Understanding consumer behavior has always been a cornerstone of successful manufacturing, especially for companies in the Consumer Packaged Goods (CPG) sector. But how well do we truly know our consumers? As shopping habits evolve, manufacturers are seeking better ways to gather and apply insights that directly shape their strategies. So, what exactly are “CPG consumer insights” and why are they becoming so important?

What Are CPG Consumer Insights?

CPG consumer insights refer to the understanding of consumer behavior within the consumer packaged goods industry. These insights are derived from analyzing purchase patterns, market trends, demographic data, and other forms of consumer interaction with products. For CPG manufacturers, these insights are crucial for shaping product development, marketing, and distribution strategies.

Key Trends in CPG Consumer Behavior

Over the past few years, several notable trends have shaped CPG consumer insights, reflecting shifts in consumer priorities and behaviors. Some of the most impactful include:

1. Growing Preference for Sustainability

A significant driver of change in the CPG sector is consumer demand for sustainable products. A recent survey indicates that 80% of consumers are willing to pay more for sustainably produced or sourced goods, and are willing to spend an average of 9.7% more for products that meet specific environmental criteria. These criteria include products that are locally sourced, made from recycled or eco-friendly materials, or produced with a lower carbon footprint. 

Consumers are also prioritizing sustainability through actions such as making more considered purchases to reduce overall consumption, eating different foods, and traveling less or differently. Brands that are transparent about their sustainability practices, such as using eco-friendly packaging and employing sustainable production methods, are seeing strong consumer support.

Actionable Insight: CPG manufacturers should consider sustainability not just as a trend but as an evolving consumer expectation. Incorporating eco-friendly practices can not only attract environmentally conscious buyers but also drive customer loyalty in the long term. Consumers are assessing sustainability through tangible attributes like production methods and recycling (40%), eco-friendly packaging (38%), and positive impacts on nature and water conservation (34%). However, it’s important to note that consumers are also facing cost-of-living pressures, with 31% citing inflation as the biggest risk to their consumption habits, and 62% expecting to spend more on groceries. Therefore, companies need to balance consumer affordability and environmental impact to retain customers.

2. The Rise of E-Commerce

Consumer purchasing patterns have shifted significantly toward online shopping. The CPG industry is undergoing a significant transition towards online marketing and e-commerce platforms, reflecting changing consumer preferences for convenient and digital shopping experiences. 

The food and beverage sector is the leading online segment, representing 44% of total online CPG sales. The rise of online shopping platforms provides consumers with convenient access to a wide array of CPG products, expanding market accessibility and reshaping traditional retail dynamics. While the pandemic significantly boosted online sales, other factors, such as adherence to hygiene standards and a growing consumer preference for personalized experiences, are expected to sustain the momentum of online shopping. The average online basket size for food and beverage is $64.

Consumers now expect to shop for their favorite CPG products from the comfort of their homes, and brands that are not investing in e-commerce capabilities are missing out.

Actionable Insight: CPG manufacturers should prioritize e-commerce strategies, ensuring their products are available across multiple online platforms. Adapting packaging to accommodate shipping and offering flexible subscription models could further enhance online sales performance. It’s crucial for CPG companies to recognize the shift towards online retail and adjust their strategies to capture their share of the growing online market.

3. Health and Wellness Focus

Consumers are becoming more health-conscious, with a growing preference for products that align with their wellness goals. This includes organic foods, plant-based alternatives, and functional beverages that promise benefits like improved digestion or better sleep. A recent McKinsey report indicated that 40% of consumers were seeking healthier options in their daily purchases.

Actionable Insight: Manufacturers should consider expanding their portfolios to include health-conscious alternatives. Incorporating clear nutritional information and promoting the health benefits of products can attract a more health-focused consumer base.

4. Personalization and Customization

Personalized experiences are becoming a key factor in consumer purchasing decisions. A recent Boston Consulting Group (BCG) survey of 23,000 consumers worldwide found that four-fifths are comfortable with personalized experiences and expect companies to offer them. Consumers appreciate personalization for the value, enjoyment, and convenience it provides. However, it is important to note that two-thirds of consumers have had at least one negative personalized experience with a brand that led them to disengage. This shows the importance of implementing personalization correctly and thoughtfully.

Actionable Insight: CPG brands can leverage digital tools, AI, and data analytics to offer personalized product suggestions or create customizable product options. These efforts can deepen consumer engagement and increase conversion rates. To personalize effectively, brands should focus on asking for zero-party data wisely, inferring from first-party data, and smartly augmenting customer information while being mindful of varying attitudes toward data usage based on geography, age, and context.

How Manufacturers Can Use CPG Consumer Insights

With these trends in mind, it’s clear that CPG manufacturers must adapt to evolving consumer expectations. Gathering consumer insights is not only about tracking purchasing behaviors but also about understanding the emotions, motivations, and influences behind those behaviors.

Leverage Data Analytics

Advanced analytics tools allow CPG manufacturers to gain a deep understanding of consumer purchasing patterns. By using Big Data and AI algorithms, manufacturers can predict trends, identify emerging markets, and spot potential gaps in their product offerings.

Example: A brand might use data to identify that a specific flavor of snacks is growing in popularity among health-conscious consumers, prompting the manufacturer to launch a new line of products tailored to that preference.

Adopt to Local and Regional Preferences

Another significant insight from the CPG industry is the importance of regional customization. Consumers in different regions may have varied preferences, influenced by local culture, tastes, or values. For instance, Asian markets are seeing increased demand for plant-based protein products, while European consumers may lean more toward products with high ethical standards.

Example: A global beverage company might use regional consumer insights to launch a product tailored to a specific market, such as a low-sugar, herbal-infused drink in one region and a high-protein energy drink in another.

3. Using Digital Platforms to Capture Real-Time Insights

Platforms like Shoplogix enable manufacturers to monitor real-time data on production and sales, helping them stay aligned with consumer demands. By tracking how products perform across different locations, CPG brands can quickly identify areas of opportunity and optimize their supply chain accordingly.

Actionable Insight: Manufacturers should invest in integrated digital solutions that allow for real-time data analysis. This will enable them to stay agile and make quick adjustments to product offerings or marketing strategies based on shifting consumer preferences.

Challenges in Harnessing CPG Consumer Insights

While the potential benefits of CPG consumer insights are clear, obtaining and acting on them is not without its challenges. The sheer volume of data available can be overwhelming, and manufacturers may struggle to filter out noise and focus on actionable insights. Moreover, changing consumer preferences mean that insights must be continuously updated and applied.

Challenge: Identifying and leveraging actionable insights from an overwhelming amount of data.

Solution: Manufacturers can work with digital platforms like Shoplogix that streamline the process of gathering and analyzing data, enabling real-time decision-making.

Looking Ahead: The Future of CPG Consumer Insights

New tools, such as advanced AI and machine learning, will enable more predictive insights, helping manufacturers stay ahead of trends and make smarter decisions. The key for CPG manufacturers will be to continue adapting to consumer behavior shifts, ensuring that they not only meet expectations but exceed them.

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