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The CPG Food and Confectionery Industries:

Trends, Insights and Marketing Tactics

USA & Europe

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    Introduction

    The consumer-packaged goods (CPG) industry stands at a critical juncture in consumer preferences and global market dynamics, grappling with the evolving tastes and ethos of an increasingly discerning consumer base. As consumers demand products that not only satisfy their hunger but also align with their values and lifestyle choices, CPG brands are challenged to weave sustainability, innovation, and wellness seamlessly into their core product strategies. Delve into the pivotal trends shaping the US and European CPG food and confectionery (candy) industries and actionable insights for brands looking to thrive amidst these shifts.

    CPG Food Industry Banner2

    THE CPG LANDSCAPE: US and Europe

    U.S. Market Dynamics & Consumer Strategies:

    • Moderated Food Inflation Still Affecting CPG Prices:
      • Despite a decrease in inflation to 3.4% by the end of 2023, high grocery prices remain a primary concern for most Americans.
      • CPG companies are cautiously adjusting pricing, having faced a 6% fall in volume sales. Confectionery items, in particular, saw an 8% decrease in sales volume with a 16% increase in prices over the past year.
    • Adjustments in Consumer Spending:
      • US consumer optimism may have increased to its highest levels in January 2024, yet spending caution persists.
      • With food expenses identified as the primary economic worry among consumers, 69% of consumers have modified their grocery shopping habits, with 59% reducing item quantities.
      • 77% of consumers have strategically lowered their overall spending, showing a preference for Buy Now, Pay Later (BNPL) options– especially in younger age groups.

    Europe's Economic Outlook & Consumer Behavior:

    • Economic Pessimism Takes a Toll on Consumer Confidence
      • Europe closed out 2023 with a continued decline in consumer confidence, according to McKinsey research, largely due to persistent inflationary concerns.
      • 50% of European consumers have reported a decline in their savings, with a notable shift towards more vigilant expense tracking and savings cutbacks.
    • Shoppers Are Adapting with Trading-Down Strategies:
      • A solid 80% of European shoppers have reported trading down–a trend consistent with the past year–to more affordable alternatives, budget-friendly stores, or even holding off on certain purchases. Italy and Spain lead in these cost-saving measures.
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    SWEET STRATEGIES: MARKETING FOR THE CPG FOODS AND CONFECTIONERY INDUSTRY

    Inflation-minded consumers are increasingly considering trade-offs, trying out the competition, and hunting for the best deals. According to Deloitte, 50% of US retail executives expect consumers to value price over loyalty in the coming year. With a blurring of the lines between established national brands and private labels of retailers, it's become imperative for CPG brands to differentiate themselves in a crowded marketplace. Today's consumers are not just seeking products; they're gravitating toward brands that can positively impact their lives. This expectation offers a vast arena for CPG companies to explore innovative and thoughtful marketing strategies to build stronger consumer relationships, distinguish themselves from competitors, and create loyal brand advocates. Key areas to focus on include:

     

    1

    AUTHENTIC BRAND STORYTELLING AND ‘NEW’STALGIA

    With consumers craving comfort in uncertain times, many established CPG and candy brands have embarked on rebranding initiatives, tapping into a trend towards ‘new’stalgia. This trend attempts to strike a balance between introducing innovative offerings while still preserving brand familiarity. Brands that don’t have such nostalgic appeal can highlight their unique stories to establish stronger connections with an audience that increasingly values authenticity during changing tides.

    giadzy

    Italian food brand Giadzy leverages celebrity chef Giada De Laurentiis' personal journey from Italy to the US to underscore the brand's authenticity and commitment to quality. The brand has seen a 400% increase in sales over three years, fueled by a focus on imported ingredients, meal kits, and engaging content that educates consumers about the producers who made the products they’re buying.

    Cadbury

    Cadbury celebrated its bicentenary by inviting fans to share their cherished memories involving the brand for a chance to win £1,000. "Your Cadbury Memories" campaign aims to evoke nostalgia and celebrate the brand's long history by featuring fan-submitted photos in their advertising, reinforcing Cadbury's deep roots in British culture and personal milestones.

    Jell-O-Logo

    Jell-O unveiled a new logo and packaging for the first time in a decade in an effort to modernize its brand identity. This rebranding aims to appeal to a new generation of parents while retaining the brand's playful and colorful essence. It highlights how Kraft Heinz is updating its brands to connect with evolving consumer tastes and preferences–but not straying too far from familiarity.

    2

    INNOVATIVE & AGILE PRODUCT DEVELOPMENT

    Innovation in product development, particularly in alignment with health trends, is crucial for maintaining relevance and capturing consumer interest in the dynamic CPG landscape. Consumers typically are willing to pay more for products that are different, have an improved formulation, or are unique in a positive way. Forward-thinking CPG brands are responding by innovating their product lines to meet evolving tastes and palate preferences.

    mars

    Mars Wrigley's Nutritional Innovations: Adapting its classic offerings, Mars Wrigley introduced Snickers Hi-Protein, infusing the beloved candy bar with 20 grams of protein and just 4 grams of sugar to cater to health-conscious snackers. Additionally, it’s launched a series of innovations to its portfolio of snacks and sweets, with unique taste experiences inspired by global cuisines and trends, e.g., Dove Milk Chocolate Tiramisu Caramel Promises and Ranch Dip flavored Combos.

    KraftHeinz_NotCo_780

    Kraft Heinz and NotCo's Plant-Based Ventures: Kraft Heinz, in collaboration with food tech company NotCo, launched a plant-based mac & cheese, marking their third joint innovation. Utilizing NotCo's AI platform, Giuseppe, they've reimagined traditional food items with plant-based ingredients, signaling Kraft Heinz's strategy towards innovating in response to the growing demand for non-dairy alternatives.

    3

    ENHANCING PRICING AND PROMOTIONS WITH AI

    AI, armed with big data and machine learning, provides a significant advantage for CPG brands to improve their marketing strategies. According to Chris Cubba, Chief Revenue Officer at Snipp Interactive Inc., "The use of AI tools is about enhancing personalization and tailoring promotions to individual preferences. By utilizing data analytics to understand individual spending patterns, brands can tailor personalized cost-savings offers that drive retention and incrementality without creating unnecessary margin impact.” Effective use of AI can allow brands to increase their marketing ROI, aligning their promotions precisely with retailer demands and consumer preferences.

    pop tarts vidmob

    Pop-Tarts Bites partnered with VidMob to analyze advertising performance and engagement on Meta’s Instagram and Facebook platforms, aiming to identify which ad variants most effectively resonated with distinct consumer segments, including Gen Z. This initiative allows for more targeted marketing strategies and showcases the potential of AI to revolutionize how brands communicate with their audiences.

    4

    STREAMLINING DIGITAL ENGAGEMENT AND DIRECT-TO-CONSUMER STRATEGIES

    Despite most groceries still being bought in stores, the shift towards digital is undeniable. According to Capital One, by 2025, over 155 million Americans will buy their groceries online, nearly doubling the pre-pandemic figure of 87 million. CPG companies are increasingly exploring new sales channels, including direct-to-consumer (D2C) models, which allow them to bypass traditional retailers and directly engage with their customer base. This strategy is particularly effective against the competition with private-label brands, as it enables personalized experiences and exclusive offerings through social media, branded websites, and D2C platforms. Direct engagement with consumers not only fosters loyalty but also provides brands with valuable and actionable insights to drive sales in a competitive market.

    Hershey

    Hershey developed a DTC strategy to gather first-party data and better understand its customers' behavior. Its branded DTC website created a frictionless path to purchase that allowed consumers to learn more about its products, leading to a 98% increase in orders and a 105% increase in sales compared with the previous year.

    ReadySet Food

    Allergy-friendly brand Ready. Set. Food!'s partnership with PBS Kids’ "Daniel Tiger’s Neighborhood" strategically aligns the brand with educational content, enhancing its credibility to allergen safety and health, and demonstrates the effectiveness of combining digital educational content with innovative product offerings.

    MiLa

    Authentic Chinese street food brand MìLà's use of its direct-to-consumer channel for product testing and innovation allowed for real-time feedback, enabling it to hone its product development for retail markets. Its DTC and e-commerce efforts were invaluable in building consumer loyalty and facilitating product market fit.

    5

    COLLABORATIVE MARKETING EFFORTS

    Collaborative marketing, involving partnerships between brands, influencers, or other entities, opens new avenues for creativity and market penetration. These collaborations can range from limited-edition products and co-branded experiences to cross-category ventures, enabling CPG brands to tap into new demographics, enhance brand perception, and create buzz.

    hidden valley ranch.   burtsBeesLogo-gdv

    Hidden Valley Ranch and Burt’s Bees: This partnership introduced a ranch-flavored lip balm, transforming a beloved dressing flavor into a unique cosmetic product. Inspired by a fan-favorite April Fools joke, this collaboration exemplifies how brands can innovate across categories, building on fan enthusiasm to explore new markets and creative promotions. Hidden Valley has found success with these kinds of limited-edition promotions-- last year, it collaborated with Van Leeuwen on ranch-flavored ice cream.

    oreo    pac-man

    Oreo teams with Pac-Man. Oreo partnered with Pac-Man with special edition cookies and a custom Oreo Pac-Man. Each Oreo can be scanned to unlock exclusive gaming experiences or a chance to win prizes. By blending snacking with nostalgic gaming, Oreo created an engaging collaboration, inviting consumers of all ages to enjoy playful moments together.

    6

    LEVERAGING SOCIAL AND MEDIA PLATFORMS

    The role of social and media platforms in today’s marketing ecosystem cannot be overstated. Brands must be adept at navigating these channels to engage with consumers, influence trends, and drive brand awareness. This involves not only traditional advertising but also engaging with content creators, participating in viral trends, and utilizing emerging platforms to reach new audiences. The challenge is to remain authentic and agile, adapting strategies in real-time to leverage the full potential of these platforms for storytelling, community building, and consumer engagement.

    tik tok

    TikTok has become a pivotal platform for emerging CPG brands, with its ability to spark new food trends and shape consumer preferences, particularly among younger audiences. The #FoodTok tag boasts billions of views, offering CPG brands an enormous creative outlet for influencer-based content that showcases their products.

    Amazon_Prime_Video_logo

    The strategic use of streaming platform advertising, as seen with Amazon Prime Video, represents a significant evolution in digital marketing, offering brands expansive reach and engagement opportunities in a highly fragmented media landscape.

    7

    ELEVATING BRAND ENGAGEMENT THROUGH UNIQUE EXPERIENCES

    In today's crowded market, crafting unique and memorable brand experiences is vital for capturing consumer attention. Through experiential marketing, interactive content, and innovative uses of products, CPG brands can offer more than just their goods—they can create emotional bonds and turn consumers into brand advocates. Innovations such as augmented reality (AR), virtual reality (VR), and real-world activations are redefining consumer engagement, allowing brands to enhance the consumer journey and offer immersive, meaningful interactions that surpass traditional advertising.

    somos

    SOMOS Foods’ Walking Tacos: This concept brings consumers a novel, interactive dining experience, blending the brand's culinary heritage with the trend of experiential eating. By introducing "walking tacos"—street food from Mexico featuring tortilla chips topped with seasoned meat and cheese—SOMOS Foods has successfully engaged consumers and encouraged them to explore the brand's diverse product range.

    sickers

    Snickers’ AR Super Bowl Experience: Snickers’ innovative Super Bowl campaign will allow users to engage in interactive AR activities like kicking field goals. Available on both the Apple Vision Pro and mobile devices, this campaign is tied to Snickers’ long-running "Rookie Mistake" platform to deepen consumer engagement beyond conventional ads. The experience invites users to share their rookie mistakes or embarrassing moments for the chance to win an at-home football viewing set-up.

    Oscar_Mayer

    Oscar Mayer’s Wienermobile Drivers: Oscar Mayer's search for Hotdoggers to drive its iconic 27-foot-long hot dog-shaped vehicles, aka Wienermobiles, showcases a creative approach to brand ambassadorship. These paid ambassadors travel across the US, hosting pop-up events and generating high-performing content for social media, demonstrating a unique way to foster brand visibility and connect with communities nationwide.

    8

    ALIGNING BRAND VALUES WITH CONSUMER EXPECTATIONS

    Consumers are increasingly looking for brands that align with their personal values, particularly regarding sustainability, ethical sourcing, and social responsibility. Brands that successfully balance these values with the value proposition of their products can build stronger, more enduring relationships with consumers. This involves transparent communication about sustainability efforts, ethical practices, and how their products contribute to a better world. But as sustainable packaging becomes the new norm, clearly defining what makes a package sustainable will be critical for helping consumers make an informed and value-driven choice. Communicating “how sustainable” a brand’s package is can become a significant differentiator in the CPG landscape.

    Leading food companies and retailers are doing their bit:

    Leading Brands Social

    undefined-Mar-07-2024-09-21-26-4301-AM

    PepsiCo's Pep+ initiative showcases a holistic approach to sustainability, addressing everything from ingredient sourcing to packaging, aligning the brand with consumer expectations for corporate responsibility and environmental stewardship.

    ugly company

    The Ugly Company's mission to reduce food waste by utilizing imperfect produce resonates with a growing consumer segment concerned with sustainability, demonstrating how brands can turn ethical practices into compelling value proposition.

    Tesco_Logo.svg

    Tesco sources cocoa for its own brand of chocolate, biscuits, cakes, desserts and cereals from sustainably managed farms and is sourced as Rainforest Alliance Certified™ with the products carrying the Rainforest Alliance cocoa sourcing label.

    9

    COLLABORATIONS WITH RETAILERS AND THIRD-PARTY DELIVERY PLATFORMS

    As the retail landscape evolves, collaboration with retailers and third-party delivery platforms becomes increasingly strategic. These partnerships can enhance CPG brand visibility, facilitate consumer access to products, encourage product trials, and support integrated marketing campaigns that drive both online and in-store traffic. By aligning with retailers and delivery services, brands can offer convenience, unique experiences, and personalized interactions, effectively leveraging each channel's strengths.

    Growth via Convenience Stores: CPG food and confectionery sales in convenience stores, particularly in the snack category, which surged by 10.5% to $12.8 billion in the last year, demonstrate the potential of these particular outlets for brand growth. With a demogr.aphic leaning towards younger Gen Z consumers, convenience stores are seeing increased snack sales, driven by innovative flavors, smaller pack sizes, and expanded product ranges. Notably, convenience stores now represent 20.4% of all snack sales, with expected continued growth in 2024

    instacart

    Instacart’s Caper Carts Instacart's Caper Carts provide a novel way for brands to interact with consumers directly at the point of sale. This technology enables personalized ads, introducing shoppers to new products and offering customized recommendations, illustrating how tech can enhance the shopping experience and boost brand engagement.

    instacart google

    Instacart and Google Shopping Ads: Instacart's collaboration with Google to offer Shopping ads powered by Instacart's retail media data represents a strategic move to extend its retail media reach. Early partners include brands like Danone’s Oikos and Kraft Heinz, showcasing the potential of combining Instacart's delivery services with Google's extensive reach to drive transactions and challenge competitors like Amazon.

    10

    ENCOURAGING LOYALTY VIA PROMOTIONS

    Loyalty promotions are a powerful tool for building and maintaining consumer relationships in the CPG sector. Brands must build loyalty initiatives structured to offer discounts, exclusive promotions, or cash-back rewards, providing tangible savings to consumers navigating the aftermath of global inflation and a cost-of-living crisis. In doing so, they can create a sense of belonging and appreciation among their consumer base, drive long-term engagement, and gather valuable consumer data. The key is to design loyalty promotions that are easy to participate in, offer real value to consumers, and are personalized to individual preferences and behaviors. Chris Cubba notes the challenges in the CPG loyalty space, including “customer adoption, purchase validation, integration with diverse and constantly changing ecosystems, creating a seamless customer-first experience, and measuring impact to justify a positive ROI. Successful strategies involve employing omnichannel approaches to accommodate varied paths to purchase while remaining as frictionless as possible.” 

    Daiya

    Daiya's 'Melt Insurance' program addresses potential consumer hesitancy around trying new products. Daiya wanted to drive trial of their dairy-free cheese by providing a money-back guarantee for a full refund if the customer is not completely satisfied. Snipp created a 'Melt Insurance' money-back guarantee program where consumers could make a qualifying purchase and upload their receipts to a dedicated micro-site. If not completely satisfied with their purchase, they could claim the Melt Insurance and get a full refund by submitting a form.

    kellanova logo

    Kellanova’s Gift With Purchase campaign capitalized on the excitement of the college basketball season to drive sales across multiple brands, showcasing the effectiveness of timely, themed promotions in engaging consumers and encouraging additional purchases. Consumers could buy three participating products and upload their receipts to a dedicated microsite to receive a $15 Fanatics e-gift card, demonstrating a targeted approach to reward loyalty.

    rxbar

    RXBAR's Unique Sweepstakes: With a creative 'pay your ex to join a new gym' theme, RXBAR's campaign aimed to boost engagement and sales. By registering on a specially designed microsite, consumers could win part of $25k in cash prizes, highlighting innovative ways to engage customers and incentivize purchases.

    CPG Food Industry Banner 5

    Conclusion

    The CPG food and confectionery sectors are navigating a period of significant transformation driven by evolving consumer preferences, economic shifts, and technological advancements. As brands strive to remain competitive and relevant, the ability to adapt to these changes has never been more critical. Embracing innovation, prioritizing sustainability, and fostering genuine connections through authentic storytelling and personalized experiences will be essential strategies for success. Leverage our marketing suggestions to dish up success in the current landscape and lead with 'zest!'

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