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"We encourage every consumer brand to do that forward-looking analysis and say, ‘Alright, how much growth do we think for our market?’ I would be willing to bet nine times out of 10, the majority of that growth is going to come from online channels. And so therefore, are you investing accordingly into that growth opportunity?" — Russ Dieringer, Founder and CEO, Stratably
Every year, leaders from 30 of the most successful consumer packaged goods (CPG) companies convene in New York for the annual Consumer Analyst Group of New York (CAGNY) conference, offering a view into their current strategic priorities and larger trends that will reshape the commerce landscape in the coming years.
Russ Dieringer, founder and CEO of Stratably, a research and analyst firm that serves digital commerce organizations, is usually there to capture it all. Dieringer joined an episode of the "Unpacking the Digital Shelf" podcast, "The Scoop from CAGNY," to discuss the five CPG trends he discovered at this year’s conference and what they signal for the industry’s future.
Commerce is changing — more specifically, ecommerce is growing, and many CPG brands are leaning more heavily into digital, causing ripple effects. Learn more about how the top five trends are reshaping commerce.
CPG companies are laser-focused on volume growth. Ecommerce may offer them the best opportunity to achieve this goal.
Dieringer says ecommerce significantly contributes to overall growth for CPG brands. During CAGNY, companies like General Mills, Colgate, and ELF Beauty shared details about their digital performance.
"Online, for these businesses, has grown 12 times faster than their store channel," Dieringer says. "So, when you do the math on that type of outperformance, more than half of their incremental dollar growth over just the last couple of years has come from ecommerce."
Dieringer says more brands need to analyze where their incremental growth is coming from.
"We encourage every consumer brand to do that forward-looking analysis and say, 'Alright, how much growth do we think for our market?'" he says. "I would be willing to bet nine times out of 10, the majority of that growth is going to come from online channels. And so, therefore, are you investing accordingly into that growth opportunity?"
Digital-first products were another CPG trend at CAGNY.
Several brands are launching products exclusively online, gathering data and tracking performance, and then using this information to inform their product launches in-store.
Kraft Heinz, for example, created a limited edition "Ketchup and Seemingly Ranch condiment based on a viral moment of Taylor Swift at a Kansas City Chiefs game. The company launched the product on Walmart.com and its direct-to-consumer (DTC) site in just 15 days, leveraging these online channels to “move to the speed of the culture,” Dieringer says, and tap into the zeitgeist.
"As the consumer shifts their behavior, retailers and brands need to evolve with that." — Russ Dieringer, Founder and CEO, Stratably
Other CPG brands, Church & Dwight, are launching products on Amazon first before making them available in-store. The Amazon consumer has now become a proxy for the average consumer. According to Dieringer, using this channel to test product innovations is a sound strategy and provides powerful proof of concepts.
"The consumer continues to spend more of their wallet online, and that's a factual thing," he says. "You can look at pretty much any data set that you want to look at, that's what's happening."
As more brands embrace digital-first product launches, retailers will need to adapt.
"If your stores are more or less driving all of your online business and the products aren't inside your store, you can't sell that stuff online," Dieringer says. "I'd be very nervous."
Traditional brick-and-mortar retailers should be particularly concerned about digital-first launches on Amazon that could cannibalize their potential revenue, according to Dieringer.
CAGNY didn’t offer a roadmap for how retailers can navigate this shift, but going forward, it’ll be crucial for retailers to figure out how to lower the barrier to entry for brands that want to do digital-first launches, similar to how Walmart worked with Kraft Heinz to facilitate this.
Seemingly every industry is leveraging artificial intelligence (AI), and CPG is no different.
Brands use AI for everything from content creation and hyper-personalization to product innovation. For example, Clorox uses AI models to enable social listening that informs product development. The company launched toilet bombs, a product designed to capitalize on the current consumer craze around bath bombs.
"Using that process cut down on their innovation cycle time by 50%," Dieringer says. " … So you think about that example, [and] you think about using online to launch more quickly, maybe it does allow brands to either iterate more or just iterate more quickly and save resources that way."
With a growing number of retail media platforms and sales channels, accurate measurement and attribution are more important than ever.
Retailer analytics was a hot topic at CAGNY, Dieringer says, as the shift to digital channels now theoretically allows brands to better assess and improve the return on investment (ROI) of their campaigns.
Some brands, like Colgate, are investing significantly in measurement and tracking. The company has jointly developed a clean room with a specialized retailer.
Cleans rooms are secure environments where brands agree to share and analyze customer data while maintaining data privacy and control over how, when, and where this information is shared.
Dieringer says Colgate’s efforts highlight the broader issue of "just how much complexity is happening around measurement."
He adds that brands can build their competitive edge by investing significantly in measurement, particularly around media.
"Measurement came up in a variety of ways at CAGNY," Dieringer says. "We think that this is really going to be an area brought up even more next year as brands try to demonstrate to Wall Street, 'We're building in this area. This is the type of benefit that we're getting and we think it's a differentiator for us.'"
Companies such as Colgate, General Mills, and Hershey all have C-level or senior analytics roles, so we could see more CPG brands build this capability to better understand the value they’re getting from their media investments, particularly on retail media platforms.
From rapid ecommerce growth and digital-first product launches to AI-led innovation, CAGNY unearthed several CPG trends reshaping the industry. Brands that want to drive growth and profitability in the year ahead will pay close attention to these CPG trends and capitalize on them to set themselves apart in today’s constantly evolving commerce environment.
Listen to the full episode to hear more of Dieringer’s CPG insights.
