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It’s no secret that the Consumer Packaged Goods (CPG) sector is heavily influenced by shifting consumer behaviors, societal changes, and economic fluctuations. As 2024 has unfolded, it’s becoming clear that there are several trends shaping how consumers purchase goods, how companies respond, and how the workforce adapts.
This blog will examine the key factors currently affecting the CPG industry, from purchasing trends to legislative changes, and how companies can stay competitive in this dynamic environment.
The rise of health-conscious consumers and the demand for convenience are two major forces impacting CPG purchasing behaviors.
There is growing consumer demand for clean-label foods—products that are minimally processed, free from artificial additives, and contain simple, recognizable ingredients. Our very own Kathy Abdouch is a huge fan of Smart Sweets.
According to a 2023 report by NielsenIQ, 55% of consumers prefer clean-label foods, and this trend shows no signs of slowing down. This shift is driven by increasing awareness of the health impacts of processed foods, especially post-pandemic, as consumers place more importance on maintaining a healthy lifestyle.
However, there’s a counter-trend: the indulgence in comfort foods. A survey by Mintel in 2023 found that 62% of consumers admitted to buying more snacks during stressful times, with indulgent snacks like chips, cookies, and candies remaining popular, especially in challenging economic climates.
Convenience remains a major driver, with grab-and-go snacks, ready-to-eat meals, and meal kits continuing to see robust demand. According to Grand View Research, the global ready-to-eat market is expected to grow at a CAGR of 7.4% from 2023 to 2028, as consumers prioritize time-saving options.
Brands must adapt to both ends of the spectrum, offering healthier alternatives while continuing to cater to consumers seeking indulgence. Packaging innovations, such as resealable and portion-controlled packages, are also crucial for brands competing in the snack and convenience categories.
Social media has become a key platform for shaping consumer purchasing habits. The viral trend of ‘restock’ videos, where users show off their perfectly organized pantries, has significantly influenced buying behaviors in the CPG space.
These videos, particularly popular on TikTok, often feature aesthetically pleasing shots and sounds (for you ASMR fans) of consumers replenishing their pantry with neatly packaged goods. The trend has driven demand for packaged goods, as consumers look to emulate the influencers they follow. This social media-driven trend boosts the visibility of products and packaging, encouraging impulse buys, with brands trialling social media e-commerce opportunities such as TikTok shop as another outlet to reach these audiences in the throws of the ’I want to do that’ mindset.
In 2023, a survey by Sprout Social found that 54% of consumers are more likely to buy from brands they follow on social media. Platforms like Instagram and TikTok allow CPG brands to engage with consumers directly, create visually appealing content, and build brand loyalty.
Companies must harness the power of social media to boost brand awareness and connect with consumers. Engaging with influencers, leveraging user-generated content, and creating social media campaigns can drive consumer interest and loyalty. Packaging design is also more important than ever, as aesthetically appealing products are more likely to be featured in these viral videos.
The current economic landscape in the U.S. is shaped by inflation, rising interest rates, and uncertainty about the future. These factors are influencing how consumers spend their money, particularly when it comes to discretionary goods like premium food and beverages.
In 2023, inflation affected food prices across the board, with some staples seeing price hikes of over 10%, according to the U.S. Bureau of Labor Statistics. Consumers have responded by cutting back on premium products and seeking out store brands or bulk purchases to save money. The Deloitte 2023 consumer survey reported that 58% of consumers are trading down, choosing cheaper brands or products in response to rising prices.
As a result, many CPG companies are seeing increased competition from private-label or value-based brands. The Private Label Manufacturers Association reported that private-label brands gained market share in 2023, with 20% year-over-year growth.
Companies must balance maintaining margins with offering value to price-sensitive consumers. Offering budget-friendly product lines or promotions can help maintain market share during economic downturns, while premium brands may need to emphasize quality and innovation to justify higher prices.
The CPG labor market is evolving in response to economic pressures and Industry 4.0, which emphasizes automation, data, and digital transformation.
The U.S. labor market continues to experience wage growth, with the average annual wage in manufacturing, a key part of the CPG sector, rising by 4.6% in 2023. This wage growth, combined with the challenges of attracting talent in a tight labor market, is driving up operational costs for CPG companies.
Many companies are investing in automation to offset labor shortages. A 2023 McKinsey report indicated that 45% of CPG companies have increased their investment in automation to manage rising labor costs and improve efficiency. However, this shift also creates a need for a more technically skilled workforce, as companies must hire employees who can operate and manage these automated systems.
To remain competitive, CPG companies must invest in upskilling their workforce to handle new technologies. Recruiting for digital skills, such as data analytics, AI, and IoT, will be critical. Companies should also focus on employee retention by offering competitive salaries, benefits, and opportunities for professional development.
The regulatory landscape in the U.S. continues to evolve, with new laws and policies impacting the CPG sector.
There is increasing legislative pressure around sustainability, particularly regarding packaging waste. Several states, including California and New York, are enacting extended producer responsibility (EPR) laws that hold companies accountable for the lifecycle of their packaging. A 2024 consumer report by PWC, found that consumers are willing to pay a 9.7% sustainability premium, even in the wake of increased cost of living.
Recent food safety concerns have prompted tighter regulations around product labeling and food safety protocols. In 2023, the FDA issued new guidelines on allergen labeling, which require clearer identification of allergen risks. These regulations are influencing how companies package and label their products, particularly in the clean-label and health-focused categories.
Companies must stay ahead of regulatory changes to avoid penalties and maintain consumer trust. Investing in sustainable packaging and ensuring compliance with food safety regulations are crucial. Companies that are proactive in addressing these concerns will be well-positioned to capture environmentally conscious consumers and avoid disruptions from regulatory non-compliance.
Despite the challenges, the CPG industry is positioned for continued growth, driven by technological advancements, evolving consumer behaviors, and global expansion.
The global CPG market is expected to grow from $8 trillion in 2023 to over $10 trillion by 2028, according to Mordor Intelligence. This growth will be driven by digital transformation, increased automation, and expansion into emerging markets.
As consumers demand more sustainable and innovative products, CPG companies that invest in product development, eco-friendly packaging, and technology will be poised for success. The global push toward sustainability, combined with advancements in Industry 4.0 technologies, presents significant opportunities for growth and innovation in the coming years.
To capitalize on these growth opportunities, CPG companies must stay agile and forward-thinking. Investing in digital transformation, sustainability, and product innovation will be critical to staying competitive in a rapidly changing market.
The CPG sector in 2024 is being shaped by several consumer, societal, and economic trends. From the rise of health-conscious eating and social media-driven purchasing behaviors to economic pressures and evolving workforce needs, CPG companies must navigate these changes carefully. By staying ahead of consumer preferences, leveraging social media, adapting to economic realities, and complying with new regulations, companies can position themselves for long-term success in this dynamic industry. If you are looking for a strategic partner when it comes to CPG recruitment – you know where to find us.
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