How the pandemic impacted consumer packaged goods

The pandemic swept the world and changed consumer behavior across the globe. As we approach the end of 2021, the CPG sector is seeing many consumer preferences return to normal, while other changes seem to be here to stay. Now, in a time of low consumer predictability, reliable agile market research is more critical than ever.  

Today’s consumers face employment instability, public health concerns, policy changes, and more. Brands face supply chain issues, labor shortages, logistics challenges, remote work idiosyncrasies, and employee burnout. As COVID-19 approaches its second fall season, many people are wondering: What’s next for CPG brands?

Supply chain complications increased customer churn

Let’s start with some big-picture conditions: Furloughs and illnesses had swift and dramatic effects on national and global supply chains. We saw a slow in production and shipping due to reduced labor availability, and produce shortages started popping up in supermarkets with little warning while meats, fruits, and vegetables piled up and expired in warehouses. These strains on the supply chain caused small accidents to become major delays—kind of like the cargo ship that blocked all trade through the Suez Canal. 

What’s worse, while some employees reclaimed their jobs after a few weeks of stay-at-home orders, others never returned to their old jobs. We saw some families adjust their budgets to survive on a single income while other workers accepted lower-wage positions and simply spent less. Furthermore, workers who had planned to retire over the next decade even decided to leave the workforce years earlier than expected. 

All in all, the labor shortage only exacerbated existing supply chain issues, slowing both production and distribution. As a result, many consumers changed brands—either by choice or out of necessity—and have yet to return.

Pandemic trends created new opportunities for CPG brands

The pandemic has been horrible, but there are still small silver linings for the CPG sector. New consumer habits opened many opportunities for brands to create novel solutions for a consumer base with new needs. Let’s look at some of them now.

Masks and sanitation supplies

CPG brands got creative to meet consumer demand, and the most agile brands carved out market share from larger competitors while they had the chance. Masks, hand sanitizer, liquid soap, cleaning wipes, and surface disinfectants flew off shelves at rates we’ve never seen before. We saw Distilleries respond to the sanitizer shortage by producing hand sanitizer instead of liquor, and many brands rushed to start manufacturing masks, which quickly became a significant part of their core offerings.

What’s happening now?

As the pandemic continues, sanitation supplies and masks are still in high demand. People are returning to offices and schools—even as new COVID-19 variants emerge—keeping rigorous pandemic cleaning routines in practice. And even though many parts of the world have always used masks to combat the spread of illness, it now looks like masks are here to stay across the globe.

Online shopping and e-commerce

E-commerce exploded during the pandemic and CPG brands scrambled to list their products online. Some brands even went as far as allowing direct-to-consumer orders to circumvent supply chain issues at the distributor levels. Pandemic lockdowns also inspired many people to launch small CPG brands of their own, like handmade snacks, soaps, and candles. This definitely means more competition, but it also means even more innovation in the CPG sector.

What’s happening now?

After two years of e-commerce infrastructure development, there’s no going back. Consumers enjoy connecting more directly with brands they love. They also prefer the convenience and depth of online browsing from the comfort of their own desks, beds, and couches. Many small entrepreneurs like the flexibility of running their own brands instead of punching a clock, and it’s getting easier than ever to turn ideas into reality with affordable market research and business tools.

More alcohol

Stranded at home with nothing to do and no access to bars, consumers started drinking at home more. Many even became their own bartenders, expanding their beverage horizons and attempting DIY craft cocktails. As a result, canned cocktails, hard seltzers, and alcohol delivery services emerged as major pandemic trends.

What’s happening now?

Alcohol consumption has remained high, but “mindful alcohol consumption” is also on the rise. Low-carb and low-calorie options are seeing more demand—and so are low-alcohol and alcohol-free adult beverage alternatives. Our guess? People want the fun and the flavor, but not necessarily the hangover. 

More hobbies

Many people picked up hobbies during the pandemic, resulting in an unexpected bump in demand for many consumable materials like lumber, drywall, paint, tape, fabric, paper, and more. Many people took their hobbies further and turned them into full-fledged pandemic side-hustles. As a result, suppliers saw a sharp increase in demand.

What’s happening now?

Many lockdown hobbies were temporary, like small crafts. But some pandemic hobbies are sticking around, like cooking at home and DIY home improvement. This is partly due to consumer preferences, and partly due to reduced spending on things like commute and tourism.

Health and wellness

Throughout the pandemic, health and environmental concerns have shifted to the forefront of many consumers’ minds—especially millennials, who now make up the majority of consumers. The work-from-home movement also seems to have contributed to CPG trends that emphasize health, wellness, and self-care. Overall, we’re seeing a larger demand for products that help consumers achieve greater health, fitness, nutrition, appearance, and sleep. 

What’s happening now?

Faced with a public health crisis, an unstable healthcare system, and unpredictable retirement, younger consumers are prioritizing their health. They are reevaluating many cultural norms about what kind of food they eat and how it makes them feel. As a result, the CPG market is seeing increased demand for nutritional supplements, balanced meals, fresh food subscription services, and plant-based alternatives. 

Sustainability

Sustainable brands were already on the rise long before the pandemic (again, largely thanks to millennials) and the last two years have seen the CPG sustainability trend gain even more momentum. The rise of online shopping and direct-to-consumer sales has brought waste—especially in distribution and packaging—into the spotlight. Many consumers are now beginning to favor compostable materials, fresh food, and minimal packaging.

What’s Happening Now?

As climate concerns garner more attention, sustainability is emerging as a critical consumer value—especially in the CPG sector. Consumers are more mindful of the waste they’re creating with their habits, and lots of people are seeking products with low or net-positive impacts on the environment. Many consumers are even willing to pay a premium for sustainability in the form of compostable packaging and low-carbon production and distribution.

What did we learn?

The pandemic demonstrated how quickly global events can change consumer values and spending habits. Some brands reacted quickly to consumer data and turned adversity into opportunity, while other brands were too slow and either lost market share or closed their doors for good. We can see from the way the pandemic impacted the CPG sector that agile research, thorough market data, and fast pivots made the difference between massive success and crippling failure. 

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