Published Date: 2019-06-03 | Views: 85 | Consumer Goods
New product innovation and expansion beyond conventional Western consumer bases are prophesied to create ample of opportunities for consumer goods companies. The global consumer goods industry is expected to gain from global population growth and steady increase in incomes, besides constant innovation. One of the strategies that consumer goods companies could adopt to expand their footprint is building global scale along the value chain, which includes distribution, manufacturing, procurement, sales and marketing, and research and development. Another strategy could be taking a customer-centric approach to strengthening one-on-one connections with customers, learning customer preferences, and responding to marketplace trends.
Technology has played a crucial part in transforming the consumer packaged goods (CPG) industry. CPG companies are able to engage with consumers in innovative ways due to the uptake of new technologies. Consumer products companies can ensure operational efficiencies by creating an interconnected and a continuous supply chain with the development of proprietary technology. Technology has also helped in understanding customer behaviors and interests. Moreover, it has been at the core of leading industry trends, including online retailers building brick-and-mortar outlets, smart packaging, advent of branded pop-up stores, and rise of direct-to-customer brands.
Digital technologies are expected to have a significant impact on consumers and their buying patterns. According to PwC’s Global Consumer Insights Survey 2019, approximately one-third of consumers surveyed purchase products online weekly or more frequently.
● Around 25% of consumers surveyed said they buy online weekly whereas 6% said they do online shopping daily, which shows increases of three and two percentage points Y-o-Y respectively
● On the other hand, there was a drop of three percentage points in the percentage of respondents who never buy anything online. These accounted for 7% of the consumers surveyed
● Furthermore, 36% of consumers surveyed said they purchase online monthly, 23% said they shop online few times a year, and 3% said they buy online once a year
Top Companies to Concentrate on Research and Development and Partnership
Nestlé, a Swiss multinational food and drink company, is one of the leading players in the global consumer goods industry. In May 2019, it announced that its subsidiary Nespresso, the Howard G. Buffett Foundation, and the National Federation of Coffee Growers of Colombia have started a pilot program for reviving coffee production in Colombia’s El Rosario municipality in the Nariño Department.
Johnson & Johnson, a US consumer packaged goods manufacturing company, is another popular player in the consumer goods industry. According to its press release in May 2019, scientists including those from its Lung Cancer Initiative and Janssen showed in a new study that biomarkers related to the immune system may help doctors to identify high-risk lung cancer patients and treat them at the most initial stage itself.
American multinational consumer goods corporation, Procter & Gamble gave out its third quarter 2019 results in April 2019. According to its results, the company achieved growth of 1% in net sales, which grew to $16.5 billion in the third quarter. CEO David Taylor said that the company is able to deliver improved results in a challenging macroeconomic and competitive environment because of its focus on culture and organization development, productivity, and superiority.
Key Trends of Global CPG Industry
High Dependency on Data: According to analysts, CPG companies are expected to focus on converting data into a tool that would give a 360-degree and holistic view of customers. Data-driven CPG players are predicted to improve their customer engagement, increase market share, and boost sales with the use of the combination of machine learning and AI-powered analytics platforms and data from various sources for anticipating future demands.
Birth of New Job Categories: The CPG industry is not only foreseen to create new job opportunities but also new job roles with changes in consumer buying patterns and consumer behaviors. CPG companies would need to look for new talent to fill new positions such as those in data science and mobile app development.
Increase in Delivery Service Options: CPG companies including regional grocers, leading pharmacies, and global coffee chains are foretold to introduce new delivery service options or bring exciting changes in their existing ones. Conventional retailers might feel the pressure to evolve with the advancement of on-demand home delivery.
Merger and Acquisition: This strategy is not only used to expand business but also boost revenues. The success of merger and acquisition activities is forecast to encourage CPG market leaders to concentrate more on consolidation in the coming years.
Rise of E-commerce: There is no denying that more number of consumers are using online platforms for shopping purpose. According to experts, CPG companies putting emphasis on improving the online shopping experience of customers while focusing on the development of multi-channel buying experiences are expected to gain telling growth in the future.
As per PwC’s Global Consumer Insights Survey 2019, customers are observed to use smartphones and PCs more than other shopping channels to buy products online daily and weekly, excluding grocery products. The percentage splits are provided below.
● 24% of the consumers use smartphones for online shopping, at least weekly
● To shop online, at least weekly, PCs are used by 23% of the consumers
● 16% of the consumers use tablets for online shopping, at least weekly
Companies Focusing on Repaying Debt to Positively Impact US Credit Metrics
According to the Industry Top Trends 2019: Consumer Products report by S&P Global Ratings, investment-grade companies operating in the US consumer products industry are anticipated to benefit from synergies. These companies that have made transformational acquisitions are expected to focus on debt repayment, which could strengthen credit metrics in the US in the near future. Europe could see consumer products companies concentrating more on improving their time-to-market and ensuring product innovation. Latin America is predicted to face challenges arising out of volatility in commodity prices, slow industrial growth, trade and political risks, and weaker external conditions.
On the other hand, Asia Pacific could see growth on the back of consumption increases due to population growth. Stable credits trends are forecast to gain support from the moderate rise in regional consumption with the growth of the middle-income population. The competition could become intense as companies look to make changes as per the shift in shopping preferences to online channels and changing consumer tastes.
Demand for Pet Care Products to Increase with High Adoption of Pets
The global consumer goods industry encompasses important sectors such as pet care, sporting goods, home textile, personal care products, furniture, and apparel. According to researchers, the global pet care market is expected to obtain growth due to the rising demand for pet products, high adoption of pets, and need to prevent animal diseases. The demand for furniture is anticipated to grow as it rides on the rise of the hospitality and real estate industries. Furthermore, increasing focus of governments on infrastructure development and gradually rising demand for premium and luxury furniture are predicted to bode well for the global market.
The growth of the global personal care products market is foreseen to improve as young consumers, especially women, continue to spend heavily on personal grooming, color cosmetics, skin care, and facial care. The demand for sporting goods is foretold to grow with increasing interest in sports and related activities.