Consumer packaged goods (CPGs) are any items, often food products or beverages, which are available for purchase to meet the everyday needs of the consumer. Additional product categories include tobacco items, household products, makeup, and clothing. It is a highly competitive sector where demand stays relatively constant, which means competition and market saturation are high while consumer switching costs are low.
Loyalty is one of the most significant challenges that the consumer-packaged goods industry faces each year. Even though the current average annual value is over $2 trillion per year in North America alone, 70% of consumers say that they will use reviews from other customers to determine their shopping habits. Only about 30% of shoppers say that a loyalty program influences their choices.
This habit of constant shifting has led to a greater level of entries and exits from the industry compared to others around the world. Since 2011, a 250% increase in these activities has occurred, with over 160 private exits registered in 2015 alone.
Essential Consumer Packaged Goods Industry Statistics
1. The consumer packaged goods industry is one of the largest industries operating in North America today. About 45% of the sales revenues which occur are within the grocery segment of the market. (PricewaterhouseCoopers)
2. The smallest manufacturers in the consumer packaged goods industry have seen a 6.2% increase since 2009, which is three times higher than what the largest producers accomplished during the same period. Private-label products have helped to inspire this growth, accounting for 2.8% growth in their category. Medium-sized producers have encountered an opposite trend, seeing their market share contract by almost 4%. (PricewaterhouseCoopers)
3. The consumer packaged goods industry has outperformed the S&P 500 market index in comparative growth since 1985. The CAGR for the industry exceeds 10%, while the stock index has managed an 8.6% rate of growth during the same period. (McKinsey)
4. The largest manufacturers in the consumer packaged goods industry have seen a 43% growth in market share due to their volume alone. (PricewaterhouseCoopers)
5. 23% of the planet’s top brands in 2010 involved fast-moving products from the consumer packaged goods industry. The total return from these products was 15% per year for the last 45 years, providing billions of dollars in dividends to shareholders. Only the materials industry outperformed CPG providers in total value over the past four decades. (McKinsey)
6. Value purchasing is becoming a strong trend in the consumer packaged goods industry because the younger generations are 10% less wealthy than their older counterparts. That means Millennials and those who are younger seek out value-priced luxury purchases more often than providing revenues through general shopping needs. (McKinsey)
7. The online sales of consumer packaged goods is only worth $155 billion globally, but it is a trend that is seeing rapid growth in recent years. Online grocery store shopping represents 6% of the total revenues that occur in this segment annually. (Deloitte)
8. Half of all customers who regularly purchase consumer packaged goods say that they are struggling to make ends meet, living paycheck to paycheck. 45% of households would describe their overall financial health as being strained. About 1 in 3 households doesn’t even have enough money each month to meet their grocery shopping needs. (Consumer Connect)
9. 73% of households who make less than $35,000 per year say that they are struggling to make ends meet. 23% of families in the United States who make more than $100,000 per year are also living paycheck-to-paycheck because of their current economic circumstances. (Consumer Connect)
10. 80% of Millennials say that they are willing to make loyalty concessions away from their favorite brands if it means that they can save some money on their consumer packaged goods. (Consumer Connect)
11. 56% of those who identify as being in Generation X say that they will shop for products based on the availability of digital savings codes, promotional items, or coupons that they can find in the store or at home. (Consumer Connect)
12. 1 in every 5 customers for the consumer packaged goods industry says that they are willing to pay premium prices for items that come in eco-friendly packaging materials. (Consumer Connect)
13. 31% of the new product launches for the consumer packaged goods industry in 2016 involved a personal care item. Another 23% provided new options for beauty and general care, while 18% were for healthcare products. Even though grocery stores provide a significant portion of the revenues for this industry, the amount of innovation available in that segment is falling behind. (IRI)
14. The average sales figures for a company beginning its first year of operations in the consumer packaged goods industry is about $22 million for convenience items, over $17 million for non-food products, and about $11 million for the food and beverage segment. (IRI)
15. Proactive care items are one of the most consistently popular segments of the consumer packaged goods industry right now. 40% of consumers say that they shop for items based on the pain points that they can resolve with their use. Individuals in the 18-34 age category are the most likely to place this stressor as their top priority. (IRI)
16. 57% of the food and beverage sub-segments in the consumer packaged goods industry focus on providing health and wellness solutions to encourage more brand awareness. Products and companies which make this issue a priority typically see faster growth than those who do not. (IRI)
17. Only 8% of customers in the consumer packaged goods industry say that they look for specific products that can help them to relax. 37% say that they like to splurge on items roughly half of the time they go shopping, while 1 in 4 customers say that treats take a priority even if they are trying to maintain a restrictive diet. (IRI)
18. Youth shopping trends are going to impact the consumer packaged goods industry for some time to come, as 65% of the population in India is under the age of 35 today, with 30% belonging to Generation Z. (Deloitte)
19. Only 1 in 4 households around the world meet the definition of being in the middle class right now. By the end of the next decade, that figure could reach 66% of all earners. (Deloitte)
20. 30% of women already earn more in their employment than their husbands do each year. Over the next 10 years, up to 75% of the spending which occurs in the consumer packaged goods industry could be initiated by a woman instead of a man. (Deloitte)
21. Customers in the American segment of the consumer packaged goods industry are actually spending less on their food and beverage purchases. When income adjustments are made to account for inflation, households are budgeting 5% less for the grocery needs than they did in the 1980s. (Nielsen)
22. Consumers say that taste (93%0, price (83%), and healthy qualities (70%) are their top priorities when shopping for groceries in the consumer packaged goods industry. (IRI)
23. When diet restrictions are not part of a household’s needs, consumers say that grab-and-go food items (51%), lower prices (48%), and family preference (41%) are top priorities for their shopping habits as well. (IRI)
24. 52% of customers who regularly shop in the consumer packaged goods industry say that their top priority for a new product is that it should offer freshness instead of being overly processed or containing artificial ingredients. (IRI)
25. The biggest increases in total sales in dollar figures for 2016 in the consumer packaged goods industry involved refrigerated lunches (13%), frozen side dishes (11%), bottled water (8%), and ready-to-drink tea and coffee products (8%). (IRI)
Consumer Packaged Goods Industry Trends and Analysis
The global consumer packaged goods industry expects to see at least 1 billion new customers come into the marketplace over the next 10-year forecast. Trends that are popular today will continue to be in the future, especially for items that start with an eco-friendly foundation. There may be shifts toward cost and value that some producers may need to account for in their offerings, but anything with a health or wellness attribute to it will likely see a successful outcome.
Protectionism and tariffs are the two significant adverse factors that could influence future growth for the consumer packaged goods industry, especially when looking at the bottom line for the smallest providers. Customers will shift their preference to the most affordable item, which means there could be a higher demand for domestic-based items in the future all over the world.
Companies will continue to look for offshoring and outsourcing opportunities to keep costs low and profits high in this industry as well. Look for brands to provide niche items to specific customer demographics to mimic the growth trends from the smallest producers.
The brands and manufacturers that are the most willing to make changes in the consumer packaged goods industry are the ones which will see the most success. Those who are unwilling to listen to critical feedback will find themselves scrambling for a way to survive. Evaluating each position now gives organizations the best possible chance to thrive in a world of evolving consumer preferences.
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