As we head into 2019, we see some of the biggest CPG trends getting even bigger while others will fade or become less important. So, which trends should you factor into your innovation plans for the next few years?
Here’s our take on trends with staying power and growth opportunity:
Mega trends across industry
- The physical/digital blur – digital natives are going for physical presence while brick-and-mortar companies are going online. The trend of omni-channel, blended retail models is not only here to stay, it’s growing rapidly and likely to spur new innovations, collaborations – and disruptions. Examples include Walmart’s acquisition of menswear site Bonobos, Wayfair’s first physical store and holiday pop-up stores in shopping malls, Kroger’s move into online ordering and driverless delivery, and, of course, Amazon/Whole Foods and Amazon Go stores. Future blended models will integrate the end-to-end consumer experience from search and buy to delivery and post-sales service. With the addition of tools such as AI, machine learning, sensors, VR, and AR, consumer buying patterns will become more data- and behavioral science-based. Wearables, voice (Alexa), and mobile will contribute to ease of purchase as well as data collection. The challenge will be balancing technology with human touch and privacy concerns; there could be backlash if algorithmic ‘intimacy’ goes too far or seems creepy. The winners will be those who clearly use technology and data to benefit the consumer more than themselves. Trust is paramount.
- Along these lines, more and more manufacturers will seek direct-to-consumer connection driven by pressure on margins and the quest for data to guide new product/service development. Relationships with distributors as well as retail outlets will become more complex as companies create their own e-commerce channels. The complexity is even greater as retailers (both online and in store) push their own private label and house brands. Opportunity, however, lies in superior product quality, exceptional customer service, and customized end-user benefits. Product expertise and availability to answer customers’ questions will be an important advantage. Loyalty programs will help, too, but need to go further than reward points and discounts.
- Smart products or services that ‘mistake-proof’ and/or do difficult tasks for you. Taking convenience a step further, AI and machine learning are enabling a new generation of products/services that not only save consumers time, they can save lives. (For example, PillPack and Hero Inc. help seniors and those with multiple medical prescriptions remember and manage their dosages; wearables, like the latest version of Apple watch, can monitor health and enable people to receive help even if they can’t call 911, etc.). On the time-saving, efficiency front, smart home and smart kitchens will take care of security, product replenishment and more.
- More IoT and blockchain-enabled interactions, complex ecosystems, and M&A activity will require an exceptional level of collaboration capability. No company is an island – those that know and protect their core strengths and choose their partners wisely will succeed. Sharing data, knowledge, risk and profits/losses is a whole new – and mandatory – ballgame. Make sure your strategy and boundaries are clearly defined and well understood.
Food & Beverage trends
- Expect more and more emphasis on health, wellness, and ‘food as medicine.’ Plant-based, vegan, minimally processed, gut-friendly, keto, paleo, and low or no sugar trends are not abating any time soon. (The key may be to offer consumers guidance to overcome the proliferation of choices.) Emerging growth areas are food and beverage products that promote sleep, hydration and mental clarity. Cannibis and hemp. ‘Anti-aging’ is now ‘healthy aging’ as the boomer generation seeks longevity and better quality of life.
- Meatless options that look, taste, and can be cooked like meat are becoming increasingly popular – this is another growth area still in its early stages. Crickets and similar non-meat sources of protein are not quite ready for prime time, but products that do not look like insects (such as Chirps) are gaining some ground – the right appearance, texture and sampling events/offers will help.
- Consumers increasingly want natural and nature-derived vs. lab-created foods with chemicals (the exception: ingredients with health and/or beauty benefits such as probiotics, prebiotics, BCAAs, collagen, etc.). Fewer ingredients are better.
- Convenience and fast delivery will become even more competitive – an important differentiator will be quality/taste and the option of customized orders. Ease of ordering and trustworthiness of delivery mode also matter. Well-designed apps and multiple modes of ordering (online, phone, in store) are de rigueur. At the same time, consumer emotions (including the association of certain foods with happy occasions and family traditions) will play a meaningful role in customer engagement. Companies are applying behavioral science, neuroscience and machine learning to understand needs that consumers themselves may not articulate.
- Meal kits will become more specialized and involve less prep time. Subscription services will need something extra to encourage loyalty, perhaps AI to ‘learn’ and respond to how consumers use their kits, and/or basic genetic testing to tailor recipes/ingredients for specific health benefits.
- Eco-friendly packaging is a growing concern, particularly among millennials and Gen Z consumers. Less is more. Packaging design must also conform to e-commerce shipping, storage and preservation requirements. Innovation in the packaging industry and closer collaboration with the supply chain will surge.
- Sales and advertising will be increasingly driven by social media, e-commerce and special events. Authenticity, ‘real’ people endorsements, user reviews, Instagram, Facebook, Pinterest, blogs, recipe-sharing groups, and special tasting events will influence buying decisions. Coupons, trial offers, Amazon presence, and free samples will gain more traction than TV ads. Food must be photogenic for social media, tasty, local (both ingredients and cooking style), healthy, and price-competitive.
- Public relations – both good and bad – will also have more impact than TV ads. Safety, transparency, sourcing, clean labels and humane factors, such as how employees are treated, can make or break brands. Finally, and most importantly, advertising messages need to embrace diversity and avoid any form of shaming (body or otherwise). Social media backlash is fast, furious and unforgiving when ads offend.
- Food technology development will focus on microbiome, genomics, CRISPR, prototyping, and AI to address consumer’s unique health concerns as well as global, agricultural and population growth needs. Blockchain for traceability and safety. Robotics for food preparation in restaurants (Spyce is an example).
So can and should you focus on all of these trends?
Realistically, no. But awareness is necessary to ensure your company remains competitive. We do recommend that you identify the trends that might signal white space – trends that perhaps complement your company’s longer-term vision and align with your current skill set. Timing is critical, none of these trends are ‘too early’ so the ability to move quickly will give you more of an advantage.
This list of trends is by no means comprehensive, but we hope they spark some innovative thinking for you.