The US consumer packaged goods industry increased by 2.2% in 2019, outpacing 2018 growth of 2.0%, according to the eighth annual Boston Consulting Group (BCG) and IRI CPG study released at the end of March. The 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.
The growth leader among large companies was Constellation Brands, which led the category for the third year in a row. Johnson & Johnson, Tyson, General Foods and Procter & Gamble rounded out the top five large companies—all of which, except for P&G, saw sales volumes increases 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.
The study also noted that private label and small consumer packaged goods companies continue to increase their share of the CPG market. In fact, 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% while volume among mid to large companies is on the rise after a slowdown in 2018.
Regardless of size, all CPG companies are honing their sales and marketing tools to prepare themselves for continued growth in the face—and the aftermath—of the coronavirus pandemic. The study compared sales at more than 430 consumer packaged goods companies with over $100 million in 2019 sales.
“Over the past five years, a mix of acquisitions and portfolio shaping has driven growth among both large and small CPG companies,” says BCG managing director and partner Aman Gupta. “Acquisitions made by Tyson in the past five years account for 85% of its 2019 growth and 53% 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.”
Surgical pricing, ecommerce and emerging trends fuel growth
The BCG/IRI study identified four main levers of CPG market growth. In addition to acquisitions and innovation, leading companies are also implementing careful pricing changes, placing more emphasis on eCommerce, and introducing products that satisfy emerging consumer trends, such as increased demand for:
- Multifunctional beverages.
- Premium self care.
- Better-for-you snacking.
- Simple and transparent ingredients.
- Products focused on the Hispanic market.
Research on COVID-19's impact
“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,” says Dr. Krishnakumar S. Davey, president of Strategic Analytics for IRI. “Some of the trends (e.g., protein on-the-go and 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.”
BCG and IRI are releasing real-time consumer spending tracking and analysis reports each week, which are published on the IRI COVID-19 Info Portal. Recent reports have highlighted the changes in consumer spending over time as the COVID-19 outbreak has accelerated in Europe and the United States, including specific spending and consumer demand changes on a country and state level.