Forecasting company growth is harder than ever, especially in uncertain or volatile environments.
Trade policy shifts, currency fluctuations, inflation and changing consumer behaviour are just a few forces disrupting business trajectories. How can you effectively plan without a clear, data-driven view of where your (or your competitors’) growth has come from and where it’s headed?
A breakdown of company growth decomposition
To make sound decisions about where to invest or divest, you need a clear understanding of past trends. Growth decomposition is a powerful analytical method that dissects a company’s topline performance, breaking it down into distinct growth drivers, such as volume changes, price effects, category dynamics, geographic contributions and market share shifts.
Let’s take L'Oreal Groupe as an example. In the US, the company’s beauty and personal care sales rose from USD17 billion in 2023 to USD17.8 billion in 2024—a net increase of USD846 million. But where did that growth come from?
While partly driven by market share gains in categories where L'Oreal competes, the majority of growth (73%) was attributed to market momentum and inflation based on our company growth outlook dashboard. This refers to broader external forces—like increased overall consumer spending in the category (momentum) and price increases due to inflation—that lift a company’s performance even when market share remains unchanged.
The article is property of Euromonitor International, a data analytics company, and you can find it here.
