Top Predictions for the CPG Industry in 2020

JACKSONVILLE, Fla. — Higher demand for pet products, integration of the in-store and online shopping experience and non-traditional channel growth are among the top predictions for the consumer packaged goods (CPG) industry in the year ahead.

A new report from Acosta, a full-service sales and marketing agency based in Jacksonville, compiles 20 top CPG predictions for 2020, grouped into four categories: Macro Consumer Predictions, Category/Brand Predictions, Shopping Experience Predictions and Store Operations Predictions.

"We expect to see continued growth in many of the categories that took off in 2019 such as self-care, CBD and plant-based food," said Colin Stewart, Executive Vice President of Business Intelligence at Acosta. "Additionally, in 2020, retailers will focus on becoming more environmentally conscious, sourcing locally, keeping prices low and making the in-store shopping experience more enjoyable and tech-friendly."

These are Acosta's top 20 predictions for 2020:

Macro Consumer Predictions

1. Focus on self-care: The $9.9 billion self-care industry is expected to continue growing.
2. Experience-based shopping: Brands building memorable experiences will cash in, thanks to millennials.
3. Emphasis on sustainability: With 73 percent of consumers willing to change their purchase habits to improve the environment, retailers will focus on eco-friendly initiatives.

Category/Brand Predictions

4. CBD goes mainstream: With 28 percent of consumers already using CBD oil, and another 54 percent open to trying it, CBD sales are projected to grow from just under $2 billion in 2018 to $20 billion by 2024.
5. Plant-based everything: Sales of plant-based food grew by double digits and at five times the rate of total food sales in the past year, with continued growth expected.
6. Consumers' need for more pet products: Pet food continue to be a driver for brick-and-mortar sales as well as in e-commerce, which grew by more than 50 percent last year.
7. Premiumization makes a comeback: Consumers will be eager to trade up to premium products to indulge or treat themselves as the economy continues going strong.
8. Expansion of functional foods & beverages: With "healthfulness" becoming increasingly important to consumers — nearly two-thirds of U.S. adults agree that it has a significant impact on their food and beverage purchase decisions — sales of food and beverages with added nutritional benefits, like electrolytes, minerals, adaptogens, and prebiotics, are expected to reach $275 billion by 2025.
9. Private brands on the rise: The private brands market, which represented almost one in five consumer packaged goods dollars sold last year, will continue to grow.
10. Reduced access to e-cigarettes & tobacco: Retailers' focus on health and wellness will continue to outweigh their sales focus on non-healthy products.
11. Buying local grows: Retailers will need to differentiate their assortment at the local market level to entice customers as consumers become increasingly aware that locally sourced food will be fresher, support regional economies and generate fewer carbon emissions.

Shopping Experience Predictions

12. Retailers double down on remodels: Major retailers will incorporate more fresh food space, online order solutions like in-store kiosks, and easier checkout options, including cashierless technology.
13. Focus on store experience: Most consumers like a brick-and-mortar store experience that delivers sights, sounds and smells, and retailers can keep customers further engaged with events like cooking demonstrations.
14. Mobile-enabled shopping in the store: An estimated 53 percent of all purchase decisions are digitally influenced, so a seamless integration between the store and the digital experience is imperative.
15. Path to purchase is no longer linear: Loyalty will become more fragmented, with 87 percent of all shoppers and 94 percent of Gen Z/millennial shoppers using smartphones, shoppers can move seamlessly between both physical and virtual channels to meet their household needs.
16. Continued perimeter improvement: Prepared foods, which topped $12.5 billion in sales last year, will continue to be a heavy-hitter on the perimeter.
17. Low price is table stakes: Retailers will continue to press for non-negotiable low prices to remain competitive.

Store Operations Predictions

18. Supply chain focus: Retailers will focus on increasing on-shelf availability and lowering inventory costs by leveraging inventory optimization solutions and demand-based systems.
19. Expanded grocery delivery and pickup options: Online grocery spending is expected to more than double by 2023, with the 21 percent of U.S. shoppers buying groceries online this year expected to grow significantly as retailer click and collect and same day grocery solutions expand.
20. Non-traditional channel growth: Strong sales growth is projected for small store formats and club channel retailers, which are succeeding by offering differentiated items, whether it is a focus on better-for-you, local/specialty/curated offerings, or by providing value through their own brands.

Acosta's top 20 CPG industry predictions for 2020 were compiled by Acosta business leaders across the country and supported by analysis and custom research by Acosta Strategic Advisors.