Demand for Consumer Packaged Goods Dips as Prices Rise

Convenience is resonating with consumers, as sales of breakfast foods and other items are softening.
Grocery cart falling off downward facing arrow

CHICAGO In April 2023, consumer packaged goods (CPG) maintained their recent trends, with food-and-beverage sales revenue increasing by 6 percent as unit sales fell by 2 percent, while nonedible CPG sales revenue rose by 3 percent and unit sales fell by 5 percent.

Overall discretionary U.S. general merchandise retail sales revenue fell 7 percent in April 2023 vs. April 2022, while unit sales fell 8 percent, according to a new report from Circana.

The marketing firm also found this continued the general trajectory of recent months as sales exhibited diminished demand alongside elevated prices. A deeper dive across CPG and foodservice performance revealed a search for convenience resonating with consumers, as sales of breakfast foods and other items are softening at grocery stores even as the morning meal is adding traffic momentum at restaurants.

"Whether it's the growing influence of social media, returning to the office or just getting out to more activities and socializing, the social side of life is back," said Marshal Cohen, chief retail industry advisor for Circana. "However, the enduring high prices of grocery items are forcing consumers to prioritize their spending decisions and make trade-offs."

While April declines are consistent with declines in March, stories of growth resulting from consumer lifestyle changes do exist in certain categories. Circana found prestige beauty and apparel represent more than half of the top 20 performing categories in the first quarter, led by products like face makeup, fragrance juices, woven shirts and sportscoats.

"While consumers are still feeling financially crunched, they are also resuming their busy social schedules, and it is being reflected in the details of how they are spending," said Cohen, "Manufacturers and retailers need to understand what is taking priority for the consumer, think about how that may evolve and be prepared to respond to the opportunities that will come with the next phase of changes."

Chicago-based Circana, previously The NPD Group and IRI, serves as an advisor on the complexity of consumer behavior. Through advanced analytics, cross-industry data and subject matter expertise, Circana provides insights and research that helps clients unlock business growth.