Knowing which lever to pull to attract, engage and maintain customers has never been more challenging—and that’s likely not going to change. With product variety, access to technology and instant gratification becoming ubiquitous, the fast-moving consumer goods (FMCG) market is facing notable growth headwinds—especially when you look at opportunity with too large of a lens.
Across traditional U.S. retail, we see that revenue growth wasn’t able to hit half a percent last year. And revenue growth was just 1% in 2016, down almost 150% from 2015, when revenue growth came in at 2.4%. Looking ahead, growth will remain elusive: Our 2020 forecast highlights a 1% revenue drop for the grocery, drug and mass merchandise channels.
The combination of access to information and consumer desires for products that meet their specific needs and desires will drive consumption going forward, which means FMCG manufacturers and retailers will need to stay focused on attributes rather than broad categories.
According to last year’s Shopper Trend survey from Label Insight, 49% of U.S. consumers adhere to a particular diet or health-related eating program. Additionally, 44% say food allergies, intolerances or sensitivities affect the way they shop. These metrics complement findings from Nielsen’s 2017 sustainability survey, which found that 67% of consumers want to know everything that goes into the food they buy. Drilling down further, 46% of Americans say that claims on food products have a direct influence on their purchase decisions.
The data couldn’t paint a clearer picture for the FMCG market: Consumers want personalized products that meet specific needs. And when we look at product categories with an eye for specific attributes, we see well beyond the overarching trends of a specific store aisle. To illustrate, let’s look at ice cream, a category that has struggled to find consistent growth in recent years. That said, however, the overall category was able to post revenue growth of 2.3% in 2017.
To find more significant growth, we need to look at the specific attributes that consumers are looking for when they shop for ice cream. For example, revenue growth among ice cream qualifying as a good source of protein increased more than 53% last year. And as a sub-category that represents just 3% of total category sales, there’s clearly an opportunity for additional products and shelf space. But protein isn’t the only attribute driving sales growth in the ice cream category.
Many of the budding sales trends across the FMCG landscape are directly connected to product transparency and clean-label products, or those without certain undesirable ingredients. Going back to ice cream, we can see the impact that clean-label product sales is having on the overall category. For example, products that are classified as “free from artificial flavors” account for more than $1.2 billion in sales across FMCG, and sales across an array of categories are trending upward, including ice cream.
Knowing which product attributes are resonating with consumers, however, are only part of the overall picture. Manufacturers and retailers also need to know which consumer groups are actively engaged with certain attributes, as well as where those groups live. Staying within our ice cream example, let’s look at consumers seeking additional fiber in their households. Across the general population, consumers seeking ice cream qualifying as a good source of fiber are 34% more likely to live in a cosmopolitan center, 31% more likely to be Hispanic and 2% more likely to have children between the ages of 6 and 12.
In looking across the FMCG landscape, it’s clear that the path to growth is no longer a single tract. Rather, it’s many granular ones that are specific and attribute-based. With data on hand to highlight the way forward, successful manufacturers and retailers will be able to deliver on what consumers are looking for—and drive sales growth in the process.
The insights in this article were derived from the following sources:
- Nielsen Product Insider, powered by Label Insight
- Label Insight Shopper Trends Survey, 2017
- Nielsen Global Sustainability Survey 2017
- Nielsen Syndicated Data (xAOC+C)
- Nielsen Homescan Panel
- Nielsen Total Spend Report