Getting Ahead Of The Curve In CPG

How to keep the business healthy in a time of pandemic

The author(s)

  • Karin O'Neill Senior Vice President, US, Ipsos UU
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Living through a pandemic changes a person’s beliefs and behaviors, some of them for life.

Pearl was a carefree 15-year-old when the 1918 flu hit San Francisco. The streets came to be associated with disease and death. For the rest of Pearl’s long and healthy life, whenever family members came in the front door, she told them, “wash your hands.”

The Consumer Packaged Goods (CPG) industry has been famously resilient through crises ranging from health to financial, and the COVID-19 pandemic looks to be no exception. To illuminate a path forward, we interviewed insights leaders at leading companies across a range of categories, including household care, beauty, food & beverage, and OTC medicine, as well as our colleagues in Ipsos UU China who are starting to emerge from the crisis.

Here are four consumer-driven reasons they list for their current growth, some concerns and ideas about how to keep growing by meeting customers needs during the crisis and beyond.

CPGs can stay healthy during a pandemic

CPG manufacturers and grocery stores are reporting record weeks and months. Kroger says it saw a 30% increase in same-store sales in March, Campbell’s CEO said on March 24 that the company saw a 60% increase over the past 4 weeks, and paper goods manufacturers like Kimberly-Clark and Procter & Gamble are working around the clock to keep up with unprecedented demand.

Our colleagues in China have seen this category growth play out, with some appearance-driven categories like cosmetics as exceptions. They have seen broad growth across hygiene, cleaning, nutrition and supplements, even beauty categories like skin and personal care, hair care, and home hair color.

We assembled a virtual panel of U.S.-based CPG Fortune 500 insights leaders to share their thoughts about how they’re pushing through the disruption – and in some ways, thriving – as consumers turn to reliable CPG in a time of crisis. These themes emerged:

  • Just like essential workers, essential products continue to report for duty, including cleaning, hygiene, paper products, food, OTC medicines, and supplements. These needs are not seen as discretionary by consumers, and governments reinforce in stay-at-home guidelines that people still need to buy these products. Said one insights leader, “the majority of the categories I work on will grow due to being essential products.”
  • As out-of-home consumption declines, it is replaced by packaged goods. As another insights lead says, “right now my category is growing because people are spending more time and home and that increase consumption.” People are spending less (in some cases no) time at work or school. Medium’s business publication, Marker, explained that the real reason for toilet paper shortages is this shift in consumption from commercial-grade product used out-of-home, to consumer product used in home. Similarly, many restaurant or cafeteria lunches have been replaced with home cooking. On a lighter note, one CPGer reports that her son requested her husband re-create the school lunch menu for homeschool lunches, and he readily agreed. “Tomorrow is beef tacos!”
  • Consumers are stocking up. People are reacting to news reports of shortages and public health guidance to minimize trips. Whether it’s driven by fear or a desire for control and preparedness, they’re stocking up on everything from canned soup to paper goods and OTC medicines. Says one researcher, “People are fearful that they may not be able to get their [products] when they need them so they are stocking up (like they are on everything else).”
  • Consumers can maintain some normalcy by buying their favorite products. One insights team is finding the benefit to familiar products in these disrupted times: ”[My category] is still a priority for all – shelf stable, comfort and familiarity.”

Not every category is as bullish, however. We heard a couple of concerns from researchers:

  • That consumers may trade down in tough times, and find that the value or private label brand offers sufficient quality: “Discretionary income is at a low ... Would expect [low tier] to win disproportionately.”
  • Some perishables may not benefit, particularly those that can’t be frozen: “We are mainly fresh, and people are focusing on pantry loading.”

Opportunity comes from evolving customer needs

The COVID-19 pandemic is changing many behaviors and routines. The key question is which will persist. The research leaders we spoke to predict that:

  • The shift to online shopping will be the most enduring impact. As one said, “I think that trying online shopping for the first time will convince some consumers of the value of this service, and they will continue to use online shopping in the future.” At the same time, this likelihood brings angst to some, who feel their brands and categories aren’t ready: “Online is still a big concern – we knew we weren’t evolving fast enough. We have grown as needed, but we weren’t ready for this.”
  • Brands may benefit from trial: Consumers will try new brands, either in response to new needs, or out-of-stock conditions. “More people are trying our brands … in the end, it will have a positive impact in that it will bring new users.”
     
  • “Old” brands in a new light: “People … will be more positive towards many of the staple brands, because they know they can count on us – we are dependable- we will always be there.”

How can CPG brands help?

  1. Be Reliable and Trustworthy. Consumers will remember the brands that they could count on during the crisis. One example is simply being in stock. Brands can also be sources of truth, working towards the common good: “we can be a trusted voice amidst all the confusion and are working to help find solutions to the virus.”
     
  2. Provide Reassurance and Positivity. Our China researchers found that messages about the endurance of the Chinese people have been well received. One US researcher says, “we are getting so many calls from people saying that the [product] familiarity brings them, their family some peace and happiness amid the fear or uncertainty.”
     
  3. Help Out — Authentically. CPGs are donating millions of dollars and truckloads of product to help everyone from healthcare workers to ordinary consumers. Some are even helping to directly combat the virus with cleaning, hygiene, or may be exploring vaccine or treatment options in their healthcare arm. When companies speak about these efforts, execution is everything. It is important to leverage consumer input to ensure they hit the mark and are not perceived as opportunistic. China shows us some strong examples, like an educational video about what to do during the pandemic, but also the potential for efforts to be perceived as distant or overly commercial.
     
  4. Bring People Joy, at Home. Some brands, especially in food & beverage, can bring a little fun to the household. Ipsos UU China found that children get especially restless in confinement. Anticipating this, one CPGer says, “It is a product children and adults can ‘get creative’ with, so could spur some family activities and help break up the day. It’s a fun treat that can put people in a better mood.”

How can CPG insights leaders help?

Our panel emphasizes the need to keep a consumer-driven point of view and stay open to new ideas that disruption brings:

  • “We may not be able to confidently have all of the answers but will still need to keep a pulse on consumers and have a point of view.”
  • “Remain inquisitive, understand the current, think towards the future, what’s next for the brand – have the ‘How can we help’ mindset.”
  • “Keep us focused on long term initiatives (we need to have these ready when we return to normalcy), in addition to the immediate changes we need to make in our day to day operations. to understand the consumer/shopper during the COVID-19 crisis. Insight teams need to try to understand if the crisis will have lasting effects on behavior”

Determining which changes will endure

Were this a short-term blip with an expected return to normal, the need for learning would be less significant. As one insights leader says, “Since none of us can accurately predict how all these factors will play out, we’re constantly looking at the latest and greatest information to guess what will happen next.”

We utilize a framework to identify the human insight, how deeply embedded it is, and whether it will continue to be relevant as we emerge from the pandemic and start to form the new version of normal life:

Emerging on the other side

So what is the end game? How will this all pan out?

We will emerge on the other side of this a changed world. We don’t know exactly how it will change, but as insights leaders we can help our teams to learn our way there. We can stay close to what is changing and update predictions about which changes might endure. We can advise our teams on new roles for brands to play and new ways to connect with consumers. CPGs have won by helping consumers through tough times before, and with the right guidance can do it again.

The author(s)

  • Karin O'Neill Senior Vice President, US, Ipsos UU

Consumer & Shopper