A recent report, Grocery CPG Trends To Watch In 2020, from CB Insights looks at 15 trends across food, beverage, and household essentials.
The trends fall into four categories, based on a combination of industry adoption and market strength:
- Necessary trends have high industry adoption and high market strength.
- Experimental trends have low industry adoption and low market strength. To reach their full potential, these trends must overcome technological and regulatory hurdles.
- Threatening trends have low industry adoption and high market strength. These trends have the potential to disrupt traditional product categories and shopping channels.
- Transitory trends have high industry adoption and low market strength.
The report identified five necessary trends.
Targeted shopper marketing
Traditionally, retailers and other platforms that drive shopper engagement have been intermediaries in CPG companies’ relationships with consumers. However, in 2019, companies invested significantly to develop one-to-one consumer relationships. “A more sophisticated ad tech landscape and more direct-to-consumer plays will enable CPG companies to establish deeper and more informative relationships with customers,” states the report.
Per capita milk consumption in the United States went down almost 18% from 2010 to 2018, according to USDA data. Traditional dairy companies, such as Dean Foods and Borden Dairy, have filed for bankruptcy. As a result, plant-based dairy alternatives are set to reach their full market potential in 2020, as companies continue to expand alternative dairy options.
Gut microbiome health
Although researchers are still attempting to understand how the gut microbiome affects health and wellness, food and beverage companies are developing products to target the microbiome. As understanding increases, CB Insights expects more companies to develop personalized nutrition services to help consumers with their diets.
Like most other food trend predictions, CB Insights sees continued growth in plant-based meat. Companies will develop new partnerships, distribution agreements, and production capabilities in 2020.
Rapid Product Innovation
Startups and changing consumer behavior have forced some leading CPG companies to dramatically speed up the product innovation cycle. “As more companies look to accelerate innovation cycles, these techniques will help companies more precisely tailor new products to individual markets, including localizing new innovations within emerging markets,” states the report.
The report identified five experimental trends.
Blockchain- and AI-based food traceability
Blockchain and AI technology are helping companies address the challenge of traceability. However, moving large network supply chains to a new technological infrastructure will require more time and investment.
Developing dehydrated products is a way to reduce the cost of shipping. This cost limits e-commerce profits for many CPG companies. However, the compact nature of dehydrated products means differentiated in-store merchandising is difficult, making the products primarily valuable for e-commerce channels.
Cannabis-infused food and beverages
Even with all the interest in cannabis, food and beverage companies still face uncertain regulations.
Human-grade pet food
The increase in human-grade pet foods will accelerate in 2020, given Increased spending on pets, declining birth rates, and premiumization trends.
Lab-grown meats are not yet commercially available, primarily due to high costs. However, recently-funded startups are working on new technology to scale production.
The report identified four threatening trends.
Nootropics and adaptogens
“Nootropics and adaptogens are emerging as the go-to ingredients for everything wellness,” according to the report. Products containing these ingredients can potentially take market share from traditional CPG categories. However, companies will need to prove the effectiveness of their product to attract consumers.
Reusable packaging services
With all the sustainability concerns, selling models based on reusable packaging will increase.
The implementation of IoT-connected products and brand services for consumers will increase with the rollout of 5G.
Tech-enabled vending machines
Although there’s interest in tech-enabled vending machines, most are still in the proof-of-concept stage.
The report identified only one transitory trend.
The healthy beverage trend is maturing. An increasingly crowded and competitive enhanced water market could stall growth. Also, more sustainable packaged-water alternatives, such as carboned at-home hydration systems, could lead to new consumption patterns and affect how enhanced water products are manufactured, packaged, and sold.