CPG Industry Expected to Reach $18.94 Trillion: Insights & Analysis
The Consumer Packaged Goods (CPG) industry is a cornerstone of the global economy, fueling daily consumer habits and preferences with various products.
This sector is pivotal for driving consumer trends and its significant impact on economic growth and innovation.
Throughout the years, and even during the pandemic, the CPG industry has maintained stable growth and cash flow, especially in North America. What can we learn from the resilience and success of this industry?
This article dives into the most recent statistics, insights, and comprehensive analyses that outline this essential industry's current state and prospects.
We’ll explore:
Sales dynamics and consumer behavior statistics
Technological advancements and their integration within the industry
The challenges and hurdles the CPG sector faces
By offering an in-depth examination that converts extensive datasets into practical wisdom, we aim to provide professionals and stakeholders within the CPG sphere the knowledge they require to navigate an ever-evolving market landscape.
If that’s you, keep reading below.
CPG Industry Market Trends and Overview
Did you know the CPG industry is projected to add $3.18 trillion in value in 2024, with the U.S. contributing $821 billion? By 2031, the industry value is expected to reach $18.94 trillion, growing at a Compound Annual Growth Rate (CAGR) of 5.1% from 2022 to 2031.
Let's explore some more key CPG stats below.
"The year 2024 will likely be characterized by slower economic growth than in 2023 and slower consumer spending growth. Yet it will probably be the last year of monetary policy tightening by major central banks. It is reasonable to expect a rebound starting in 2025. For global consumer products companies, it may make sense to focus on the longer term." - Dr. Ira Kalish, Chief Global Economist, Deloitte
Plant-Based Foods Growth
Sales of plant-based foods are surging. The market was valued at $11.3 billion in 2023 and is predicted to grow at a CAGR of 12.2% over the next decade.
Nearly 57% of US consumers choose plant-based products while grocery shopping, and 40% of shoppers choose plant-based meats and milk, though 90% of them aren’t vegetarian or vegan. This indicates a significant consumer shift. Plant-based CPG products are now more accessible and reach a wider audience.
Pet Care Industry
Valued at $320 billion in 2023, the pet care items industry is expected to grow to nearly $500 billion by 2030.
The percentage of dog and cat owners has increased from 1991-2024, and it’s only projected to grow as the new generations choose to continue with these trends.
This growth is driven by rising pet ownership and the premiumization of pet food and services. CPG is expected to grow because of the new generations deciding to become pet owners and as the pet market and competition increase.
Health and Wellness Market
Rapidly expanding, the wellness market is projected to reach $7 trillion in the coming years.
This growth reflects increasing consumer spending on appearance and health, favoring clinically proven ingredients.
After healthy food, personal care items like beauty and youth products seem to be the most consumed ones in this industry.
Additionally, the beauty space, the boom of influencers, and wellness campaigns are shaping the way people consume and buy CPG in this field.
Consumer Preferences for Fast Shipping
People expect fast-moving consumer goods, everything in the blink of an eye. The shipping demand is expected to grow next year, and 48% of consumers are willing to pay more for faster shipping, highlighting the importance of efficient logistics in the CPG industry.
Buy Now, Pay Later (BNPL) Popularity
By 2022, over 44% of Gen Z digital buyers had used BNPL services at least once, with BNPL revenue up 72% year-over-year in Q3 of 2022.
Just as we speak, there are 360 million BNPL users.
Rise of Private-Label Products
80% of customers who tried private-label products during the pandemic indicated they intended to continue using them. Inflation and the 2020 pandemic have contributed to the increased popularity of private-label products.
Omnichannel Sales to Improve CPG Buying Experience
Brands offering robust omnichannel experiences see a 19% boost in total revenue, with those using at least three channels experiencing a 287% higher purchase rate than single-channel brands.
Omnichannel sales, on many occasions, increase the value of the customer experience, providing consumer goods companies with a better reputation and growth.
Marketing Spend in the CPG Industry
CPG brands spend an estimated $38.83 billion on advertising annually, with 64% planning to increase their retail media spending. Why are CPG industries spending so much on marketing?
Marketing helps consumer brands expand to digital channels, find growth opportunities, and, most importantly, connect with their clients in a new way that is essential for success in 2025 and the years to come.
If you are still struggling with CPG marketing and want to hire specialized professionals, reach out to the experts to guide you in the right direction.
Shift from Price to Volume Strategy
With increasing retailer pushback and consumer resistance to price hikes, CPG companies like Procter & Gamble are shifting their focus from raising prices to growing volume through innovative and profitable product mixes.
Adoption of New Technologies in the CPG Industry
The Consumer Packaged Goods (CPG) industry increasingly leverages new technologies to drive growth, efficiency, and innovation. Recent studies and surveys have highlighted key trends and statistics in adopting these technologies.
AI and analytics adoption: A survey by NVIDIA reveals that AI significantly boosts operational efficiency and customer experiences in the retail and CPG sectors. Notably, 69% of retailers reported an increase in annual revenue due to AI adoption, with 72% experiencing reduced operating costs. The top AI use cases include store analytics, personalized customer recommendations, and inventory management. Moreover, 86% of retailers are interested in using generative AI to enhance customer experiences, pointing towards an omnichannel approach integrating online and offline channels for a seamless consumer experience.
Digital and Data Analytics (DnA) transformations: McKinsey & Company discusses how leading CPG firms achieve substantial returns on investment (ROI) from DnA transformations. The Global Lighthouse Network, a World Economic Forum initiative, has seen a doubling in the number of CPG applications since 2020, from six to twelve. These transformations are helping firms achieve improvements across productivity, sustainability, speed to market, and customization. This shift is especially important in an industry where vast production networks are often composed of smaller sites, making broad-scale changes challenging.
Digitally enabled innovation: Another report by McKinsey highlights how digital tools are accelerating innovation within the CPG industry. By digitizing its innovation process, one beverage company could generate five times more new concepts and get products to market in half the time previously required. For CPG companies, leveraging digital techniques alongside innovation practices is emerging as a significant growth driver, especially in the face of rising supply constraints and rapidly shifting consumer preferences.
Data transformation in digital initiatives: Deloitte outlines the importance of transforming disconnected product data into actionable intelligence for the CPG industry. Despite an 8% increase in technology budgets over the past three years, many CPG companies lack a cohesive data management strategy. A focused effort to improve product data can lead to end-to-end visibility, reduced costs, and increased internal development capacity. Companies are encouraged to develop data strategies, invest in transformation tools, and implement robust governance to support digital transformation efforts.
“The future of consumer goods is Data + AI +CRM + Trust.” - Najah Phillips
These insights reflect a broader industry trend toward integrating digital technologies to enhance efficiency, innovate product offerings, and meet evolving consumer expectations. The emphasis on AI, DnA transformations, and data management strategies underscores the potential for significant operational improvements and market growth within the CPG sector.
CPG Industry Challenges
The consumer packaged goods industry is navigating through a period of significant challenges and transformation as we enter 2025. Key issues stem from economic pressures, evolving consumer preferences, technological advancements, and regulatory changes. Drawing insights from various sources, here are the most pressing challenges the CPG industry faces.
Economic pressures and consumer behavior: The industry is grappling with the aftermath of price increases in 2023 due to cost inflation. However, with no room for further price hikes, companies must fundamentally reshape their strategies to reignite profitable, volume-driven growth. This challenge is compounded by a predicted slow economic growth in 2024, leading to sluggish consumer spending. The ongoing cost of living crisis, characterized by inflation and declining purchasing power, has made consumers more cautious with their spending, favoring lower-priced or store-brand items over premium alternatives.
Sustainability and ethical considerations: A growing consumer demand for sustainability drives companies to adopt eco-friendly practices in product development and packaging. The industry is seeing a particular emphasis on "better-for-the-planet" packaging options and sourcing, reflecting broader consumer preferences for products with a lower environmental impact.
CPG AI, technological integration, and digital transformation: The CPG sector is undergoing a digital transformation, significantly focusing on leveraging artificial intelligence (AI) for personalized nutrition and consumer engagement. Adopting AI and other digital technologies is essential for staying competitive, enhancing customer experiences, and streamlining supply chains. However, integrating these technologies poses challenges regarding investment, implementation, and consumer data privacy.
Changing consumer preferences: The shift towards health and wellness continues to influence product innovation, with a notable increase in the demand for better-for-you (BFY) products, functional foods, and personalized nutrition solutions. This trend pushes companies to innovate in product formulation, marketing, and leveraging technology for customized wellness plans.
Regulatory compliance: New regulations, such as the Modernization of Cosmetics Regulation Act (MoCRA), introduce compliance challenges, especially in the cosmetics and personal care segments. Companies must navigate these regulatory landscapes to ensure product safety and maintain consumer trust.
Direct-to-consumer (D2C) and e-commerce strategies: The rise of D2C channels and the impact of e-commerce platforms are reshaping distribution and marketing strategies. CPG companies are adapting to meet consumer expectations for convenience, personalization, and online shopping experiences.
CPG companies must focus on strategic agility, innovation, and customer-centric approaches to address these challenges. Emphasizing sustainable practices, leveraging technology for personalized experiences, and adapting to the evolving regulatory and economic landscape will be key to navigating the complexities of 2025 and beyond.
What’s Next for CPG Firms?
This article provided a comprehensive overview of the Consumer Packaged Goods (CPG) industry, breaking down key statistics, insights, and analyses highlighting its current landscape and future potential.
The CPG industry is on the cusp of significant change, driven by evolving consumer preferences and technological advancements. Companies in this sector adapt rapidly, leveraging data analytics and digital transformation to meet new market demands and stay ahead of the competition.
As you navigate the complexities of the CPG world, remember that these shifts represent opportunities for growth and innovation. Reflect on the information shared here to make informed decisions that can position you or your business for success in this dynamic industry.
FAQs
What will the CPG industry look like in 2025?
Private label brands will continue to gain market share, especially in grocery and retail segments, but online is growing with more CPG brands establishing robust e-commerce platforms and expanding their digital presence.
Consumers will increasingly demand sustainable packaging solutions, driving innovation in recyclable and biodegradable materials.
How big is the CPG industry?
The CPG industry is valued at over $2 trillion globally, with the U.S. market alone contributing around $2 trillion annually to GDP. It’s one of the largest and most dynamic sectors in the global economy.
What are the industries in CPG?
The CPG industry includes food and beverages, household goods, personal care products like skincare and cosmetics, healthcare items such as supplements, and pet care products like food and accessories.
What is the current trend in CPG?
Sustainability is a major focus, with eco-friendly packaging and sourcing in demand. Consumers are also gravitating toward health-conscious, functional products. E-commerce and AI-driven personalization are transforming how brands interact with customers.
What are the key metrics of most of the CPG industry?
Sales growth, market share, and customer retention rates are essential metrics. Other key indicators include profit margins, inventory turnover rates, and brand penetration, which measures how widely a brand is adopted by households.
What are the fastest-growing categories in CPG?
Plant-based foods, functional beverages like energy drinks and kombucha, premium pet care products, clean beauty items, and ready-to-eat meals are expanding rapidly due to changing consumer preferences.
What is the future of the CPG industry?
The industry is headed toward greater digital integration, focusing on sustainability, health-focused innovation, and expansion into emerging markets. Direct-to-consumer models will also play a larger role in building stronger brand-customer relationships.
