There’s no screaming alarm for profit erosion in CPG. It happens gradually over time. It hides in Excel tabs, unclaimed deductions, and trade promotions that “look fine on paper” but quietly bleed margin in execution.
Whether you’re a fast-scaling brand or a legacy name with coast-to-coast distribution, there are five traps that can prevent the profits from flowing - and without knowing, the losses can mount up and begin to cause real problems.
The key to avoiding traps is to be aware they exist – so let’s break each one down with examples and how to avoid them. After handling millions in deductions and tracking thousands of promotions for brands over the years, we’ve been there and seen them all!
We’ve seen it all too often: in the planning stage of a promotion, profitability looks fine. Fast-forward to related deductions and back-end fees rolling in, and the promo is a loss. In this scenario, the brand failed to fully account for distributor bill-backs, retailer deductions, free fills, slotting fees, merchandising requirements, or the cost of unsold inventory returns.
We call these surprise costs because they were hidden from the brand before they surfaced – but with proper planning and processes any brand can avoid this outcome.
Warning Signs
Too many "surprise" charges from finance after running promos
Promo planning happens in a system/spreadsheet disconnected from actual expense data (ERP or accounting software)
Overall net profit is shrinking despite stable or growing topline revenue
Consistent variances between planned vs actual promo spend
How to Avoid
There are two approaches to avoiding this.
Approach 1: In the absence of historical knowledge or data, make your best guesstimate on promotional costs. Stick your thumb out, eyeball it, and throw in a 10-15% buffer.
Approach 2: Plan promotions as methodically as possible, taking into account historical data and learnings from past mistakes or omissions. Ideally, a closed-loop system - one in which there is a process that inherently drives continual improvement over time - will help ensure there are no stones left unturned.
Still managing on spreadsheets? With CPGenius™ for Trade and our turnkey Deduction Management service, you can plan and track promotions with real accuracy, capture costs at the promo level, and tie deductions back to their originating events to avoid the surprises altogether.
Forecasting in CPG is not always straightforward. Sometimes there is no choice but to base it on assumptions instead of data – especially if you’re a younger brand. But when there is data to base it on, it’s often overwhelming and not organized well enough to be helpful. Maybe it’s based on what brokers think worked last year...or on educated guesses from your team.
Unless you’re forecasting based on reliable insights extracted from your data, you’re doing it blindly. And without seeing the full picture, you’re risking profit.
Warning Signs
How to Avoid
When the sales team runs the promotion but operations can’t fulfill it on time, what should be a win turns into a major fail. Misaligned sales/supply plans turn growth opportunities into financial drains—through missed revenue, unexpected deductions, extra costs, and damaged retailer trust.
Warning Signs
How to Avoid
Big unit lifts (sell-in and sell-through) are attractive at first glance, but margins can quickly erode if the promotion that drove them cost too much to run. When sales teams focus only on volume without considering margin, what looks like great unit gains can actually hurt profitability.
Warning Signs
How to Avoid
When brands run the same promos (e.g., 20% off coupons, TPRs every quarter, case stacks at a fixed cost) across all retailers they risk wasted trade spend and ROI. Each retailer has different shopper profiles, competitor sets, and expectations – which may require different promotional tactics. A natural foods brand giving the same $2 off coupon in a value grocery chain and a premium chain can help to drive trial in one but erode margin in the other, for example.
Warning Signs
How to Avoid
Across all these traps, the root causes are clear: lack of visibility, disconnected processes, and poor alignment across teams. The solution is equally clear: a closed-loop system that unifies trade planning, spend tracking, deduction management, and performance analytics.
At Promomash, we partner with CPG brands to provide exactly that. With the industry’s best Client Success team and our CPGenius platform, we help you plan and track promotions, tie spend to real outcomes, manage deductions, and monitor P&L by promo, customer, or product—so you can make faster, smarter, more confident decisions.