Are CPG brands headed for a very merry Christmas?

Discussion
Photo: Getty Images/alvarez
Nov 18, 2020
Tom Ryan

Boosted by homebound living and the return of panic purchases, consumer packaged goods (CPG) purchases are expected to climb between 9.5 to 11.5 percent for the holiday selling season (November/December), according to the Consumer Brands Association.

The anticipated growth drivers are expected to be a continuation of stay-at-home trends — whether as a precaution or by order — that have pushed year-over-year CPG sales up more than 10 percent in three of the last four months. Holiday purchases, which resulted in a three percent rise for CPG last year, are expected to provide a boost again this year.

A Consumer Brands/Ipsos poll conducted as part of the forecast found that more than two-thirds (68 percent) of Americans plan to stay local — at their own home or going to the home of nearby family or friends — for Thanksgiving and 75 percent for the winter holidays.

Other pandemic-driven factors are expected to include the return of stockpiling and the strong digital shift in the CPG space.

According to a survey from Inmar Intelligence conducted during the week of October 14, 57 percent of shoppers plan to stock up again as winter approaches. Grocery chains including Kroger and Giant have begun reinstating purchase limits on items such as toilet paper, paper towels and disinfecting wipes.

The Consumer Brands Association survey showed that 46 percent of consumers are at least a little worried about access to food and beverage products, with 57 percent saying the same about household cleaning products. Fifty-eight percent said they’re at least a little worried about what the increase in online shopping will mean for getting CPG essentials.

A RetailWire visit Sunday to Costco’s warehouse club in East Hanover, NJ, showed disinfectant spray and wipes, face shields, Bounty paper towels, disposable gloves, Lysol Multi-Surface Cleaner, rubbing alcohol and Clorox Clean-Up and Windex all out of stock.

“For CPG, it has been the equivalent of peak season since the pandemic started,” said Tom Madrecki, vice president of supply chain at Consumer Brands. “It raises the importance of addressing systemic challenges like the truck driver shortage, infrastructure needs, freight rail performance and port clearance times. Improving supply chain efficiencies will only happen with concerted policymaking and strong leadership across government.”

DISCUSSION QUESTIONS: What’s the likelihood that sales of CPG categories will continue to grow at elevated levels in the months ahead? How might the challenges for retailers supporting essential categories be the same and different compared to the early days of the pandemic?

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Braintrust
"As long as people are staying home the demand for CPG products and home cooking products will remain high. "

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18 Comments on "Are CPG brands headed for a very merry Christmas?"


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Neil Saunders
BrainTrust

CPG is doing very well during the pandemic. Certain categories like household cleaning supplies are up very strongly because people are more focused on sanitization and hygiene. Other household essential categories are up because people are spending more time at home and are consuming more essentials. But the biggest driver is the transfer of spending from dining out to eating at home. This has boosted the majority of food categories and is also why all of the grocers are seeing sales spike. Next year, companies will lap tougher comparatives so growth will moderate. And once the pandemic ends, growth will fall back.

David Naumann
BrainTrust

With further state mandates that restrict indoor dining and social gatherings already starting in some states and with others likely coming, we will likely see strong growth of CPG revenues for a few more months. Retailers are better prepared to satisfy panic buying of some CPG products like toilet paper and paper towels. However I have seen some empty shelves at a couple stores already.

Michael Terpkosh
BrainTrust

CPG sales of essentials will remain very strong through the holidays and into early next year as the pandemic creates more and more lockdowns. Retailers will once again have a difficult time staying in-stock on many essentials. They will have to implement purchase limits. However unlike regional pandemic waves earlier this year, the winter pandemic wave appears to be affecting the entire country. This will stress CPGs and the supply chain even more. Specialty items (gourmet, organic, natural) will have strong sales too, through the holidays. Then most of the gains will be lost in early 2021.

Ralph Jacobson
BrainTrust

CPG brands are enjoying strong growth and since COVID-19 doesn’t look like it’s going away anytime soon, hoarding will continue.

Brian Cluster
BrainTrust

Many CPGs in essential categories and key baking and cooking categories will have banner holiday sales this year. With escalating COVID-19 rates happening across the country, consumers’ options to eat out will be limited and more meals will be eaten at home. Retailers should create and enforce product limits in key categories, especially health-related, that had extreme demand in the spring to ensure that supplies are not overtaken by panic buying. With better data, improved supply chain transparency as well as perhaps a more diverse and deeper supplier base in key categories, retailers may be better equipped to manage the surge.

Camille P. Schuster, PhD.
BrainTrust

Stockpiling has already started so instituting limits on purchases early is a good idea. the numbers of cases are as high or higher everywhere as in the early part of the pandemic. The differences is that it is affecting all 50 states this time. As long as people are staying home the demand for CPG products and home cooking products will remain high. Hopefully the surge will be managed better with limits being enforced early.

Zel Bianco
BrainTrust

The sales increases will stick around and, unfortunately, so will COVID-19. We will see the large CPG brands that consumers have come to love and trust continue to be the leaders in the months ahead. Most have planned for and executed effectively in getting their supply chain and operations ready to meet the challenges of having fully stocked shelves at most retailers.

Perry Kramer
BrainTrust

CPG sales will continue to grow for the next several years. Much of the growth will be driven by B2C business. However, the B2B business will also drive tremendous growth over the next few years as consumers return, (in smaller amounts than before), to the work-place and dining. We will see business and public space segments consuming CPG products at a much higher level than pre-pandemic. Increased use of supply chain tools and visibility combined with collaborative relationships will differentiate those that lead from those that ride the wave.

Gene Detroyer
BrainTrust

I will be terribly disappointed if CPG companies and retailers face the same problems with out-of-stocks and hoarding that we all experienced in the second quarter.

One would hope and expect that they are sophisticated enough and understand the marketplace enough that they would adjust operations to avoid that disaster. If they don’t, shame on them. It will be very telling. We will find out which companies and which retailers are good and which ones have underlying management problems that will continue to resurface even when normality returns.

Matthew Pavich
BrainTrust

With current COVID-19 trends, there is no doubt that household CPG products will continue to have really strong sales in the coming months. Retailers should be better prepared for the current wave than they were in March which should translate to better demand modeling/pricing, fewer shortages, and improved operational efficiencies. There will still be a few empty shelves, but the best retailers who have invested in their capabilities and data analytics should benefit from this increase in demand in the near future while providing consumers with the essential products they need.

John Karolefski
BrainTrust

Consumers will not be traveling much during the holiday season. They will be staying home and cooking for family gatherings and guests. That bodes well for CPG sales.
Savvy grocers will be prepared and well-stocked. If they have out-of-stocks, they have themselves to blame.

Gary Sankary
BrainTrust

Retailers learned a lot in March and April this year. They now have data to correlate how lockdowns and spiking caseloads can impact consumer demand for essentials. They are using this data to create indicators by market adjusting inventory where they can. CPG companies have worked very hard to bring more flexibility into their supply chains, including resolving some of the bottlenecks we have been seeing in packaging and raw materials. While I don’t think this will guarantee they won’t see outages on items this fall and winter, I do think retailers and their CPG partners are better prepared to react to volatility. I expect that means they will be able to recover faster when demand spikes.

Andrew Blatherwick
BrainTrust
During the pandemic people are not eating out or traveling as they were, so naturally the sales of CPG brands and own-label brands of CPG products has risen considerably over this period. It is likely that the trend will continue until the new normal is established. So the question really is, will it continue after that? A percentage of people will not go back to the old ways of traveling abroad or long distances for vacations and there will be more “staycations” and people entertaining at home, but it is unlikely that over a long period of time the eating at home trend will continue at the expense of eating out. It does not need a massive swing for the ongoing sales of CPG products to remain high and this can only be a good thing for the world economy. A shift from travel and international haulage to local manufacturing and short haul transportation is no bad thing from an environmental or economic point of view. Shopping local, staying local and buying local product should… Read more »
Doug Garnett
BrainTrust

These predictions may well happen — but I’m cautious. The one critical thing we should have learned from the pandemic is we don’t know anything from the past which can predict how economic matters will proceed during a pandemic.

In April, economic doom was forecast for the entire market. By August, it was clear that some companies were doing quite well while others were suffering quite badly.

The boom and doom of the pandemic are not evenly distributed. Those in the right place have seen tremendous benefits while those in the unpredictable wrong places have seen doom. So … CPG? I’m quite cautious — and would suggest all we can do is watch and learn. History has no predicates for this pandemic.

Ryan Mathews
BrainTrust

It all comes down to two words — vaccines and vaccinations. If the vaccines perform at the advertised levels AND we have effective mass vaccinations completed by, say, Q2 2021 sales could start to drop as people feel comfortable returning to foodservice venues that will presumably be open without significant restriction. Change any element of that equation: the vaccine is effective, but not safe; the virus mutates and/or becomes vaccine resistant; a significant percent of the population refuses to take the vaccine for whatever reason; etc. and CPG categories will continue to grow. Otherwise, these categories should continue to grow from now until all those factors align as state-level restrictions make it harder for restaurants and bars to stay in business.

Ricardo Belmar
BrainTrust

If there’s one thing we’ve learned during the pandemic is that neither success nor disaster is evenly distributed. CPG brands should have learned in the spring what could happen next time lockdowns are imposed, or the pandemic conditions create panic buying. As with many other things during the pandemic, we’ll see better-prepared brands that have the internal resources to commit showing they’ve learned their lessons from the Spring. While others, not so prepared, or being smaller organizations simply lacking the internal resources, will fall short. There are many variables that will affect consumer buying habits this season across different categories so agility will be the requirement for CPGs & retailers to react accordingly.

Mark Price
BrainTrust

As COVID infections ramp up during the winter months, households with children in particular are likely to increase home cooking and also seek out foods that provide them with emotional comfort. These traditional foods are often the brands that their parents served them, bringing back memories.

This trend is likely to continue until a vaccine is widely available, sometime late spring or early summer. Retailers can better allocate products during this season and use this time to reinforce loyalty — reserving products for best customers and loyalty program members. Grocers can then become the place that has “some of everything” and not face such extreme stockouts due to consumer loading.

Patricia Vekich Waldron
Staff

This is the latest example of category surges during the pandemic. Demand for CPG essentials as well as ingredients for home-cooked meals, snacks and entertaining will be high going into the cold weather holiday season.

wpDiscuz
Braintrust
"As long as people are staying home the demand for CPG products and home cooking products will remain high. "

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