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March 7, 2019

Consumer companies are racing to divest non-core assets in their search for growth

The race to divest non-core assets is gathering momentum as consumer businesses focus on innovative solutions in their search for growth, including pursuing direct-to-consumer (D2C) options. Change has been sweeping through the consumer sector for the past decade, from the rise in online retailing to next-day deliveries and now subscription-based services offering everything from shaving equipment to gourmet meal kits. Growth in the sector is sluggish, margins remain tight, consumer preferences are heading in multiple directions and digital channels are being redefined as quickly as they are established.

According to the EY Global Corporate Divestment Survey, companies need to transform themselves, either through portfolio optimization or cost-structure changes. Divestment ticks both boxes: selling off non-core assets not only tightens the portfolio, but also releases capital for re-allocation where it will most address what companies need to do to be relevant to the consumer’s changing expectations. EY-Parthenon Consumer Products and Retail Leader, Jeff Wray, explains.

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