CPGs power through the pandemic

Bubbles are rising to the top in consumer packaged goods — seriously!

Information Resources Inc.’s 2021 New Product Pacesetters report finds six of the top 10 CPGs in food and beverage are bubbly beverages, in both alcohol and non-alcohol categories, reflecting consumers’ desires to socialize at home. Among nonfoods, top products in IRI’s 27^th annual report show the importance of a clean home and healthy body.

The unpredictability of the pandemic last year triggered an ebb and flow of shopping behavior that made the work of manufacturers even more difficult than in 2020. Despite this and other challenges, 2021’s New Product Pacesetters delivered an impressive $6 billion in aggregate year-one sales across food and beverage and nonfood products.

“This year’s New Product Pacesetters successfully ran the gauntlet of powering through a pandemic that first caused people to hunker down at home, and then start socializing in public again, only to hunker down again late in the year,” said Joan Driggs, vice president of content and thought leadership at Chicago-based IRI. “COVID-19 generated trends that both helped and hindered growth trajectories. In-home stock-ups eased from 2020 levels, while concurrently, interest in new products representing beverages, frozen convenience foods, household goods and self-care resulted in healthy growth.”

Here are the Top 10 Food and Beverage New Product Pacesetters for 2021:

And the Top 10 Nonfood New Product Pacesetters for 2021:

Making bubbles and fighting germs

New alcohol and non-alcohol beverages in a variety of flavors and combinations encouraged consumers to explore, IRI noted. Variety packs in hard seltzers made entertaining at home more interesting and let brands test new flavors by promoting trial. Hard seltzers and premixed cocktails represented four of the top 10 Pacesetters. On the non-alcohol side, Dr Pepper & Cream Soda and Coca-Cola’s AHA sparkling water captured the Pacesetters’ No. 1 and No. 2 spots, respectively.

IRI’s data indicates that during 2021 consumers juggled at-home and out-of-the-home work and school as the pandemic evolved. Several coffee and tea products performed well to keep people’s energy up, including Starbucks Nitro Cold Brew (No. 29), which brings coffeehouse quality home. Rounding out the top 50 are Kitu Super Coffee (30), Dunkin’ Multi-Serve Iced Coffee (47) and Tazo ready-to-drink iced tea (50).

In nonfood, top Pacesetters focused on home cleaning and personal cleanliness. Innovative manufacturers leveraged interest in cleanliness to extend their product lines. Suave evolved its established personal care brand and pushed into hand sanitizers, the No. 8 spot among nonfood Pacesetters. It also expanded a new subcategory of hand care with soaps and gels that don’t damage hands but are effective with Suave Essentials Hand Soap (No. 49). Clorox introduced Clorox Laundry Sanitizer (26), a bleach-free additive that “kills 99% of bacteria and viruses, including COVID-19.”

Innovation thrives two years into COVID-19

New Product Pacesetter products typically comprise just 1% of total CPG dollar sales but are responsible for one-third of growth year over year, IRI said. In 2021, Pacesetters accounted for 44% of total store growth with similar contributions from food and beverage and nonfood innovation, despite challenges ranging from supply chain issues to store space allocation and unpredictable demand.

Pacesetters’ first-year revenues mostly held steady with previous years, despite limited promotional activity. The median dollar sales of food and beverage products in this year’s Pacesetters was $20 million, slightly under 2020 Pacesetters, but equivalent to 2019. Among nonfoods, median dollar sales totaled $17 million, the highest since 2017’s New Product Pacesetters.

Large CPG companies, defined as those with over $6 billion in revenues, led in total dollar sales of Pacesetters products with 47%. Medium companies, those with $1 billion to $6 billion in sales accounted for 27%, and small companies, those with $100 million to $1 billion in sales, gained ground with 15%, an increase over 2020.

Courting ‘early adopters’

Despite an easing of the pandemic, approximately 80% of meals are made at home vs. 48% pre-pandemic. New food and beverage products with unique flavors help “spice up” the at-home experience, according to the IRI report. In nonfood categories, while functionality remains supreme, consumers will likely explore new products. If products deliver on their original promise and then offer a bit more, consumers are more likely to appreciate the value add.

“Early adopters” are an important group with which manufacturers need to engage. They represent 27% of consumers, and 93% of that group consider themselves “avid early adopters.” These groups actively seek out the latest and greatest new products, according to IRI’s New Products Survey.

“Early adopters drove outsized sales of Pacesetter products, but supply chain problems brought on by the pandemic pushed more shoppers to reach for something new — 22% stated they looked for new products only if their usual product was unavailable, up 3 percentage points from 2021,” said Lisa Maas, principal of innovation at IRI.

While 39% of surveyed consumers state they rely on recipes, the percentage of promotional activity around new products via recipes is down. Among avid early adopters, 55% said suggested recipes are an avenue to new products. Sixty-eight percent of these consumers consider shopper loyalty programs when making purchase decisions, compared with 54% of the total population.

Avid early adopters of new CPG products are also often avid early adopters of technology, IRI noted. Among this group, 26% look at pop-up ads and half use smartphone apps. Engagement is significantly higher than with the general population and has been consistently strong in recent years.

Sustainability remains a key ingredient

Sustainability impacts both food and beverage and nonfood categories. Oatly and Impossible Burger earned the No. 5 and No. 8 spots, respectively, in food and beverage, while Hello Bello baby products was No. 4 in nonfoods, followed by The Honey Pot Company feminine products (17) and Huggies Pull-Ups New Leaf (22).

Sustainability has grown to include a wider range of attributes, such as carbon footprint and water conservation. It has also grown as an increasingly important decision factor among consumers. IRI said innovators should recognize the value of sustainability and how it contributes to a consumer’s overall impression of a product, brand and manufacturer.