also unable to easily pay the tax from their super savings. The modelling suggests the median high super balance household has annual disposable income of nearly $250,000, versus $95,000 for all households, and nearly eight in 10 own their own home outright. Two-thirds of the estimated 87,000 people with high super balances are men, three in four live in a capital city, and over half don't work. 'We really need to question why people have so much money in super for a start, when you only need enough to give you a comfortable retirement,' Phillips said. 'You also have to question – given the nature of super, where it's about getting money when you need it – why would you have large amounts of illiquid assets [assets not easily converted to cash]? That's not really what super is about. That seems to be more about a tax haven, rather than a saving vehicle for your retirement'
Web Release
22-02-2025
- Business
- Web Release
Amid a steep drop in shareholder returns, consumer products companies need to regain lost ground and accelerate digital transformation
Global sales of consumer products grew more slowly in 2024 as price increases ran their course and volume growth remained minimal. With a 7.5% year-over-year sales increase in 2024, down from 9.3% in 2023 and 9.8% in 2022, the industry continues to face headwinds as consumer spending patterns shift and economic pressures mount. Bain & Company explores this and more in its Consumer Products Report. 'The challenging dynamics of 2024 have placed disproportionate pressure on the biggest CPGs,' said Richard Webster, head of Bain & Company's global Consumer Products practice. 'As inflation recedes, it's clear that the old, large-scale CPG growth model is not fully fit for the new normal that's emerging. The industry is at a turning point and the traditional reliance on price-driven growth is no longer enough to sustain long-term growth. For those CPGs ready to embrace the opportunity, this is the time to sharpen their agendas and make strategic choices that will enable them to thrive in the generative AI era.' Emerging markets accounted for most volume growth in 2024 In developed markets, sales growth for consumer products dropped from 7.7% in 2023 to 4.5% in 2024, with disappointingly flat volumes despite more moderate price rises, Bain found. This weaker growth reflects the cumulative impact of many months of high inflation: prices in the US and the European Union in late 2024 were more than 20% higher than in the first quarter of 2020. Bain's Consumer Lab found in its latest consumer surveys that cost of living was still the top concern for US and European consumers, with about 80% of respondents saying they are cutting their spending. Meanwhile, emerging markets remain the primary growth engine, posting an 11% year-over-year increase in retail sales value. This is broadly in line with recent years and more than twice the rate of developed market growth in 2024. The 3% volume growth recorded in emerging markets—against a backdrop of smaller price increases—equated to almost all the volume growth recorded by the consumer products industry globally. Consumer preferences are shifting away from mass-market offerings The challenging dynamics of 2024 place disproportionate pressure on the biggest CPGs, particularly as insurgent brands gain market share and consumer preferences shift away from mass-market offerings. The 50 largest CPGs globally posted just 1.2% of revenue growth in the first half of 2024, while insurgent brands capture up to 40% of total US consumer product growth, Bain found. At the same time, consumer health trends such as rising concerns about ultra-processed foods and the increased uptake of GLP-1s have the potential to create lasting disruptions in the industry. Profound shifts will also emerge where changing consumer behavior combines with macro trends such as migration, the redefinition of family units, and aging populations. The consumer goods industry is shifting rapidly as both shopper behaviors and the retailer landscape evolve. Shoppers are becoming more polarized and exhibit increasingly divergent spending habits: some seek value and affordability, while others are willing to pay premiums for high-quality items. Our recent study also indicates that they are busier and seek more convenient consumption methods (on-the-go, snacks, etc.). The retail landscape is becoming more modern, consolidated, and diverse with the emergence of value formats, the proliferation of e-commerce platforms, and the rise in foodservice spending. For CPGs, small, incremental improvements won't be enough to regain lost ground. To stay competitive, they must revamp their portfolios, invest in digital capabilities, and integrate AI throughout their operations,' said Faisal Sheikh, partner and leader of Bain's Consumer Products practice in the Middle East. Top of Form Bottom of Form AI remains a missed opportunity for many CPGs Despite 90% of CPG executives acknowledging AI's importance, only 37% rank it among their top five priorities. Only 6% say they have a plan for using AI to create business value, signaling a critical gap in execution. Advances in enterprise resource planning (ERP) and AI are reshaping what digital technology can do. For many CPGs, this creates a once-in-a-lifetime chance to achieve a technology-fueled transformation. Bain found that advanced retailers already leverage AI to optimize supply chains, automate content creation, and hyper-personalize marketing—but most CPGs have yet to catch up. AI adoption is no longer optional, yet many CPGs are falling behind in integrating digital tools at scale. Companies that fully integrate AI into their business models will lead the industry's next wave of growth, and successful CPGs won't be impeded by perfectionism; they'll build cohesively toward big bets via near-term digital uses, while always testing and learning. An opportunity for reinvention To win back investors, top CPGs must get the basics right, rediscovering volume growth to regain ground lost to smaller insurgents and local incumbents that have done a better job of appealing to consumers. They must also invest in productivity programs that improve margins and free up cash to support further investment in priority areas such as technology, advertising, and promotion. To achieve deeper transformation, CPGs must: Rethink their sustainable growth algorithm , by maximizing current profit pools through superior execution and making bold portfolio moves that expand categories or open up new profit pools; , by maximizing current profit pools through superior execution and making bold portfolio moves that expand categories or open up new profit pools; Reinvent themselves to achieve continuous productivity gains , by simplifying today's portfolio and operations to generate growth and finding a distinctive focus for tomorrow's business; and , by simplifying today's portfolio and operations to generate growth and finding a distinctive focus for tomorrow's business; and Redefine an AI-led and technology-driven model, by honing their ability to roll out value-generating digital tools at scale today and reimagining their entire business for tomorrow.
Yahoo
12-02-2025
- Business
- Yahoo
Amid a steep drop in shareholder returns, consumer products companies need to regain lost ground and accelerate digital transformation
Global sales of consumer products grew more slowly in 2024 as unsustainable price increases ran their course and volumes only picked up modestly, finds Bain & Company Despite easing inflationary distortions, consumer confidence remains fragile To regain lost ground, CPGs must redefine an AI-led and technology-driven model NEW YORK, Feb. 12, 2025 /PRNewswire/ -- Global sales of consumer products grew more slowly in 2024 as price increases ran their course and volume growth remained minimal. With a 7.5% year-over-year sales increase in 2024, down from 9.3% in 2023 and 9.8% in 2022, the industry continues to face headwinds as consumer spending patterns shift and economic pressures mount. Bain & Company explores this and more in its Consumer Products Report, published today. "The challenging dynamics of 2024 have placed disproportionate pressure on the biggest CPGs," said Richard Webster, head of Bain & Company's global Consumer Products practice. "As inflation recedes, it's clear that the old, large-scale CPG growth model is not fully fit for the new normal that's emerging. The industry is at a turning point and the traditional reliance on price-driven growth is no longer enough to sustain long-term growth. For those CPGs ready to embrace the opportunity, this is the time to sharpen their agendas and make strategic choices that will enable them to thrive in the generative AI era." Emerging markets accounted for most volume growth in 2024 In developed markets, sales growth for consumer products dropped from 7.7% in 2023 to 4.5% in 2024, with disappointingly flat volumes despite more moderate price rises, Bain found. This weaker growth reflects the cumulative impact of many months of high inflation: prices in the US and the European Union in late 2024 were more than 20% higher than in the first quarter of 2020. Bain's Consumer Lab found in its latest consumer surveys that cost of living was still the top concern for US and European consumers, with about 80% of respondents saying they are cutting their spending. Meanwhile, emerging markets remain the primary growth engine, posting an 11% year-over-year increase in retail sales value. This is broadly in line with recent years and more than twice the rate of developed market growth in 2024. The 3% volume growth recorded in emerging markets—against a backdrop of smaller price increases—equated to almost all the volume growth recorded by the consumer products industry globally. Consumer preferences are shifting away from mass-market offerings The challenging dynamics of 2024 place disproportionate pressure on the biggest CPGs, particularly as insurgent brands gain market share and consumer preferences shift away from mass-market offerings. The 50 largest CPGs globally posted just 1.2% of revenue growth in the first half of 2024, while insurgent brands capture up to 40% of total US consumer product growth, Bain found. At the same time, consumer health trends such as rising concerns about ultra-processed foods and the increased uptake of GLP-1s have the potential to create lasting disruptions in the industry. Profound shifts will also emerge where changing consumer behavior combines with macro trends such as migration, the redefinition of family units, and aging populations. "The industry's fundamentals are evolving rapidly. Consumers are becoming increasingly discerning, preferences are fragmenting, and expectations are increasing given the higher prices. As a result, insurgents and local incumbents are capturing an increasingly outsized share of growth," said Charlotte Apps, executive vice president of Bain's Consumer Products practice. "Incremental improvements to their growth model will not be enough for CPGs to regain momentum. To compete effectively, CPGs need to invest in digital capabilities, reinvent their portfolios, and embed AI across their operations." AI remains a missed opportunity for many CPGsDespite 90% of CPG executives acknowledging AI's importance, only 37% rank it among their top five priorities. Only 6% say they have a plan for using AI to create business value, signaling a critical gap in execution. Advances in enterprise resource planning (ERP) and AI are reshaping what digital technology can do. For many CPGs, this creates a once-in-a-lifetime chance to achieve a technology-fueled transformation. Bain found that advanced retailers already leverage AI to optimize supply chains, automate content creation, and hyper-personalize marketing—but most CPGs have yet to catch up. AI adoption is no longer optional, yet many CPGs are falling behind in integrating digital tools at scale. Companies that fully integrate AI into their business models will lead the industry's next wave of growth, and successful CPGs won't be impeded by perfectionism; they'll build cohesively toward big bets via near-term digital uses, while always testing and learning. An opportunity for reinventionTo win back investors, top CPGs must get the basics right, rediscovering volume growth to regain ground lost to smaller insurgents and local incumbents that have done a better job of appealing to consumers. They must also invest in productivity programs that improve margins and free up cash to support further investment in priority areas such as technology, advertising, and promotion. To achieve deeper transformation, CPGs must: Rethink their sustainable growth algorithm, by maximizing current profit pools through superior execution and making bold portfolio moves that expand categories or open up new profit pools; Reinvent themselves to achieve continuous productivity gains, by simplifying today's portfolio and operations to generate growth and finding a distinctive focus for tomorrow's business; and Redefine an AI-led and technology-driven model, by honing their ability to roll out value-generating digital tools at scale today and reimagining their entire business for tomorrow. Editor's note: To arrange an interview or for any questions, please contact: Katie Ware (New York) — Email: Gary Duncan (London) — Email: Ann Lee (Singapore) — Email: About Bain & CompanyBain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today's urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. 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