New IRI Report Finds CPG Industry Struggled in 2015 and Makes Predictions for Growth in 2016

Top Trends for 2016 Include Keeping Pulse on Ethnic Diversity,
Harnessing Insights on How Consumers Are Shopping Online and Focusing on
Quality Versus Quantity of Marketing Messages

CHICAGO–(BUSINESS WIRE)–Driving growth continued to be a challenge for the consumer packaged
goods (CPG) industry in 2015. Manufacturers and retailers had to deal
with the ebbs and flows of the economy and its impact on consumer
spending as well as the increased demands of digital-savvy shoppers.
IRI’s latest Times & Trends report, “Taking Stock of CPG Past and
Future: Gear Up Now for a Year of Growth,”
analyzes the lessons
learned in 2015 and provides insight into several key trends that will
drive growth in 2016.

“At the beginning of each new year, we all reflect on our past a bit and
vow to find ways to make improvements in the coming months,” says Susan
Viamari, vice president of Thought Leadership, IRI. “IRI’s latest
research does just that with the CPG industry. We are taking a hard look
at the peaks and valleys of 2015 and using these learnings to make a new
plan for the coming year. We’re offering up insights into several trends
that will provide growth opportunities for 2016 and beyond and are
taking a deep dive into the three trends that we think will make a big
impact.”

2015 CPG Year in Review

The CPG industry has been searching for growth for the past several
years due to the challenging economy and conservative shopper spending.
Last year was no exception. Volume sales continued to slide, and dollar
sales growth was fed largely by inflationary pricing trends. When
looking across channels, mass merchandisers and supercenters posted
sharper-than-average declines and the club channel showed some
resilience. The grocery and drug channels held volume flat,
outperforming the industry average of negative 1.7 percent.

The grocery channel continues to capture the lion’s share of total CPG
spending at 43 percent, while club seized 11 percent, drug took 7
percent, mass/super picked up 4 percent and dollar netted 2 percent.
Sales momentum continued to be slow across CPG aisles. Performance was
weakest in the frozen food sector, where unit sales declined 1.5
percent, and strongest in beverages, where unit sales increased 2.9
percent. Growth was weak in non-food departments. The tobacco sector was
boosted by electronic smoking products, which grew 23.9 percent for the
year, and the health care department grew 2.1 percent thanks to the
latest new products that help consumers tackle common ailments and
conditions, such as colds, allergies and weight control.

Private label share of overall CPG spending changed very little during
2015 and remained relatively flat at the store level. Some CPG
categories that did show some notable changes included refrigerated
meats, with a 3.2 percent unit sales increase, and fresh eggs, with a 3
percent increase.

Growth Opportunities for 2016

Consumers will remain entrenched in their conservative purchase
behaviors in 2016 even though one-third of Americans feel their
financial situation will improve this year. Fifty-seven percent of
consumers will make their purchase decisions before they enter the
retail store, so marketers must continue their efforts to engage
shoppers early in the planning process.

One-third of shoppers will choose brands based on coupons they have at
home, and 29 percent will base purchase decisions on shopper loyalty
card discounts. Of course, they’ll leverage a number of Internet-based
tools, such as smartphone apps and online advertising and promotions, to
keep their grocery budgets in check in 2016.

Finding pockets of growth in 2016 definitely presents its challenges,
but it’s not impossible. IRI research and analyses uncovered the
following top 10 trends that will offer growth opportunities for 2016
and beyond:

  • Circle the Wagons: Omnichannel retail is turning the CPG
    industry on its ear. Harness in-depth insights about how consumers
    travel online to understand the new path to purchase and drive
    in-store growth.
  • Melting Pot Gets Hotter: The growth and transformation of U.S.
    households are altering shopper attitudes and behaviors. Keep a finger
    on the pulse of increasing ethnic diversity and the explosion of
    non-traditional families.
  • Doing More with Less (Media): Consumers are constantly barraged
    with marketing messages. Cut through the noise in the
    marketplace and focus on quality versus quantity.
  • Lean & Mean Growing Machine: Manufacturer consolidation
    will continue as CPGs look for new revenue streams. Consider
    specialized acquisitions to fill white-space growth opportunities.
  • Big Opportunity in Small Packages: The urbanization of America
    will drive growth of smaller footprint stores. Meet urban shopper
    needs with localized specialty outlets.
  • On the Highway to Health: Consumers are embracing a wide
    variety of healthier-living strategies. Look across CPG aisles for new
    ways to deliver healthier options for shoppers and the environment.
  • Get Real: Consumers want to know what they’re putting into and
    onto their bodies, what they’re feeding their pets and exactly what is
    making their houses cleaner. Answer consumers’ thirst for
    transparency and authenticity.
  • Snack Attack: On-the-go lifestyles continue to have a profound
    impact on consumer eating behavior. Tap into grazing, the new sit-down
    meal.
  • Go Smart or Go Home: The focus on big data is rapidly giving
    way to smart data that will drive smart growth. Marry big data with
    technology and analytic know-how to pave the way to growth.
  • Growth Comes from Within: There is no shortage of retail outlet
    options, so driving growth by adding stores is an ineffective
    strategy. Find growth by improving efficiency and productivity from
    within current stores.

”Despite challenging market conditions, CPG marketers really do have
reason for optimism in 2016,” concludes Viamari. “Advancing technology
has really given retailers and manufacturers a distinct advantage during
these times of rapid and widespread change. By investing to understand
how best to leverage new advances to really tap into the change,
marketers throughout the CPG industry will identify exciting new ways to
create real and lasting market advantages.”

About the Report

The latest IRI Times & Trends “Taking Stock of CPG Past and
Future”
is a free report available from IRI. To obtain actionable
insights and recommendations around growth opportunities for 2016, tap
into IRI Market Advantage, IRI Consumer and Shopper Insights
Advantage, Hispanic Insights Advantage, IRI
ProScoresand IRI Lift. To download the report,
visit: www.iriworldwide.com/en-US/insights/Publications/Gear-Up-for-Growth-in-2016.

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Contacts

IRI Contact:
Shelley Hughes
+1 312.474.3675
Shelley.Hughes@IRIworldwide.com