A combination of global events, digital developments and shifting consumer habits have an impact on trends in the consumer packaged goods (CPG) industry. As a player in the industry, it’s important to stay up to date with these developments if you want to stay ahead of the competition.
Preparation is key to success in the CPG industry, and this includes keeping your sights on the upcoming years when establishing a strategy. We’ve put together a few of the most important CPG industry trends for 2022 to 2025.
Industry leaders prioritize direct-to-consumer (DTC)
CPG companies are prioritizing DTC in an effort to target their marketing messages, increase customer lifetime value, improve customer relations and better manage brand reputation. DTC is being activated in various ways, namely acquiring competitors, launching new brands and selling directly to consumers.
The subtle shift toward buying direct is becoming increasingly prevalent. For example, one out of five consumers in the UAE bought products on a DTC channel online in 2021, contributing to more than $1 billion sales on online DTC channels in the UAE market last year.
DTC startups challenge traditional CPG brands
Modern enterprises typically adopt a more flexible and current business model which meets consumers where they are at - including DTC channels. The pandemic led to a small business boom as people were laid off of jobs and took the opportunity to start their own business.
Emerging businesses are challenging the traditional CPG business model and cutting out the middleman. In the process, consumer relations are strengthened and present a threat to older brands.
Increased retailer brands
Not only are CPG companies shifting towards DTC channels, but retailers are also starting their own brands and pushing their own e-commerce storefronts. By creating a private label, retailers can pursue better margins and get direct control over product development.
These trends are emerging around the world. For example, Walmart launched its own consumer brand in the United States and Amazon has revealed multiple private label brands such as AmazonBasics and Solimo.
Prioritizing fast and easy delivery
As technology continues to develop, e-commerce sales have been consistently rising. The pandemic escalated this growth and shopping online has become a large part of the new normal. In the process, consumers have grown accustomed to fast and easy delivery. A 2021 consumer survey revealed that 33% of consumers have higher expectations for fast delivery and 40% of shoppers have higher expectations for free shipping.
Consider that e-commerce revenue in the UAE is expected to show an annual growth rate of 10.4% from 2022 to 2025, with a projected market volume of US$17,214 million by 2025. As the focus on e-commerce continues to grow, so does the consumer expectation for fast and easy delivery.
Growth in CPG omni-channel shopping experiences
With digital development, consumers have become accustomed to making online purchases using different devices. While specific e-commerce trends are growing, consumers still desire an in-person shopping experience.
CPG brands are starting to combine their various sales channels to offer an inclusive and seamless shopping experience. E-commerce has leveled the playing field but omni-channel shopping allows businesses to stay one step ahead and keep up with various consumer demands. Key aspects in omni-channel efforts include personalization, machine learning, and being mobile-friendly.
Multi-channel marketing efforts
In the same way that consumers are making purchases on various platforms, so too are CPG brands marketing on various platforms. While there’s been a growing focus on digital marketing channels, such as SEO and PPC, an effort is still being made to place TV ads and invest in public relations (PR). In addition, influencer marketing and social media are considered in the marketing budget.
Consider Under Armour’s multi-channel marketing approach that includes personalities and personalization. The CPG brand has invested in creating social media content that features celebrities and endorsements, and this content is shared on a variety of different channels, including the Under Armour App.
Demand for sustainability and set brand values
Consumers are becoming more intentional about the purchases that they make and the brands that they support. As conscious buyers, consumers are looking to support brands that mimic their own personal values, and they are willing to switch products or services if these values are violated.
Sustainability, in particular, is a growing priority among consumers and CPG brands are meeting these demands. A recent study revealed that 75% of adults in the UAE agree that companies behaving in more sustainable and eco-friendly ways is more important than before, and this includes consumer packaged goods.
CPG brands are heeding the call. Consider how Splash fashion in the UAE has shifted to using sustainable, raw material that is eco-friendly and delivered in sustainable packaging. In the process, Splash Fashions recycled 38 million PET bottles to produce 2,5 million recycled garments, among other efforts.
Growing demand for self-care products
Self care has become a priority for consumers as global society begins to prioritize health and wellness above image and status.
In many ways, the pandemic has redefined beauty as self care and this is impacting how CPG brands tackle the marketing of beauty products, as well as their investment in self care products.
Personalized experience becomes the norm
With data playing such a fundamental role in marketing efforts and the management of supply and demand, brands are able to target their consumers directly. CPG brands understand the importance of personalizing a message and consumers have come to expect a customized buying experience.
Some of the ways to take advantage of the trend is through product quizzes and online tools to help consumers find the best product to meet their needs.
Consumer Goods Consulting
At Ollen Group, our strategy consultancy services are up to date with consumer shifts in the Middle East, and the necessary steps needed to find success in the future. Whether you work in FMCG, food and beverage, beauty and cosmetics, or appliances and electronics, among others, Ollen Group consumer goods consultancy services offer turnkey solutions from strategy to execution, as well as design, development, and deployment.
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