Better-for-You Snacking & On-the-Go Protein Among the Top Levers Pulled by CPG Growth Leaders

CHICAGO — The U.S. consumer packaged goods (CPG) industry is winning the battle for short- to mid-term growth by a multitude of factors, such as innovation, surgical pricing, e-commerce and consumer-trend fulfillment.

The CPG industry increased by 2.2 percent in 2019, outpacing 2018 growth by 2 percent, according to the eighth annual US CPG Growth Leaders: Who They Are and Why They Win report from Boston Consulting Group (BCG)/IRI CPG study, released at the end of March.

Some key findings from the study include:

LEVERS TO GROWTH

The BCG/IRI study identified four main levers of CPG market growth. In addition to acquisitions and innovation, leading companies are implementing careful pricing changes, placing more emphasis on e-commerce and introducing products that satisfy emerging consumer trends, such as increased demand for:

• Multi-functional beverages
• Protein-on-the-go
• Premium self-care
• Better-for-you snacking
• Simple and transparent ingredients
• Products focused on the Hispanic market

"Based on the results of our 2019 Growth Leaders study, we expect that small, medium and large companies that leverage these emerging trends will be well-positioned to capture growth in the years to come," said Dr. Krishnakumar S. Davey, president of Strategic Analytics for IRI. "Some of the trends (e.g., protein-on-the-go, better-for-you snacking) and categories (e.g., candy) of 2019 winners are challenged in these turbulent times. Emerging data suggests that smaller companies continue to gain so far post-COVID, with those present in stock-up categories benefitting most. Large manufacturers are not necessarily seeing a gain yet. 

"IRI and BCG are continuing to study the acute and rapidly evolving impact the COVID-19 pandemic has impacted consumer spending on CPG products globally. IRI and BCG are partnering to provide CPG manufacturers and retailers with measurement, analysis, and insights to inform their strategy in this unprecedented environment," the executive added.

GROWTH LEADERS

Growth was driven exclusively by pricing adjustments in the face of declining average volumes across measured channels. Despite the volume drop, top growth leaders saw their volumes increase over 2018.

For the third consecutive year, Constellation Brands lead the large companies category, followed by Johnson & Johnson, Tyson, General Foods and Procter & Gamble (P&G). All companies except for P&G saw sales volumes increase in 2019.

Leading mid-size companies include VPX, maker of the sports drink Bang, and e-cigarette maker Juul. Leading small CPG companies include e-cigarette maker NJOY and sports drink company BodyArmor.

PRIVATE LABEL ON THE RISE

Private label and small CPG companies continue to increase their share of the market. Since 2014, approximately $19 billion in industry sales have shifted from large and mid-size to private label. At the same time, private label volume has dropped 1.5 percent while volume among mid- to large companies is on the rise after a slowdown in 2018.

VALUABLE ACQUISITIONS

Over the past five years, a mix of acquisitions and portfolio shaping has driven growth among both large and small CPG companies. Acquisitions made by Tyson in the past five years account for 85 percent of its 2019 growth and 53 percent of its overall portfolio.

"While CPG companies are using a variety of tools to sustain growth, interest in acquisition seems to be on the rise even among smaller players," said BCG Managing Director and partner Aman Gupta.

To download US CPG Growth Leaders: Who They Are and Why They Win is available here.