CPG Industry Grew 2.2%, Finds BCG, IRI Report

Consumer packaged goods companies that leverage acquisitions, surgical pricing and e-commerce will be well-positioned to capture growth in the years ahead, according to the eighth annual Consumer Packaged Goods Growth Leaders study by IRI and Boston Consulting Group (BCG).

The U.S. CPG industry increased by 2.2% in 2019, outpacing 2018 growth of 2%, according to the study, which found growth 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.

While IRI and BCG are continuing to study the rapidly evolving impact of the COVID-19 pandemic on consumer spending with CPG products globally, key findings from the study—which compared sales at more than 430 consumer packaged goods companies with more than $100 million in 2019 sales—include:

Growth Leaders: Constellation Brands 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 increases in sales volume 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.

Private Labels Are Rising: The study noted that private label and small consumer packaged goods companies continue to increase their share of the CPG market. 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.

Acquisitions Are Valuable: Over the past five years, a mix of acquisitions and portfolio shaping has driven growth among both large and small CPG companies. Acquisitions made by Tyson in the past five years account for 85% of its 2019 growth and 53% of its overall portfolio.

“Over the past five years, a mix of acquisitions and portfolio shaping has driven growth among both large and small CPG companies,” said BCG partner and Managing Director 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, E-Commerce and Emerging Trends Fuel Growth

The 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 e-commerce and introducing products that satisfy emerging consumer trends, such as multi-functional beverages, protein on the go, premium self-care, better-for-you snacking, simple and transparent ingredients, and products focused on the Hispanic market.

Companies that leverage these emerging trends “will be well-positioned to capture growth in the years to come,” said Krishnakumar Davey, president of strategic analytics for IRI. “Emerging data suggests that smaller companies continue to gain so far post-COVID, with those present in stock-up categories benefitting most.” However, Davey noted that “large manufacturers are not necessarily seeing a gain yet.” 

COVID-19 Impact Research

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.   

A copy of the report can be downloaded here. The latest BCG/IRI COVID-19 impact research reports can be downloaded here.