Over the past half century, the consumer-packaged-goods (CPG) industry has achieved enviable growth in both revenue and shareholder returns. At first blush, continued growth seems a sure thing—after all, the burgeoning economies of emerging-market countries are fueling an unparalleled boom in global consumption. And given that global CPG companies are selling more of their products to more people in more parts of the world, shouldn’t revenue growth—and, with it, healthy returns—be theirs for the taking?

If only success were that simple. A look back at recent decades of developed-market based CPG companies shows that they have consistently managed to grow, but not always profitably. And today, a series of large-scale trends is causing industry upheaval, forcing companies in mature markets to make tough choices about where to play and how to win. Investment in emerging markets isn’t foolproof: growth, although strong, is uneven, with certain markets and categories far outpacing others. Severe resource constraints are causing volatility in commodity costs. Digital technologies are affecting every part of the value chain, and in sometimes unpredictable ways. New—and newly acquisitive—competitors are emerging. And regulatory risk is rampant as government exerts ever-greater influence over the industry.

Given how fundamentally these trends will transform the industry over the next decade, we believe the strategic choices that CPG manufacturers make in the next few years will be more consequential than those they’ve made in the recent past. Every company will respond to the trends differently. Some companies may choose to keep their focus on core franchises with the hope of delivering stable, even if not stellar, earnings; others may opt for more assertive but riskier moves.