Session briefing brought to you by:

Shelly Banjo

Deputy Editor-in-Chief

The revenge spending of the post-pandemic era has been replaced by a spend-through-stress kind of caution where consumers shell out for the moments that matter (think holidays and birthdays) but hold back on big purchases. High interest rates, stubborn inflation, uneven job growth, geopolitical instability, and a general sense of unease about the future means consumers are less comfortable spending big on homes, cars, and even washing machines. 

In the US, there’s a growing gap among the high-income consumer, who remains resilient in the face of uncertainty, and lower-income households without exposure to stock market gains. In China, where 70% of wealth is tied up in real estate, a reckoning of property prices has fundamentally altered how consumers view their financial security and how they spend their money. In Europe, consumers are oscillating between caution and a willingness to spend as debt burdens rise and affordability and property prices present challenges. While the Gulf had been the global outlier for optimism – and luxury spending – the regional fallout from the war in Iran prompted a pause. 

Overlaid upon all the economic factors is the impact of AI on the way we think about what and how we buy. Armed with more information than ever on each individual customer, companies are using AI to fundamentally reorder how they price and sell goods. The result is a world in which more companies than ever are competing for a smaller sliver of a person's time – and money. 

Jacek Olczak

Group CEO, PMI

The past few years have permanently changed how consumers prioritize, choose, and spend. Behavior is even more deliberate, more selective, and more fragmented. The same individual will reduce spending in one category, pay a premium in another, and expect a different experience depending on the moment.

This breaks the logic of designing for an “average consumer.” For global consumer businesses, growth now depends on understanding how the same individual moves across occasions, price points, and needs, while building portfolios that can meet diverse expectations at scale. Our business is no exception: this approach is essential, especially as progress depends on adults switching to smoke-free alternatives rather than continuing to smoke.

Inflation has intensified these dynamics. Consumers across product categories are actively optimizing their choices and rebalancing their basket. This environment rewards portfolio depth, pricing discipline, and a deep understanding of consumer behavior. Geopolitics is becoming real and is intertwining with the economy more than ever. All these factors, along with new technology, evolve at an unprecedented speed.

What has not changed is the value of long-term consistency. At PMI, we spent roughly a decade building an entirely new $17 billion smoke-free business across more than 100 markets. That outcome was not the result of tactical moves, but of sustained investment in innovation, science, and capabilities, even when short-term pressures pushed in the opposite direction. Transformations of that scale demand what some call a “capacity to suffer,” the willingness to absorb near-term pain in pursuit of durable impact.

AI will widen the gap between those who move decisively and those who hesitate. But the advantage will not come from adding new technologies to old systems. It will come from redesigning how organizations learn, decide, and execute, with human judgment at the center. In this environment, durable growth comes from strong fundamentals executed with precision, discipline, and pace.