CPG Food Industry Trends

One of the most powerful trends in the U.S. CPG food & beverage industry over the past few years has been an explosion in consumer preferences for products that promote health

and wellness—and 2020 ushered in a new consumer focus on the role of nutrition in immunity.

Consumers are continuing to use food to manage their health and are being careful about what they put in their stomachs.

In a study from ADM OutsideVoice, 77% of consumers reported that they want to do more to stay healthy in the future, and immunity boosting foods, like honey, turmeric, and oranges, saw a sales lift in the last year.

In response to these priorities, American food manufacturers are dramatically altering their strategies to serve consumers who are concerned about boosting their immunity and gut health, plant-based meat alternatives, and fewer sugars and fats in their foods.

In particular, the global plant-based protein market is expected to grow at a rate of 10% year-over-year.

In addition to addressing consumers’ nutritional goals, plant-based protein is viewed as a more sustainable, eco-friendly option—another trend we’ll cover in this guide.

The consumer demand continues for transparency on how companies perform when it comes to sustainability and corporate social responsibility—a pressure increased by many of the events we experienced in 2020. Food decisions are increasingly being based on where, how, and by whom products are made, grown, and raised.

Food Facts (Transparency and Sustainability):

• 6 in 10 consumers are interested in learning about where their food comes from
• Consumers cited sustainability as a top reason for adding plant-based proteins to their diet
• 9 in 10 consumers see the pandemic as a chance for companies to “reset” and start being more environmentally and socially responsible
• Consumers are 4 times more likely to buy from a brand with a strong purpose
• 3 in 4 consumers expect companies to make investments in sustainability

Consumer demand for transparency in information and production is driving the evolution of the food industry, requiring brands and manufacturers to rethink more than their marketing strategies. Efforts to implement sustainability and social responsibility need to be authentic and supported by every aspect of a business and its supply chain.

Authentic changes made by brands to support sustainable causes and reduce their impact on the environment build trust and loyalty with consumers. Consumers are 6 times more likely to protect and 4.5 times more likely to champion and recommend a company they believe is authentic in driving change.

Every sector saw a jump in online sales during 2020. However, prior to the pandemic, industries like grocery were behind in e-commerce adoption. Even though services like Shipt and Instacart, as well as curbside pickup from major retailers like Target and Walmart, have been around for some time, regular use by a majority of consumers was still low.

At the height of the pandemic, grocery stores reported 20-30% of their business shifted online. But by the end of 2020, online shopping for groceries had dropped down to between 9% and 12%. However, grocery ecommerce in the U.S. is expected to grow to between 14% to 18% market saturation in the next three to five years.

No matter where consumers buy their groceries, they expect a seamless experience across platforms. An omnichannel approach is necessary in today’s market to compete. Availability and experience with your brand across online and brick-and-mortar stores is a requirement to connect and maintain relationships with consumers.

Additionally, physical store space for marketing has gone down, as many retailers maintain their clean store policies and allot extra space for social distancing. With a more competitive space in-store for displays and signage, channels like social media and other digital marketing are important to capturing consumers’ attention.

Brands are spending more. Raw materials, packaging materials, transportation and logistics, and consumer pressure to lessen their environmental impact are affecting the bottom line of companies big and small—leading to price increases. Major brands like Coca-Cola, Unilever, Nestlé, Mondelez International, and General Mills have all raised prices or announced that price increases are coming.

Raising prices, especially as consumers become more price-sensitive, is not ideal. However, McKinsey found that, since the onset of the pandemic, CPG companies have taken on increases of up to 50% in certain cost categories.

• 91% of consumers are paying closer attention to price,
• 42% of consumers say that lower prices drive their purchase decisions.

In a rapidly evolving environment, CPG brands today need to push the envelope in their quest to engender loyalty from their increasingly diverse customers. The brands that succeed will find ways to engage their audience with their brand stories and purpose via digital technology.

References:

• https://www.statista.com/outlook/dmo/ecommerce/food-personal-care/food-beverages/united-states

• https://www.supermarketnews.com/consumer-trends/online-cpg-food-and-beverage-sales-could-top-100-billion-2021

• https://gfi.org/marketresearch/

• https://foodinsight.org/2020-food-and-health-survey/

• https://www.everydayhealth.com/pictures/top-healthy-food-trends/

• https://www.fona.com/0621sugarreduction/

• https://www.adm.com/news/news-releases/emerging-consumer-behavior-shifts-six-ways-food-beverage-innovation-is-evolving-in-the-face-of-covid-19-2

• https://www.prnewswire.com/news-releases/plant-based-proteins-market-to-reach-us-23-4-billion-by-2027-globally-cagr-10-univdatos-market-insights-301287576.html

• https://www.fooddive.com/news/6-immunity-boosting-ingredients-gaining-popularity-during-the-pandemic/581153/

• https://www.zenogroup.com/insights/2020-zeno-strength-purpose

• https://www.prnewswire.com/il/news-releases/innova-identifies-top-10-food-and-beverage-trends-to-accelerate-innovation-in-2021-301155638.html

• https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/making-online-grocery-a-winning-proposition

• https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/high-growth-low-profit-the-e-commerce-dilemma-for-cpg-companies

Customer engagement may be difficult to measure and perform well at scale, but it undoubtedly leads to higher profitability and customer retention. Looking ahead, the future of customer engagement is going to involve even more personalized experiences.

To reach this future, brands need to optimize their people, operations, and technology to create a consistently positive feedback loop with customers. This will keep you in touch with your customers’ evolving needs, build your brand integrity, and allow you to use data to further improve their experiences.

And that's where Snipp comes in.

We provide global marketing and loyalty technology solutions that bring together modular SaaS technology with best-in-class marketing expertise to help you increase sales, retain customers, and unlock intelligent decision making.