Despite Market Volatility and Shifting Demographics, Consumer CFOs See Growth in 2011

Recession-toughened Consumer Companies Demonstrate Resilience to the Global Impact of Events in Japan and Middle East

TORONTO, May 3, 2011 - Consumer companies around the globe are showing a surprising resilience
and guarded optimism about prospects for growth in 2011, even amid continued
market volatility and changing demographic trends, according to a new survey
from KPMG International.

"An element of cautious optimism is evident but we remain in a state of
flux," said Willy Kruh, Global Chair of KPMG's Consumer Markets practice.
"We're still experiencing an erosion of spending as people are simply
spending less, so the focus on cost management going forward is still
critical.

"Moreover, the fundamental issues underlying Standard and Poor's revised
outlook on the US as well as the threat of rising inflation in China could
have repercussions on consumer spending in both North America and China,
although it's still too soon to tell."

Three-quarters of the consumer executives surveyed report that they
anticipate an increase in consumer spending in their target markets and in
their own companies' financial performance in 2011 compared to 2010.

"The management discipline that consumer businesses adopted throughout
the downturn made many of them leaner and more efficient, creating a stronger
base from which to pursue success," Mr. Kruh said.

Sixty-four percent believe that the ongoing situations in Japan and the
Middle East will have little or no impact on their business operations in the
long-term, although for

Asia Pacific specifically, 80 percent of all respondents expect a
sustained impact on economic growth over the next six to 12 months.
Respondents worldwide were most likely to see energy price volatility as the
most enduring impact of these crises, as 51 percent of respondents anticipate
a short-term impact on energy price volatility and 40 percent see a long-term
impact.

For the study, CFO Insights: A global survey of Consumer Markets
executives (
www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Pages/cfo-insights-global-survey.aspx),
KPMG International worked with CFO Research
Services to survey 291 senior finance executives of consumer businesses to
solicit and examine their outlook on the issues affecting their industries
and market segments. Shortly following the crises in Japan and the Middle
East, KPMG and CFO Research conducted a second survey of more than 150 of
senior finance executives in consumer businesses to gauge their outlook on
the impact that these events would have on their businesses and economic
growth.

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An Eye on Cost and Growth

While the economic downturn has had a significant impact on profits and
growth for many consumer businesses over the last three years, those
companies that have sustained the downturn have emerged stronger: nearly 50
percent of executives say they have better cost structures, prospects for
growth and improved relationships with suppliers.

"We're witnessing the beginnings of a cost-to-growth agenda in the
consumer sector," said Mark Larson, KPMG's Global Head of Retail. "We're
moving into a new paradigm characterized by a renewed focus on growth, while
preserving margins and investing in IT. The sector has learned the hard way
that it can't take its eye off the ball of cost management."

Seventy-five percent of respondents worldwide expect a rise in consumer
spending in 2011 compared to 2010. Elsewhere in the survey, respondents were
especially likely to identify emerging markets such as Asia, India, and Latin
American as strong regions for growth and that the growing consumer base and
expanding middle class in emerging markets-as well as consumers' adoption of
technology-will have a positive impact on their businesses.

In North America and Europe, however, outlooks are more measured.
Consumer trends in these regions point to a stronger consumer focus on
savings; a heightened interest in safety, health and sustainability; lower
consumption of luxury goods, and an aging population.

Over 40 percent said that maintaining profit margins will be a challenge
due to rising input costs, discounting, regulatory compliance and foreign
exchange variability. Moreover, 60 percent believe that they will have
difficulty raising prices.

Careful Positioning for Growth

A majority of respondents say they will increase market share mainly
through organic growth: 74 percent plan to enter new geographic markets
-through opening new stores, adding distribution channels, or other
maneuvers.

Respondents from the US and Canada intend to employ organic growth
methods as their primary tool for increasing market share. Executives from
Asia-Pacific, Latin America and Europe say they will also pursue organic
strategies but will supplement their growth with M&As.

And in a global economy where volatility may be the new norm -
economically, environmentally and politically - 42 percent of respondents,
when polled about the impact of the Middle East and Japan crises say they
will most likely address changes to their risk management policies, and 40
percent intend to adjust their supplier programs.

Improvements in supply chain efficiency are critical to growth strategies
with over 50 percent of respondents intending to improve distribution
structure, invest in technology, decrease inventory and consolidate
suppliers.

Information technology (IT) investment also plays a significant role in
both cost and strategic growth initiatives. Over 70 percent of respondents
say their companies will invest in IT systems for customer relationship
management, enterprise resource planning, business intelligence and
forecasting.

"In the face of such volatile market conditions–continuing economic
risks compounded by the impact of other social and environmental
trends–retailers and manufacturers will need to consider how they can
develop contingency plans and adapt their operations and strategies to
quickly respond to these dramatic changes."

    For further information:

    Jennifer Samuel
    Head of External Communications
    KPMG International
    +1-416-777-8491

    Sam Knox
    Vice President and Director of Research
    CFO Publishing LLC
    +1-617-790-3243
    samknox@cfo.com

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