Dive Brief:
- Overall demand for CPG products will remain elevated above pre-pandemic levels in 2021, hitting between 7.4% and 8.5% above 2019’s figures — the last "normal" year — according to a new report from the Consumer Brands Association. It expects 2021 CPG purchases to slip between 1% and 2% from 2020.
- In the year ahead, CPG manufacturers should pay attention to several key pandemic-related trends that have redefined the space, CBA noted. With 82% of consumers indicating they want to maintain some form of remote work, purchasing and consumption patterns are taking new shapes. E-commerce will remain popular, with 77% of consumers who opted for online shopping indicating that they’ll continue the practice.
- Recyclable packaging, transparency and the adoption of digital labels that provide more information about a product’s origins, as well as consumers' growing expectations that brands should take a leading role on social and environmental issues, should also be on CPG companies' radars.
Dive Insight:
Beyond elevated demand for packaged goods, CBA flagged other noteworthy trends for CPGs: the widespread adoption of e-commerce, consumers' desire for transparent label information and recyclable packaging, and the ability to build a brand halo around social and environmental issues.
With consumers spending more time at home amid concerns about catching the coronavirus, it is unsurprising to see widespread adoption of e-commerce. Pre-pandemic, some grocers and brands struggled to get consumers to make online shopping a habit. Many consumers were leery of letting others pick their produce while others simply found the process unfamiliar.
Now, many consumers have tried food e-commerce and aren’t looking back.
Several manufacturers including PepsiCo, Mondelez and Unilever launched or revamped direct to consumer platforms to tap into this behavioral change. For brands that have not already adopted an e-commerce or digital marketing strategy, doing so will become a top priority to keep pace.
With major brands facing supply-chain issues over the past year, supermarket shortages encouraged shoppers to try private label and small-scale brands. Big food lost an estimated $12.1 billion in sales, according to research from IRI, thanks to supply chain headaches. Resolving this issue is key to continued growth in the year ahead for big-name brands. According to CBA's polling, when asked what CPG companies could do to boost their confidence coming out of the pandemic, improving the supply chain to reduce disruptions was consumers' top choice.
With more time at home to think about where their food comes from and where packaging winds up, consumers are also looking for products that reflect sustainability. According to a CBA survey, 59% of Americans want to see a mix of packaging alternatives, with 14% seeing properly recycled plastic as a preferred option.
Over the past year, many CPGs have made moves here. Coca-Cola is adopting bottles made from 100% recycled plastic while Nature Valley, Kraft Heinz and Mondelez are also swapping out packaging materials.
That said, consumers are not necessarily willing to pay more for these gestures: Forty-two percent said they would pay no more for recyclable packaging, per a CBA survey, meaning manufacturers will have to consider carefully how they adjust pricing, if at all.
Consumers are also more conscious about fighting food waste. From a health perspective, many consumers indulged at the start of the pandemic, but over half have shifted back to their normal eating habits.
Other pandemic-driven trends that CBA identified include convenience. Here too, manufacturers have been busy developing products to meet this demand. Tyson created a new line of meal kits tailored for instant pot fans while Kraft Heinz revamped some of its existing brands to target home cooks.
