By Carrie Shea, Managing Partner, Growth Consulting, IRI
As the COVID-19 pandemic flipped most people's lives upside down, those of us in CPG and retail were closely watching the evolution of consumers' shopping and behavior trends to understand and predict what would happen next. While we expect some trends that appeared during COVID, such as not traveling and eating 100% of your meals at home, to wane as the country starts to reopen, IRI consumer data suggest that some trends – including those that began pre-COVID – are here for the long term.
I recently presented at a SVG Ventures' Thrive AgTech event, covering five key trends that are redefining daily life and that I believe CPG manufacturers and retailers should be watching closely to spark and inspire innovation opportunities in their businesses.
1. Immune-Boosting Foods
According to the CDC, influenza rates have hit historic lows during the COVID-19 pandemic. As consumers have now directed many of their health efforts toward avoiding the coronavirus, they've actively sought foods that build and sustain strong immune systems. In fact, according to IRI data, 37% of consumers say “food is a better medicine than medicine,” and 17% reported they would buy more products that support immunity as a result of the pandemic. One example is elderberry, which saw a 125% sales increase during 2020. Also, over the past year, Google Trends has seen huge spikes in online searches for “foods that boost your immune system.”
2. Plant-Based Foods
During the pandemic's peak, many consumers experienced difficulty finding certain foods as many items were out of stock due to supply chain challenges. Continued out-of-stock issues, combined with consumers' desire for improved health, pushed many to experiment with alternative options such as plant-based diets and non-meat alternatives. While traditional meat (+20%) and dairy (+8%) both saw healthy growth in 2020, as did CPG as a whole, plant-based meat (+84%) and dairy alternatives (+21%) significantly outgrew their traditional counterparts compared to prior years.
3. Product Transparency
Building on the first two trends, consumers are increasingly aware of and demanding full transparency for the food ingredients and the sources of those ingredients that they put into their bodies. They want to know exactly what is in their food, where it came from and how it was grown or produced. This includes both ingredient transparency (free from, never frozen, added nutrients) and sourcing transparency (locally grown, U.S.-produced, free trade), as well as purpose transparency (B-Corp, employee-owned, diversity). Specialty diets such as keto, gluten-free and others, along with consumer segments wanting more “natural” products, have made consumers scrutinize labels much more closely. During the pandemic, brands that used labels to highlight certain product attributes and social media to share their company or food's story were able to capture consumers' attention and baskets.
CPG manufacturers and retailers who want to capture consumer loyalty need to adjust their activities so products are sourced, made and packaged sustainably. As younger generations gain buying power, they expect sustainable practices from their food sources – and not just the manufacturers. According to IRI data, nearly half of Gen Z and Millennials actively seek out retailers that carry sustainable products. Once the pandemic winds down, we believe that the sustainability trends picked up during 2020 will be here to stay. We've seen 54% of consumers report that they are buying more or as many organic products than before COVID-19, and 69% are buying more or as many eco-friendly products as they did prior to COVID-19. This is all connected to their increasing focus on health and wellness.
5. CPG Mood Enhancements
2020 was undoubtedly stressful for most of us in some way, and many consumers sought food and beverage products that provided comfort and alleviated stress and anxiety. A new category of functional non-alcohol beverages saw significant growth this past year – euphoric and nootropic beverages. Euphoric beverages are engineered to provide a feeling of elation when consumed, while nootropic beverages are aimed at improving mental clarity and cut stress. Given all that consumers have been dealing with in their daily lives over the past year and the fact that the pandemic is not yet over, we expect them to continue seeking out stress-relieving CPG solutions as they become more comfortable with these new products that contain certain and in-demand nutrients and supplements that promote mental well-being.
Implications for the Future
As we make our way through the first half of 2021, we are already seeing that these trends are continuing to stick with consumers as they focus on health and wellness, indulgence, premiumization and taste exploration. With the economy and consumers continuing to adjust to a COVID world, CPG manufacturers and retailers can expect to see the following in the coming years:
A Bifurcated Economy – Increased mobility will squeeze consumer budgets, pushing them toward value and private label products. At the same time, premium products backed by purpose-driven companies will also see growth.
Sustainability as a Value Driver – Brands and retailers should lean heavily into sustainability as consumers' value for those types of products will continue to grow.
Transparency as Table Stakes – Consumers have been taught to question everything as the line between truth and bias has blurred even further during the pandemic. Brands will need to be fully transparent about ingredients, labeling, sourcing and their organizations' diversity, equity and inclusion practices to gain consumer trust.
Food as Medicine – The cost of health care continues to increase, and consumers are more interested in experimenting with foods for improving performance and enhancing health. Brands have an opportunity to provide alternatives that offer some of the same benefits as pharmaceuticals without the cost of traditional options.
Being able to predict the future is already hidden in consumers' daily routines. By taking this data and turning it into insights that you can act on, you can stay ahead of the COVID curve and ensure that you are creating and/or selling the products that CPG consumers want and need.
IRI Growth Consulting is redefining consulting by integrating real-time data, proprietary insights, artificial intelligence and behavioral science to accelerate actionable growth for companies. Our consultants are from the top strategy consultancies in the world and are experts in data science and research methodologies, translating complex analytics and insights into activation and growth strategies for CPGs, retailers and private equity firms. Reach out to Carrie Shea at Carrie.Shea@IRIworldwide to learn more.