Deflation, aggressive growth in e-commerce and fragmenting retail channels contributed to slow growth of consumer packaged goods in 2016, according to Supermarket News. The category's growth rate fell to 1.4%, its lowest point in the past five years.
Smaller CPG companies, with sales of $100 million to $1 billion, grew at five times the rate of larger businesses with $5.5 billion or more in sales. Many attribute this continuing trend to consumer demand for smaller, local brands.
Many of last year's leading CPG companies were in the food and beverage space. They capitalized on consumer interest in plant-based proteins, functional beverages, indulgence brands and convenient mini-meals.
As the pace of life continues to accelerate, food manufacturers and retailers should continue to find ways to center CPG products on convenience. Consumer health trends also demand that these easy-to-prepare and easy-to-eat food and beverage applications deliver functional nutrition.
At a forum at the Food Marketing Institute's Midwinter Executives conference, Tim Lebel, president of sales for Mars Chocolate North America, said, “The biggest challenge and opportunity for CPG companies in 2017 is capitalizing on consumers’ demand for health and wellness. Consumers are demanding more choice.”
The plant-based water category, for example, is expected to enjoy healthy sales gains over the next few years as a result of consumer interest in wellness. Though some companies consider this a "fad" category, consumer interest in healthy, niche products is holding strong, and it would be wise for retailers to continue carrying products in this category or even investigate investing in private label applications.