The post-pandemic opportunity for the consumer packaged goods (CPG) industry

The post-pandemic opportunity for the consumer packaged goods (CPG) industry
May 8, 2020
3 MIN. READ

As we continue our content series on how brands are managing the business curve of COVID-19, we explore how leading CPG brands are seizing the opportunity to emerge from COVID-19’s disruption more relevant—and more human—than ever before.

A “walk the talk” moment

Over the last decade, consumer packaged goods firms have made “purpose” marketing one of the industry’s most inescapable trends. These efforts are often well-intentioned but in too many cases veer into what Unilever CEO Alan Jope last year described as “woke-washing,” a cynical process by which a brand gloms on to a timely cause for short-term buzz but makes no meaningful contribution. “It threatens to further destroy trust in our industry, when it is already in short supply,” he noted during a talk at last year’s Cannes Lions festival.

COVID-19, however, has given CPG companies a chance to “walk the talk” on purpose.  Leading CPG firms like Mr. Jain’s Unilever, Procter & Gamble, Kimberly-Clark, Kraft Heinz, and Mars have spent the crisis prioritizing the health and well-being of employees, serving customers who count on their brands, and supporting the communities, agencies, and people on the front lines.

There’s ample evidence that these are the right priorities. Recent Twitter research showed, for example, that approximately eight out of ten respondents expect brands to support their local communities, communicate how they are standing by employees, and look for ways to boost frontline health workers. And 77% said they feel more positively about brands making an effort to support society right now—an insight that could have lasting customer loyalty implications.

It’s been inspiring to witness how quickly CPG firms like Beiersdorf, L’Oreal, P&G, and Molson Coors pivoted their manufacturing to develop much-needed equipment such as medical disinfectant, hand sanitizer gels, and face masks. It’s also likely to be good for business in the long term.

Panic buying and long-range changes to consumer habits

In the short term, however, CPG firms have felt something a bit different: off-the-charts demand, fueled initially by panic buying.

Even before state-wide stay-at-home orders, consumers were stockpiling goods potentially important to weathering the crisis. While much has been made about the runs on toilet paper and sanitizing products, shortages of multiple CPG products impacted 84% of Americans in March, according to the Consumer Brands Association.

Within grocery, many of these sought-after items were found in stores’ center aisles, which have been fading in relevance for decades. But the need for familiar, affordable, and shelf-stable products bucked that trend, at least for the time being. Leading CPG companies and their retailer partners responded to the pandemic-induced demand surge by ramping up production of these in-demand products and limiting purchases during a single visit. The result? Products and brands that have been largely afterthoughts are enjoying an elevated status and fresh relevance—provided they can manage to stay available through whatever disruption lies ahead.

After all, a second wave of this challenge is coming. Brands will need to maintain supply, adjust to a disrupted landscape, and re-establish their products’ unique value proposition and brand loyalist relationships in an unknowable marketplace.

Looking ahead, it’s unclear how consumers will change, but it’s likely those shifts will be significant when they come. They almost always are. The Great Depression gave rise to life-long frugality and saving habits; more recently, the Great Recession of 2008-2009 split millennials into two groups based on how it affected their spending habits. The pandemic lockdowns will surely leave their own unique mark.

An opportunity to reframe product usage

For CPG brands, the monotony of home confinement has transformed everyday activities, like cooking, crafts, and cleaning into much-needed moments of escape.  Once back-of-the-cupboard, forgotten items are becoming top-of-mind must-haves for consumers with the resurgence of family meals.

As consumers are exploring unknown passions, discovering new-found skills, and finding at-home solutions for everything through social and video networks, CPG brands have an opportunity to authentically partner with social influencers to reframe product usage. 

Time will tell how many of these new uses persist past the crisis, but brands should not take lightly the new role they play in consumers’ lives and the opportunity they now have to make this role a permanent one.

ICF’s global marketing services agency focuses on helping your organization find opportunity in disruption.
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