Where Consumer Packaged Goods Fit Within the Food Industry

Consumer packaged goods make up an overwhelming percentage of the retail marketplace. People pick them up from shelves at their favorite retailers and order them on Amazon so their pantries are always stocked with the products they love by brands they trust. CPG foods are part of this larger pool, but they exist in their own pocket of the CPG industry that interacts with a larger marketplace — food and beverage.

CPG’s Relationship with the Food and Beverage Industry

CPG companies that specialize in packaged foods are in a niche area of food sales, which is a huge market in the U.S. The packaged food market in the U.S. was valued at $996.56 billion in 2020 and further growth is expected. It might not have quite the same landscape as foodservice, but CPG food sales often share the same consumer demands.

One growing request for the food industry is to shift its focus to sustainability. Consumers are turning their attention to packaging and food waste, urging businesses to find ways to reduce their carbon footprints. They’re also asking for stores to ditch plastic bags in favor of reusable or recyclable materials. CPG brands aren’t immune to this ideology either. People are looking for more items packaged in recyclable materials or made from biodegradable sources, too.

In addition to the push for sustainability, people are increasingly seeking out food brands that speak to them. Consumers are perusing grocery stores in search of brands with meaning. Just as they want restaurants with locally sourced ingredients, they want packaged food that speaks to their values. For CPG companies, this could mean shifting packaging to include more brand information or highlight specific certifications and attributes —Whole 30 approved, keto, paleo, etc. — of the product that could attract a specific end user.

As you can see, although CPG food is typically marketed, purchased and used differently than other items in the food industry, the consumer expectations often cross over. Whether they’re shopping in Walmart, Whole Foods or online, consumers are looking for specific qualities in whatever food items they purchase, which means CPG companies need expert tactics to set themselves apart.

How CPG Companies Can Stand Out From the Crowd

It seems every other ad these days is for food. A new restaurant, a popular local eatery or even a major retail brand like Coca-Cola take up billboards, commercial time and online ad space to try to get people’s attention. This kind of saturation means it can take a lot of time and effort for emerging brands to get through to consumers. To get ahead of the curve, you need a few clever ways to break into the market where you can be most visible. 

Utilize an Open Business Model

Sometimes the best path to profitability is through collaboration, not competition. If you’re testing the waters with new products or trying to get your brand name out there, partnering with local retail stores and grocers might be the best way to feature your food. Staying close to home can also save you time and money in deliveries, which might be much needed dollars in the beginning of your enterprise.

A place in big-box stores is a great goal for any CPG company, but if you’re not on a level to compete with major brands, your product could get lost in the sea of other items on the shelves. Focusing on creating a strong, local customer base first can help you confidently enter larger retailers and expanded retail channels later on.

Go Digital

Plenty of startups launch online only. Sticking strictly to e-Commerce in the nascent months of your brand can give you time to figure out your best pricing model and test the functionality of your packaging. For some brands, it’s an easier place to hit the ground running than moving straight into retail stores.

Another reason digital can be a good place to start is because most consumers are already accustomed to finding products online. With smartphones in every hand, anyone can search for, discover and research a product in just a few taps of their thumb. Creating a website with a strong brand message and detailed product information is one way to cater to this consumer behavior. 

As an added bonus, the e-Commerce sales of CPG items have skyrocketed in the last two years, gaining $63 billion from 2019-2020. This trend is expected to continue, making it a great time for CPG brands to hop into the digital arena.

Give the Right Information to the Right People

If you’re an emerging CPG brand, then you’ll likely be representing yourself to two main audiences: retailers and consumers. As you know, these are two distinct groups and you often need both to succeed. That’s why it’s imperative to target each one with the right information.

• Retailers: When you're in discussions with retailers, you want to focus on the quantitative aspects of your product. Talk about the innovation or uniqueness of the product, how much product you’re moving in other areas, how much you could deliver weekly and so forth. You have to show them that you’re worth the shelf space and their investment in your product is ultimately in their best interest.

• Consumers: To reach consumers, you want to focus on your brand story and how it relates to them. They’ll care more about who you are and what you stand for than how much success you’ve had. When speaking to this audience, concentrate on making a personal connection and establishing how your product can be a solution for their needs. You can do this by advertising that your food is approved for specific diets, supports their lifestyle, donates proceeds to charity or uses only recycled materials.

Positioning Your CPG Products

Positioning your product can be tricky. You have to know your market and find ways to engage with customers that are unique to your brand. These days, millennials are driving CPG sales, so you want to position your products to appeal to their wants and meet their needs. There are numerous ways to market to this group, but here are three simple tactics any brand can employ:

1. Predict the future. (Not literally.) Millennials are the first generation where being an influencer is a profession. This means some of them are setting the market trends that others will follow. If you can keep a finger on the pulse of millennial interest when it comes to CPG goods, then you’ll have the opportunity to stay one step ahead. This can launch your brand into being an innovator that can claim phrases like “new technology,” “the only product with…” or “introducing a new way of eating” to set your products apart from the competition.

2. Focus on what makes you different. The majority of this emerging consumer base grew up with more choices than they could ever possibly consider. They’re accustomed to looking for a product and being greeted with a sea of options. That means to stand out, you have to make yourself different. Focusing on how your brand and product aren’t like the others can help consumers realize why you’re the right choice and not just another CPG. Mention how your product will help them achieve overall wellness, how it’s easier to grab and go or how it uses healthier ingredients than the competition.

3. Angle the Advantages. Every item in the world has pros and cons, but you want customers to focus on the pros. Many CPG foods are snack items, which is an advantage in and of itself as more people look to sate their hunger between meals. You don’t have to compete with fast food and restaurants if you position yourself to be the go-to option for all the in between moments. You can position your product as an add-on, enhancement or supplement to a normal diet so people see how easy it is to slip into their everyday routine.

Consumer packaged goods’ relationship with the food and beverage industry is complex. It’s a densely populated market where you have to stand out from the crowd and properly position your product to succeed. Schedule a call with us today, and we can help you find the right niche in the food industry for your product.