Midyear 2025 Industry Outlook: Focus on the FMCG and Chemical Manufacturing Sectors by Paul Galanti

In the past year, the FMCG Sector and the Chemical and Process Industry accounted for 40% of all Pacific leadership placements globally. These are the two fastest-growing practices across the Americas at Pacific, led by Paul Galanti, with new clients in this space retaining us to benefit from our talent expertise.

As we cross the halfway mark of 2025, it’s clear that the FMCG and Chemicals sectors remain dynamic, resilient, and marked by both progress and persistent challenges. The chemical industry alone is projected to reach $6.3 trillion by year-end, driven by recovering demand from semiconductors and automotive production.

Key Developments So Far

Specialty Chemicals Leading Growth

As predicted, the specialty chemicals segment has continued a strong growth trajectory, particularly in advanced materials serving several industries, including electric vehicles, battery technology, and, in particular, sustainable coatings. The chemical industry is expected to focus on innovation, sustainability, and resiliency to drive efficiency and growth, with specialty players maintaining their competitive edge despite headwinds.

Environmental regulations and trade dynamics are proving to be significant hurdles as expected. Trade dynamics have become more unpredictable, with renewed tariffs (the word of the year!) specifically on imports from Asia. Despite these challenges, specialty players have been able to maintain an edge through strategic positioning and regional supply chain diversification.

AI-Driven Automation and Digital Transformation Accelerating

AI-driven automation, regional supply chain resilience, and net-zero acceleration are survival mandates for chemical firms. Across FMCG and Industrials, automation investments have gained significant momentum, with companies (mostly packaging and warehousing) doubling down on robotics and AI to enhance operational efficiency.

Unlike previous years, where digitization was experimental, 2025 has marked a decisive shift from pilots to large-scale implementations of Industry 4.0 technologies. However, 3D printing has not taken off as expected and remains in the prototyping stage rather than scaling to full production – a reality check for many organizations that had pinned growth strategies on this technology.

Energy Costs and Supply Chain Regionalization

Inflation was the headliner of 2024, and while it has remained a concern, there are bigger fish to fry in 2025. Energy and transport costs have been the primary focus for the first half of this year, with costs soaring due to geopolitical events. As a result, many major players have moved to regional sourcing as a priority – a trend that’s reshaping traditional global supply networks and creating new competitive dynamics.

This shift has created both challenges and opportunities: while transportation costs have decreased for regional suppliers, companies are grappling with the complexity of rebuilding supplier relationships and ensuring quality standards across new vendor networks.

Labor Market Tightness Intensifies

The talent crunch has reached critical levels. Skilled labor shortages persist across supply chain, maintenance, and digital operations roles, but we’re now seeing acute shortages in AI implementation, sustainability expertise, and cross-functional leadership positions. Companies have increasingly seen difficulties in attracting talent with both technical and leadership skills in these spaces unless they are willing to be at the top of the market in terms of compensation.

Here’s the reality: if companies don’t show a greater openness in considering candidates from adjacent sectors with relevant experience, they risk falling behind and leaving positions unfilled. Softening the previously rigid preference for plug-and-play industry experience is a must in today’s world. The most successful placements we’ve made this year have been leaders who brought fresh perspectives from automotive, technology, and even aerospace into traditional FMCG and chemical roles.

Consumer Demand Evolution Continues

Health, wellness, and sustainability-focused products continue to outperform traditional offerings. The demand for plant-based, “clean label,” and functional products remains robust, shaping new product development pipelines and marketing strategies. Notably, companies are seeing increased consumer sophistication. It’s no longer enough to claim sustainability; consumers are demanding transparency, third-party verification, and measurable impact.

The “premiumization” trend has also accelerated, with consumers willing to pay more for products that align with their values, creating opportunities for companies that can authentically deliver on purpose-driven innovation.

Diversity and Inclusion Show Resilience

Despite predictions of potential backtracking on DEI initiatives, most organizations have maintained or even renewed their commitments to building diverse leadership teams. Companies with strong diversity metrics are finding it easier to attract top talent. They are reporting better innovation outcomes – a competitive advantage that’s becoming increasingly clear in our placement data.

Outlook for the Rest of 2025

Looking ahead to the second half of the year, the FMCG and Chemicals industries can expect:

Regulatory Momentum Building: Continued regulatory pressure is driving innovation in sustainable production and packaging. The EU’s upcoming packaging regulations and various state-level sustainability mandates in the US are creating both compliance challenges and market opportunities for forward-thinking companies.

Strategic Digitization at Scale: More companies are moving from pilots to larger-scale implementations of Industry 4.0 technologies. The winners will be those who can integrate AI, predictive analytics, and automation seamlessly into their operations while maintaining workforce engagement.

Talent Wars Intensifying: Persistent talent gaps will continue, especially in AI, robotics, advanced manufacturing, and the increasingly critical area of sustainability expertise. Companies that build strong employer brands and offer compelling development pathways will have significant advantages.

Trade Uncertainty as the New Normal: Heightened trade uncertainty, particularly as global elections and geopolitical tensions shape tariffs and cross-border flows, will require agile supply chain strategies and scenario planning capabilities.

Purpose-Driven Innovation: Consumer-centric innovation, with health, wellness, and environmental impact remaining critical differentiators. The companies that can authentically embed purpose into their business models will capture disproportionate market share.

Consolidation Opportunities: Market volatility and capital constraints are creating consolidation opportunities, particularly in specialty chemicals and regional FMCG brands. Leaders with M&A experience will be in high demand.

Strategic Recommendations for Leaders and Organizations

For Companies:

Build Resilience, Not Just Efficiency: Prioritize investments that build long-term resilience. The reward won’t be immediate, but it will be worth it! This approach means redundancy in critical systems, diversified supplier bases, and cross-trained teams.

Expand Your Talent Horizons: Broaden talent pipelines by targeting adjacent industries with transferable skills. The most successful companies are those hiring automotive engineers for process optimization, tech leaders for digital transformation, and sustainability experts from consulting or NGOs.

Supply Chain Stress-Testing: Reassess supply chain dependencies to mitigate geopolitical risks. Scenario planning isn’t optional anymore; it’s business-critical. Companies should have clear strategies for various trade and political scenarios.

Invest in Leadership Development: With talent so scarce, developing internal capabilities is crucial. Companies that create clear progression pathways and invest in leadership development will have competitive advantages in retention and attraction.

For Senior Leaders Considering a Move:

Showcase Transformation Credentials: Highlight your contributions to transformation initiatives, primarily digital and sustainability programs. These are the experiences that differentiate candidates in today’s market.

Network Strategically: Be proactive in building relationships with recruiters and decision-makers. The hidden job market is especially active in these sectors, and relationships matter more than ever.

Think Adjacent Sectors: Consider opportunities in adjacent sectors where your experience can drive innovation and operational excellence. Some of the most successful placements we’ve made have been cross-industry moves that brought fresh perspectives to traditional challenges.

Develop Digital Fluency: Even if you’re not in a technical role, understanding AI, automation, and data analytics is becoming table stakes for senior leadership positions. Invest in AI training to show curiosity and a continuous learning mindset.

Sustainability as Core Competency: Environmental and social impact expertise is no longer a nice-to-have; it’s becoming essential for senior roles across both sectors. Showcase your expertise in this space.

The second half of 2025 promises to be as dynamic as the first. The leaders and organizations that thrive will be those that embrace change, invest in capabilities, and remain agile in the face of uncertainty. For senior executives, this represents one of the most opportunity-rich environments we’ve seen in years, provided you’re prepared to think differently about your next move.

Paul Galanti leads the Americas’ FMCG and Chemical & Process Industry practices at Pacific International Executive Search. For a confidential discussion about senior leadership opportunities in these sectors or talent challenges, please feel free to reach out directly.