9 Important CPG Industry Trends 2021-2025
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The consumer packaged goods industry is changing fast.
New CPG competitors are emerging every day.
And many incumbents are struggling to adapt to changing marketplaces, consumer behavior and pricing strategies.
That said, new technologies and consumption habits are also creating new opportunities — for both stalwarts and startups.
And in this post we'll outline 9 of the most important trends impacting the CPG industry right now.
Including several trends (like product personalization, direct-to-consumer upstarts, private label brands, and sustainability) that are likely to continue growing into 2025 and beyond.
1. Industry Stalwarts Rush Into DTC
Incumbent CPG companies are joining the direct-to-consumer wave.
And they’re doing it in 3 major ways:
First, by acquiring (or investing in) competitors.
Unilever has been particularly aggressive.
Since 2015, CPG Unilever has acquired dozens of companies — including many DTC brands.
Unilever has been on an a acquisition spree as of late.
But Procter & Gamble isn’t resting on its laurels, either. Its recent acquisitions include This is L for $100M, Walker & Company, First Aid Beauty and more.
Second, legacy CPG companies are launching entirely new brands.
Procter & Gamble’s EC30 is one example of this increasingly common strategy.
EC30 is a DTC brand under Procter & Gamble.
Finally, traditional CPG brands are selling their existing brands directly to consumers.
Last May, PepsiCo announced two new websites to do exactly that: PantryShop.com and Snacks.com.
And their DTC sales nearly doubled in Q3.
Snacks.com is PepsiCo’s direct-to-consumer ecommerce store for Frito-Lay products.
And Heinz recently followed suit with their “Heinz To Home” ecommerce websites, launched in the U.K. and Australia during the Coronavirus pandemic.
2. New "Challenger" CPG Brands Emerge
DTC online sales grew to an estimated $17.75 billion in the U.S. last year.
By removing the middleman, the direct-to-consumer model promises bigger margins, more nimbleness in product offerings, and valuable consumer relationships.
And right now, DTC startups are busy nibbling away at traditional CPG brands' profits.
Thanks to competitors like Dollar Shave Club and Harrys, Gillette's share of the US razor market fell from about 70% to under 50% in the course of a decade.
Like Dollar Shave Club, many DTC startups use a subscription model, bringing in a steady stream of recurring revenue.
Other growing subscription-based DTC brands include Blue Apron, GlossyBox and BarkBox.
BarkBox offers dog toys and treats via monthly subscription.
But without needing to compete for retail shelf space, the DTC business model is susceptible to competition.
Newer competitors like Walker & Company, HelloFresh and BeardBrand are threatening older challenger brands’ footholds.
Search interest in HelloFresh, a Blue Apron competitor, has been rising.
3. More Private Label Brands Launch
CPG companies are pushing their own ecommerce storefronts.
But an even longer-trend term is the other side of the coin: retailers starting their own brands.
With better margins and direct control over product development, private label brands are attractive to retailers the same way DTC brands are attractive to CPG conglomerates.
Amazon's private label clothing brand Goodthreads is one major example.
Searches for Goodthreads have increased by 3400% since 2016.
And it's easy for customers to spot AmazonBasics and Amazon Essentials as two other brands from the company.
But beyond those, over the years Amazon has actually grown dozens of private label brands.
Amazon's Solimo is one of many of their in-house CPG brands.
4. Renewed Focus On Faster and Easier Delivery Options
Ecommerce has been a growing CPG channel for decades now.
But with the pandemic extending into 2021, it's gone into turbo mode.
And Walmart's online sales have almost doubled in the U.S. in that time (and more than doubled in China).
Walmart also recently launched a program called Walmart Plus, to compete with Amazon Prime and allow the retailer to offer faster free shipping to customers.
Walmart+ launched in 2021.
Walmart+ provides unlimited two-day shipping along with other perks for $98 per year.
But Amazon has been focusing on improving delivery times since long before the pandemic. In April 2019, it announced one-day shipping as the new standard for U.S. Amazon Prime members.
(It's estimated that as many as 82% of U.S. households subscribe to Amazon Prime.)
Global searches for Amazon Prime are up 1.3x over 5 years.
But for some purchases, even one-day shipping isn't fast enough.
That's why Amazon offers same-day delivery of many grocery items.
Still, dedicated fast-delivery CPG retailers are growing rapidly to meet additional demand. One example of this is GoPuff, which is basically an ecommerce-only version of 7-Eleven.
Search interest in GoPuff has been rising for years, and spiked during pandemic lockdowns.
According to the company, they deliver in minutes - not days or even hours.
Which is a critical feature for many CPG products (like toilet paper and soda).
5. Omni-Channel CPG Shopping Takes Hold
Another growing CPG trend is the push from brands and retailers to create omni-channel shopping experiences.
In other words: purchasing is smooth and seamless across different devices, and even in-store vs. online.
Often, these experiences are tied together.
For example, even before the pandemic, Walmart was quickly expanding its in-store pickup kiosks. (They increased the number by 8x in 2 years, to 1,700 stores.)
"Grocery pick-up" searches since 2016.
While Sephora uses online resources to enhance - rather than replace - the in-store experience. The retailer offers in-store tablets so that people can access their online "Loves" (shopping lists) on large screens inside stores.
6. CPG Brands Go All-In With Multi-Channel Marketing
Consumer packaged good companies are also taking a more omni-channel approach to their marketing.
TV ads, product placements and PR are still massively popular.
(In fact, as of 2019, CPG was still the top-spending industry on up-front TV advertising.)
And traditional digital marketing channels like SEO and pay-per-click advertising aren't going away, either.
But influencer marketing has been on a tear in recent years. Especially in the CPG space.
Skincare brand CeraVe (a division of L'Oreal) has demonstrated how powerful this can be, crediting TikTok influencer Hyram Yarbro with boosting their sales among Gen Z two years earlier than forecasted.
And not just with big-name celebrities. Even "micro" and "nano" influencers, who have as few as 1,000 social media followers, are delivering results for brands.
Searches for micro influencers have increased rapidly over the last 5 years.
7. Consumers Demand Sustainability and Clear Brand Values
47% of internet users say they'd switched products or services after a company violated their personal values.
Specifically, the top reasons for switching were protecting the environment, lack of transparency, and climate change.
(Image source: eMarketer)
According to Nielsen, sustainable-minded consumers are expected to spend up to $150 billion on sustainable products by 2021 in the US alone. The company says the top-growth subcategories of the sustainable movement include vegan, cruelty free, and B corporations.
Search interest in cruelty-free products and companies has increased dramatically over the past 10 years.
Searches for "Puracy" over the last 5 years.
Some companies have also seen positive results by taking a public stance without necessarily changing the way their products are made.
For example, Nike's decision to continue sponsoring Colin Kaepernick after the NFL dropped him for "taking a knee" to protest police brutality during the national anthem.
While opponents boycotted Nike for this choice, it ultimately led to an increase in sales.
8. Growing Demand For Self-Care Products
Millennials spend more on self-care than any other generation before them (2x more than Baby Boomers.)
And for the first time ever, skincare products are now outselling makeup.
Brands like CeraVe and DRMTLGY are taking full advantage, seeing interest in their brands spike dramatically.
Searches for direct-to-consumer startup skincare brand DRMTLGY are on the rise.
CBD products are another rapidly-growing part of the self-care category.
CBD products were not legal nationwide in the US until 2018.
But now, they're already used by an estimated 28% of US consumers - and 56% of Millennials. And sales are expected to continue growing very quickly: from about $5 billion in 2019 to over $16 billion in 2022.
9. Consumers Expect Product Personalization
70% of the top DTC subscription brands use product quizzes to help personalize the customer experience. Usually during or before the signup process.
For example, monthly subscription box service BarkBox asks questions like: what's your dog's name? How big is it? As well as breed, date of birth and allergies.
According to Forbes, about 120,000 different variations of each BarkBox go out to a million dogs each month.
BarkBox's personalization process.
As a way to boost ecommerce conversion rates and customer retention, the beauty brand Tatcha also allows personalization, via its Ritual Finder tool.
Tatcha interest may have peaked. But the brand still attracts more than 90K searches per month.
Personalization is Color&Co's unique selling proposition.
From DTC to product personalization, those are the top top CPG trends to keep an eye on right now.
One theme that ties many of these trends together is convenience. Thanks largely to ecommerce options and improved delivery times, consumers increasingly expect "CPG on demand". Another interesting angle that many of these trends share is a focus on sustainability and the environment.
Considering that most CPG products are disposable, it makes sense that eco-minded consumers would turn their attention to the environmental impact of the products that they use every day.
It will be interesting to see how these trends shake out in the coming years.