CPG Category Research

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CPG Category Research

Some pain points of consumers in the United States CPG industry are slow innovation and inadequate expenditure on innovation, consumers are expecting CPG companies to address global issues, and consistent customer experience.

Pain Points/Challenges/Unmet Needs of Consumers in the US CPG Industry

Slow Innovation and Inadequate Expenditure on Innovation

Consumers Are Increasingly Looking to CPG Companies to Adress Global Issues

Consistent Customer Experience

  • Today's customers are becoming increasingly empowered and digitally informed to make their own purchasing decisions. Customers now have access to a myriad of online customer reviews and price-comparison tools to guide their purchase decisions.
  • While there has been increased transparency, customers still find it hard to run a price comparison for every item on their grocery list. This is a need that CPG brands have failed to meet.
  • According to Deloitte, " the complexity and cost of new channels and services can make it more difficult for brands to deliver a consistent experience."
  • As the CPG ecosystems become more complex, customers are finding it hard to expect consistent customer experience from CPG companies.
  • According to the US CPG Industry Outlook for 2020 from Deloitte, "through strategic investment in customer-centric digital technologies, various players are blurring the lines between CPG and Retail in their efforts to earn consumer trust."


US CPG Industry SWOT Analysis

Strengths

Decreased Barrier of Entry

Some CPG Brands Can Go Big by Focusing on Specific Ethnic Demographics

  • According to CBI Insights, some startups focus specifically on particular ethnic demographics and tailor their CPG offering to them.
  • As opposed to "using a one-size-fits-all approach, some smaller companies focus on the needs of a specific ethnicity and develop great brands around that base."

Weaknesses

Traditional Pain Points

  • As per Inc, one of the weaknesses traditional CPG brands have is that no matter how much they try to reinvent themselves to appeal to new customers and the mass market, the customer won't get on board.
  • Today, customers have more power than ever before so this becomes a serious pain point. Millennial consumers have "a shorter attention span moving from one new thing to the next new thing often- adopting almost indiscriminately, but not long term."

Opportunities

Bespoke Brands

  • According to experts, there is an opportunity for CPG brands to go bespoke, hot in the heels of "uptick in recommerce, upcycle, and bespoke brands."
  • This is an area of interest to consumers and it has promising potential. According to Blythe Jack, Managing Director of TSG Consumer Partners, "as business models work to adopt and feed into mass consumer behaviors, we have to make sure there is viability. We are seeing a lot of new businesses show up in the marketplace based on consumer demand and customization, but we are still waiting to see if there is enough of a viable business model to support these consumer wants and demands."

Health-Conscious Consumers/Shifts in Consumer Preferences

Threats

Reckless Endangerment

  • According to Buzz, CPG companies recklessly venturing into the direct-to-consumer business model. While there is a lot of hype and buzz around the model, there isn't much market proof to justify the massive amount of capital being invested into the brands, some of which are very early concepts.
  • According to Sara Buckley, Managing Director at KeyBanc Capital Markets, "wellness and social good upstart buzzwords have changed the way younger companies are coming in and chasing consumer wants but buzzwords don't equal market proof and profitability. It's hard to understand what return they're underwriting to and a lot of those companies are going to have a hard path to profitability. This is somewhat of a backwards trend I think we will see reverse over the next five years, where this early traction and devastating fall off will discourage such reckless funding, and encourage more market proof first."



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