11 Trends That Will Shape the CPG Industry in 2020
By Hannah Hammond on Jan. 02, 2020JACKSONVILLE, Fla. — Mainstream CBD products and plant-based everything are among the consumer packaged goods predictions that sales and marketing agency Acosta has for 2020.
"We expect to see continued growth in many of the categories that took off in 2019, such as self-care, CBD and plant-based food," said Colin Stewart, executive vice president of business intelligence for Acosta, Jacksonville, Fla. "Additionally, in 2020, retailers will focus on becoming more environmentally conscious, sourcing locally, keeping prices low and making the in-store shopping experience more enjoyable and tech-friendly."
Here are some of Acosta’s predictions for the coming year …
1. Experience-based shopping
Brands building memorable experiences will cash in, thanks to millennials. Seventy-two percent of millennials would rather pay for experiences than material items, according to Acosta.
2. Emphasis on sustainability
Seventy-three percent of consumers are willing to change their purchase habits to improve the environment, causing retailers to focus on eco-friendly initiatives.
3. CBD goes mainstream
CBD sales are projected to grow from less than $2 billion in 2018 to $20 billion by 2024, according to Acosta.
Twenty-eight percent of consumers are already using CBD oil and 54% are open to trying it, according to Acosta. Prices will likely come down as consumers become more knowledgeable about the product.
4. Plant-based everything
Sales of plant-based food grew by double digits and at five times the rate of total food sales in the past year, ultimately reaching $4.5 billion. Sales grew in part due to improved taste and protein benefits as well as availability in more retail grocers and on mainstream foodservice items.
5. Comeback of premiumization
With a strong economy, consumers will be eager to trade up to premium products to indulge or treat themselves, Acosta said.
Seven out of 10 shoppers trade up to premium products for indulgence or to treat themselves. Fifty-two percent of consumers say buying premium makes them feel good, while 42% will pay a premium for organic or all-natural ingredients.
6. Further expansion of functional foods and beverages
Nearly two-thirds of U.S. adults agree that health has significant effect on their food and beverage purchase decisions. Sales of food and beverages with added nutritional benefits—such as electrolytes, minerals, adaptogens and prebiotics—are expected to reach $275 billion by 2025, according to Acosta.
7. Rise of private brands
Private brands reached $143 billion in sales in the past year, up 3.7% from the previous year.
With a premium face-lift on some private-brand products, stores with premium products—including Whole Foods Market, Sprouts and The Fresh Market—have experienced an 11% boost in private-brand sales, while value grocery stores such as Aldi and Lidl have seen private-brand sales decrease by 4%.
8. Reduced access to e-cigarettes and tobacco
Retailers will focus less on non-healthy products, including tobacco-based products, as their focus on health and wellness increases, Acosta said.
9. Retailers double down on remodels
Some of the biggest retailers, including Walmart, Target and Aldi, are spending billions of dollars to remodel their existing stores. Competition to attract store foot traffic will intensify in the coming years, according to Acosta.
Major retailers will include more space for fresh foods, online ordering solutions and easier checkout plans.
10. Path to purchase is no longer linear
Loyalty will become more fragmented as consumers move seamlessly between both physical and virtual channels to meet their needs, Acosta predicted.
Digital is affecting purchase decision-making even before the consumer enters the store.
11. Growth of nontraditional channels
Strong sales growth—a 3.1% five-year compound annual growth rate (CAGR)—is projected for small store formats (those with less than 50,000 square feet), and small-format channels such as dollar, discount and specialty stores are projected to experience a five-year CAGR of 23.4%.
These stores are succeeding by offering differentiated items, Acosta said.