CPG / FMCG: US Trends, Part 1
The coronavirus pandemic has affected various sectors and industries, among them CPG/FMCG sector. As a result, the CPG/FMCG has been forced to adapt to some new trends, such as more production of plant-based products and investing in omnichannel strategies to stay afloat.
More Emphasis on Plant-Based Products
- In 2019, before COVID-19 struck in the U.S., consumers were already embracing healthy options such as plant-based products, which were the strongest performing products in the CPG industry. In 2020, and especially with the outbreak of the novel virus, this trend has continued to outperform all other products, thus becoming a lucrative trend in the CPG/FMCG industry.
- Studies show that self-care products have hit $9.9 billion in the first quarter of 2020. Further, 62% of consumers plan to spend more on self-care and healthy products than non-essential products.
- Demand for plant-based food has grown five times more compared to total food sales in 2019. CPG experts are learning to adjust to this trend as healthfulness has become a top priority to almost 66% of the American adult consumers.
- CPG/FMCG companies have had to re-adjust to consumer trends, especially after pandemic-driven buying, which saw some product sales go higher than others. For instance, plant-based foods seemed to be the quarantine foods for most Americans, as the demand continued soaring after the virus outbreak.
- According to data collected from the U.S. retail, sales of products such as fresh plant-based meats went up 279.8% in mid-March, beating a 206.4% spike at the beginning of March 2020. Oat milk sales spiked 476.7% in mid-March.
- An article published by Fortune on May 15, 2020, provides that sales of vegetarian and vegan products have increased significantly in recent years. However, the rise of these products has gone a notch higher after the COVID-19 breakout, as sales of fresh meat alternatives grew 255.3% by the end of March 2020, year over year. Plant-based burgers and sausages generated a $97.1 million revenue in the first quarter of 2020, a 141% increase, compared to the same time in 2019.
- CPG companies such as Tofurky have continued to monitor consumer behavior at the grocery store to meet the increasing demand for plant-based products such as deli slices, which has continued to spike in sales at 50%.
- An article published by Wall Street Journal debates that plant-based CPGs are exploiting opportunities to fill in the gap of meat staples, especially after COVID-19 interrupted operations in various meatpacking plants across the U.S.
- Various plant-based CPGs such as Impossible Foods Inc., and Beyond Meat Inc., are increasing production as well as discounting their plant-based products to appeal to a bigger target audience. These manufacturers are also expanding their distribution chains to more outlets, as grocery stores continue to run short of conventional meat products.
Investing in Omni-channel Strategies
- CPG/FMCG companies have become aware of how consumers have become unpredictable. As consumers continue to adopt new strategies, CPG/FMCG can no longer assume the whereabouts of their target market.
- They are investing time and resources to research the shopping habits of consumers and adjust accordingly. In the recent past, online channels have contributed to the growth of CPGs by almost 70%, and digital retailers are using comprehensive digital marketing plans to stay ahead of the curve.
- The ongoing coronavirus pandemic has triggered a blur between digital and physical shopping experiences. However, CPG companies and retailers have continued to apply agile measures such as branded touchpoints to respond to consumer needs.
- CPGs and retailers are using mobile, online and geospatial data to capture lost volume and to optimize networks and omnichannel purchases. Through omnichannel fulfillment options like buy online, foot traffic in physical stores is expected to increase again.
- CPGs and retailers have had to meet consumers' demands, especially those with holistic omnichannel experiences. Studies reveal that retailers and CPG/FMCG companies with robust omnichannel strategies have a 91% customer retention rate. Providing consumers with more flexibility will generate more revenue growth, can be achieved through a consistent omnichannel experience, such as giving consumers the option for online or in-store purchases.
- In light of the coronavirus pandemic, consumer buying behavior and pattern have changed in the U.S. compared to a year ago. Studies reveal that approximately 79% of American shoppers have shifted to online and internet platforms using smartphones.
- Even though established traditional brands such as Nike, The Gap, and Trek bikes, have still maintained their brick-and-mortar stores, they have also started to embrace online platforms to reach to their virtual target audience. These brands have seen the importance of investing in omnichannel strategies where they have maintained their traditional channels while launching new platforms to keep up with their consumers that have moved to online platforms.
- Omnichannel strategies are expected to extend post-COVID-19, as there will no longer be such thing as pure retail commerce or e-commerce; instead, all commerce will be standard. Most CPG brands will inspire both online and offline sales, and consumers will be spoilt for choice, given the multiple channels.
- As a result, many CPGs will prioritize consumer-first and total commerce strategies. Experience will be the only channel that matters, and consumers will be able to engage brands universally and continuously.