Revenue Management: How CPGs Can Drive Profitability With AI

For CPG businesses, every pricing decision directly affects margins and market share. Revenue management is the practice of optimizing pricing, promotions, and product availability to maximize profits. Companies that apply data-driven CPG pricing strategies can increase revenue by 5-10% without raising costs (McKinsey).

Yet, traditional methods fall short. Static pricing models and broad promotional strategies leave money on the table. With AI revenue management, CPG analytics, and smarter pricing strategies, brands can ensure that every dollar works harder.

What is revenue management?

Revenue management is about selling the right product, at the right price, to the right customer, at the right time. It combines CPG analytics and data-driven insights to optimize pricing, promotions, and inventory decisions. In food and beverage revenue management, this means understanding demand fluctuations, adjusting prices dynamically, and ensuring product availability to maximize CPG sales.

Why is revenue management important?

For CPG businesses, ineffective revenue management can lead to lost profits, inventory issues, and wasted trade spend. Poorly timed promotions and mispriced products can cut into margins, while overstocking and understocking lead to waste or lost sales. Studies show that over 72% of trade promotions don’t break even (Nielsen), meaning many brands are spending money with little return. Without real-time adjustments, pricing strategies can also become outdated, causing brands to lose market share to more agile competitors.

With AI revenue management, companies can avoid these pitfalls by optimizing pricing and promotions in real time. This ensures that pricing decisions align with demand, competitor activity, and consumer willingness to pay, leading to more sustainable CPG revenue growth management.

Examples of revenue management in action

These examples show how strategic pricing and promotion adjustments, driven by real-time data, can significantly impact the bottom line.

A global beverage company can use AI to adjust prices based on temperature changes. When the weather was hotter, vending machines automatically increased prices slightly, leading to a 5% revenue boost. Coca-Cola experimented with vending machines that adjusted prices based on temperature. The idea was to increase prices during hot weather when demand for cold drinks surged, leveraging supply and demand principles.

Similarly, a dairy brand can use AI revenue management to predict demand spikes based on seasonal trends. This can lead to reduced waste, ensure product availability, and improve profit margins.

A flavored water company called Hint in 2022 emphasized health-conscious choices by avoiding sugar and artificial sweeteners. Hint has grown into a leading brand in the natural-essence water category, leveraging innovative marketing and distribution strategies to achieve over $230 million in sales annually

The core principles of revenue management

At the heart of CPG revenue growth management is a set of principles that ensure brands optimize their pricing and inventory strategies. Demand forecasting helps predict market fluctuations, while customer segmentation allows companies to tailor pricing strategies to different audiences. Competitive pricing intelligence enables brands to stay ahead by adjusting prices dynamically in response to market trends.

Trade promotion effectiveness is another essential factor—brands must ensure that every discount or promotion leads to measurable ROI rather than just increased costs. Assortment optimization ensures that product availability aligns with demand, reducing overstocking and out-of-stock scenarios. Consistency in omnichannel pricing helps maintain customer trust across retail, e-commerce, and direct-to-consumer channels.

To execute these strategies effectively, companies must embrace data-driven decision-making. CPG analytics provide insights into consumer behavior, helping brands refine their pricing and promotional strategies. Finally, automation and AI play a crucial role in modern CPG pricing, allowing brands to make real-time adjustments and optimize revenue at scale.

Facts about revenue management in F&B

• The global food & beverage industry is expected to close out 2024 with a 2.6% increase in dollar sales and a small gain of 1.1% in volume.
• Revenue Growth Management (RGM) is increasingly important in the F&B industry as it involves strategic approaches to optimize pricing, promotion, product assortment, and distribution to maximize revenue.

CPGs and revenue management

For CPG businesses, revenue management is about more than just setting the right price—it’s about optimizing the entire sales cycle. Trade promotion management ensures that trade spend delivers measurable ROI, rather than being wasted on ineffective discounts.

AI-powered pricing enables brands to adjust CPG pricing dynamically based on real-time market conditions, helping them stay competitive. Additionally, retail collaboration plays a crucial role in ensuring that the right products are stocked at the right time, preventing out-of-stock situations that can hurt sales.

Tips for improving revenue management in the F&B industry

• Adopt AI-driven pricing models – Move beyond static pricing and use AI to adjust prices dynamically.
• Optimize promotions – Use data to identify which promotions drive the highest ROI.
• Leverage consumer insights – Use CPG analytics to understand purchasing behavior.
• Ensure omnichannel consistency – Align pricing across online, retail, and direct-to-consumer channels.
• Monitor competitor pricing – Stay agile with AI revenue management tools that track competitor prices in real time.

Final thoughts on revenue management

Revenue management is no longer just an operational concern—it’s a competitive advantage. By integrating AI revenue management, CPG pricing intelligence, and real-time CPG analytics, brands can improve food and beverage revenue management, optimize trade spend, and maximize long-term CPG revenue growth management. Companies that embrace data-driven decision-making will lead the industry, ensuring that every pricing and promotion strategy contributes to sustained profitability.