The 2023 Outlook for Emerging CPG Brands
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The 2023
Outlook for
Emerging
CPG Brands
© 2022 Nielsen Consumer LLC. All Rights Reserved.
© 2021 Nielsen Consumer LLC. All Rights Reserved.
Table of Contents
Introduction 3 What You Can Do In 2023 16
Inflation and Cost-of-Living 4 Conclusion 19
Shifting Consumer Behaviors 8
Sustainability and Product Attributes 11
Omnichannel Sales Growth 13
2
© 2022 Nielsen Consumer LLC. All Rights Reserved.
With 2022 behind us, what awaits emerging and growth brands in
2023?
Introduction
2022 was a challenging year for To make things a little easier for Some of the areas we'll address
many brands. Between inflationary emerging and growth brands, are:
pressures, supply chain issues, and we've put together this overview of
shifting consumers behaviors the state of the market and ▪ The state of inflation and
there has been a lot going on. So, addressed trends that we believe cost-of-living issues
what does this mean for the CPG you need to consider in your 2023 ▪ Shifting consumer behaviors
Outlook for Emerging Brands in planning. ▪ Sustainability and product
2023? attribute alignment
We took a look at the top issues ▪ Omnichannel sales growth
Unfortunately, planning for facing emerging brands in the ▪ How you can use this
demand and a shifting market in second half of 2022, how information to plan for a
the coming year will be a bit consumers are reacting to market strong 2023
complicated. But not everything changes, and the early results
on the horizon looks bleak. In fact, we’re seeing from holiday sales to
there look to be many
opportunities for emerging and
determine the challenges and
opportunities awaiting your
48%
of global consumers plan to buy
growth brands to make moves emerging or growth brand in the
and continue to grow. new year. more from smaller brands in the
future
(https://nielseniq.com/global/en/insights/analysis/2022/the-brand-balancing-act-of-small-and-medium-sized-businesses/)
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© 2022 Nielsen Consumer LLC. All Rights Reserved.
The State of Inflation and Cost-of-Living © 2022 Nielsen Consumer LLC. All Rights Reserved.
State of Inflation
Going into 2023, you can't make So, what are shoppers doing to But, there are still opportunities
any plans without first deal with inflation? in 2023 for emerging and growth
understanding the state of brands.
inflation and its impact on the cost To start with, 44% of shoppers are
of living. now cooking at home and 40% As inflation peaked in October,
have reported consciously trying value-based retailers’ sales
Early Q4 numbers are promising, to minimize waste. A further, 31% jumped by 10%, capturing 42% of
as the Consumer Price Index (CPI) said they will buy whatever is on CPG sales. Additionally,
report for October showed promotion and 26% have stopped promotional sales are starting to
inflation dropped to 7.7% shopping certain categories trend slightly higher than the
compared to 8.2% in September. altogether, demonstrating that total market growth (up 11%
CPG inflation has also stabilized for shoppers are directly responding versus 9%).
the past three months, though it is to the crisis by buying less and
still holding at the record high of being more responsible with their
12% compared to last year—a waste.
decrease of 0.1% over September’s
figure. This declining consumption is a
concern as consumers focus their 67%
October reported a 9% lift in dollar spending on the essentials and will of Americans think we are
sales, whereas unit consumption be more careful with the money currently in a recession
dropped by 3%. they do wish to spend.
(https://www.axios.com/2022/11/10/cpi-inflation-October); (https://nielseniq.com/global/en/insights/commentary/2022/leaner-budgets-inflation-battered-consumers-prioritize-grocery-spending/);
(https://nielseniq.com/global/en/insights/analysis/2022/cpg-inflation-has-peaked/) 5
© 2022 Nielsen Consumer LLC. All Rights Reserved.
The cost to consume is up
across the globe.
Consumers are feeling
the pressure and their
spending habits are
changing.
The US is facing less
inflationary pressure than
other countries, but brands
still need to factor in the
impact on consumers as
they plan for the coming
year.
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© 2022 Nielsen Consumer LLC. All Rights Reserved.
How are Manufacturers reacting?
Shrinkflation Revising Promotions Focusing on Core Products
Shrinkflation is a term coined by Many brands are seeking to Another area where we’re seeing
economists almost a decade ago, manage price reductions to be brands cut back is in their
referring to the phenomenon more profitable and to manage assortment offerings. Brands
where the physical size of products inventory. We saw this during that overextend can see weaker
shrinks while prices either remain some of the early sales with 32% returns than those that focus on
the same or simultaneously of consumers stating that the fewer products as consumers
increase. deals fell a bit short in pull back.
comparison to typical Black
We have begun to see this in Friday holiday deals. Historically, this is a good move
response to inflationary pressures as brands can optimize without
around the globe. Since Going into 2023, promotions will much additional cost. For
consumers are less likely to notice continue to be closely monitored example, an assortment
shrinkflation rather than price to ensure brands don’t lose out optimization program can
increases, it is undoubtedly on valuable revenue growth by deliver up to 20% in incremental
something we will continue to trying to appeal to consumer’s sales and profit for both
witness during 2023. thriftiness. suppliers and retailers by
reducing item cannibalization.
(https://www.npr.org/2022/06/08/1103766334/shrinkflation-globally-manufacturers-shrink-package-sizes);
(https://nielseniq.com/global/en/insights/education/2022/advanced-analytics-can-give-cpg-companies-an-edge/)
7
© 2022 Nielsen Consumer LLC. All Rights Reserved.
Shifting Consumer
Behaviors
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© 2022 Nielsen Consumer LLC. All Rights Reserved.
Shifting Consumer Behaviors
In recent years, consumer behavior has been
Consumer Future Spending Intentions
changing fairly quickly, but 2020-2022 saw
drastic changes arrive. Consumers were forced
to adapt to a tumultuous environment with
inflationary pressure, pandemic bubbles, and
more. But, consumers still needed to purchase
CPG products for their daily lives, so they were
forced to shift the paradigm.
Some highlights of the list were the adoption
of DTC and online sales, social selling, and
omnichannel shopping.
But are these going to continue into 2023, or is
there something new on the horizon?
Source: NielsenIQ 2022 Consumer Outlook Survey, June 2022 – US – Spending in next 12 months
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© 2022 Nielsen Consumer LLC. All Rights Reserved.
Top Consumer Trends
Private Label Adoption Buy Now Pay Later Convenience Is Key
One of the big ways consumers The “Buy Now Pay Later” model The total number of online
are tightening their belts is by has been around for years, but grocery customers, which
eschewing big brand names for 2022 has seen an exponential includes sales of food and
Private Label products. Private growth in BNPL companies like alcohol, grew from 16.1 million in
Label, which on average provides Klarna and Afterpay. It has even June 2019 to 45.6 million by June
14% savings versus other brands, seen banking and payment apps of 2020. Today, more than one in
has set a new report share, now like PayPal add these schemes to five (22%) of shoppers plan an in-
accounting for 19% of CPG sales in their offerings. store shopping trip combined
the U.S. with a prior online order.
According to MarketWatch,
We have seen that as prices rise, so overall revenue from BNPL was With more tools available to
does the growth of private-label up 72% year-over-year for the them, like efficient mobile apps
goods, which reported an increase week of Black Friday. Going into and click-and-collect options,
of +13% in September. With more 2023, we can expect to see this consumers are planning out
consumers shifting their spending trend continue as more their shopping more than ever
habits, brands will need to millennial and Gen Z consumers before. Getting customers the
differentiate and continue to adopt the model for more of products they want in the
innovate in order to win back the their purchases. manner they want will be
consumer wallet. paramount.
(https://nielseniq.com/global/en/insights/analysis/2022/u-s-moved-16-points-closer-to-a-consumer-recession-in-q3/); (https://www.marketwatch.com/story/the-big-winner-of-the-holiday-shopping-season-so-far-buy-
now-pay-later-11669664310); (https://nielseniq.com/global/en/insights/education/2022/omnichannel-shopper-behavior-shifting/) 10
© 2022 Nielsen Consumer LLC. All Rights Reserved.Sustainability and Product Attributes © 2022 Nielsen Consumer LLC. All Rights Reserved.
Sustainability and Product Attributes Changes will shape and
guide consumer choice
Green consumerism has been on Over the past three years, total
the rise for some time, but the food and beverage sales increased
COVID-19 pandemic kicked it into by 24.7% and sales of products
high gear. Many consumers are
avoiding brands that don’t align
that make claims based on
environmental sustainability, social
78%
of consumers surveyed say a
(or don’t appear to align) with their responsibility and animal welfare
sustainable lifestyle is important
stance on the environment and outpaced this growth. to them
other sustainability issues.
An emerging consumer focus on
Brands themselves have become
increasingly sustainability-focused
attributes means manufacturers
need new granular ways to
61%
agree environmental issues are
across the world, and 2022 has analyze performance across
seen some ingenious solutions to channels. NielsenIQ’s omnichannel having an adverse impact on
their current and future health.
reduce environmental impact. solutions can help brands see a
When surveyed, almost 60% of sales breakdown by channel,
shoppers indicated that the first category and these deep sub-
action brands should take to be category listings. This kind of data 31%
considered 'sustainable' is to can help CPG manufacturers are more likely to buy products
reduce the amount of plastic in capture new omnichannel with sustainable credentials
packaging. shoppers.
Source: NielsenIQ Global Health & Wellness Study of 17 markets, September 2021, US results; NielsenIQ Omnibus Survey, Dec 202 1
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© 2022 Nielsen Consumer LLC. All Rights Reserved.Omnichannel Sales
Growth
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© 2022 Nielsen Consumer LLC. All Rights Reserved.Omnichannel Sales Growth
Footfall in-stores remains high Shoppers now have more options Insights into omnishopper
despite the convenience of online than ever to get their products. behavior can help a consumer
shopping. The appeal of the From traditional shopping down goods brand pinpoint where and
physical shopping spree has the aisle to delivery within a few when consumers are shifting
returned since 2020 and it doesn't hours or a day or two to click-and- and take further steps through
look like brick-and-mortar shops collect orders for inside the store pricing or promotion changes
are headed anywhere anytime and curbside. Where your online or by negotiating for more
soon. But, omnichannel shopping, products are listed and how prominent positioning in a
that is buying products both they’re listed matters more than retailer's e-commerce storefront,
online and in-store, has been ever. for example. Brands can make
trending up for years. proactive moves to shore up
This level of control lets consumers their omnichannel sales.
According to NielsenIQ data, 86% do plenty of product research and
of shoppers are now combining comparison before making a
their shopping habits to include purchase, which presents a
both online and in-store shopping. challenge for retailers. Impulse
That leaves only 14% shopping in- purchases aren’t as much of a 86%
store only. So, how can you meet temptation when shoppers can consumers purchasing FMCG
this growing need for multiple plan their grocery list and visits products both in-store and online
touchpoints? with such high precision.
(https://nielseniq.com/global/en/insights/education/2022/omnichannel-shopper-behavior-shifting/); (https://nielseniq.com/global/en/insights/education/2022/dollars-are-in-the-details-digging-into-brand-shifti ng-
across-all-channels/) 14
© 2022 Nielsen Consumer LLC. All Rights Reserved.Omnichannel Strategies Matter
1. Highlight Relevant Attributes 2. Keep Branding Consistent 3. Use Social Media
With more consumers searching No matter the channel, your brand As brands look for new ways to
for products online, there has been is how consumers connect your connect with shoppers, social
a marked change in their search products to you. You need to be media gradually moves up the
behaviors. In the U.S., shoppers consistent across all channels and ranks of importance as an
searching for “organic” products still able to stand out on shelf and ecommerce channel.
online increased by 163% since last online.
year and “plant-based” searches In a recent study by Dash
grew 148%. Sales of “keto” This is particularly important for Hudson and NielsenIQ, we
products increased 265% mobile-shopping as consumers identified significant correlation
compared to three years ago, and scroll quickly and your products between entertainment-based
“vegan” product sales grew 102% in can get lost in the mix. If your content on TikTok and omni-
the same time frame. brand is easily identifiable and channel sales growth for beauty
stands out, you’re in a better brands. The brands that leverage
This means brands that can position across channels. In fact, entertainment as a content
identify the right attributes to 60% of consumers who shop both strategy grow at a rate 34%
feature on packaging and in online and in-store surveyed said faster than those who approach
product listings are appearing in they browse for anything that the platform with a traditional
searches more often and more looks interesting. marketing mindset.
likely to make sales.
(https://www.dashhudson.com/press-release/new-study-by-dash-hudson-and-nielseniq-proves-entertaini ng-content-dri ves-sales); (https://nielseniq.com/global/en/insights/education/2022/leverage-rich-product-
attribution-to-drive-discovery-and-reach-the-conscious-shopper/); (https://nielseniq.com/global/en/insights/education/2022/where-the-digital-shelf-meets-real-life-brick-and-mortars-new-role/) 15
© 2022 Nielsen Consumer LLC. All Rights Reserved.What You Can Do To Succeed In 2023 © 2022 Nielsen Consumer LLC. All Rights Reserved.
What You Can Do In 2023
Understanding what’s going on in the market is meaningless if you don’t know how to act on it. Emerging and growth
brands are in a unique position as they tend to be more agile and forward-thinking than many of their
established competitors.
With that in mind, here are some of our top tips on how you can keep growing in 2023:
1. Focus on Revenue Growth Management 2. Embrace Omnichannel
Revenue growth management (RGM) is no Today’s shopper moves more fluidly across retailers
longer a once or twice a year process. The and channels, making it more challenging to see the
full landscape and know how to prioritize
challenge for manufacturers in 2023 will be
opportunities. CPG brands need to understand their
balancing the increase in net prices with shoppers to know how they’re changing in 2023 and
efficient trade promotions to gain margins and where to focus to gain their attention and gain
profits. market share.
To protect margins and effectively use trade Digging into the details of how consumers' brand
spend in varying market scenarios, revenue shifting behavior is impacting sales across all
managers should equip themselves with channels will help brands deploy savvy strategies for
regularly refreshed data that reflects the latest capturing more of their buyers’ dollars.
market dynamics.
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© 2022 Nielsen Consumer LLC. All Rights Reserved.What You Can Do In 2023
3. Be Authentic 4. Stay Agile 5. Invest in Data and Insights
Today’s customers, younger With the market undergoing so Building an effective growth
generations in particular, expect many changes, CPG brands need plan hinges on your ability to
brands to be fully honest about to be able to react swiftly and access up-to-date and accurate
who they are. Many brands try to decisively in the new year. This data. One of the biggest gaps
engage Gen Z consumers by being means understanding the impact between high-performing
young and playful, but it doesn’t of assortment, space, pricing and companies and the rest is that
match their brand. This comes off promotions. Then, identifying they incorporate daily data
as disingenuous and only serves to which retailers can help you practices from the top all the
push potential customers further become a category leader, and way down.
away. stay that way. This agility can pay
dividends. That’s why it’s vital to understand
In 2023, stay open and honest how CPG data can help your
about who you are and why it High-performing businesses are business grow and dedicate a
matters. Don’t be fake to try and 57% more likely than their peers budget to investing in a good
make sales. Transparency can go a to report altering their long-term data platform. You’ll also need to
long way in building brand loyalty strategy in response to data and build data into your decision-
and firmly establishing your analytics. It’s this agility and making throughout your entire
position in the new year and reaction to data and trends that growth strategy to let you act
beyond. makes them high performers. early and intelligently to shifts in
consumer demand.
(https://nielseniq.com/global/en/insights/education/2022/small-cpg-businesses-data-driven-growth-strategy/) 18
© 2022 Nielsen Consumer LLC. All Rights Reserved.What You Can Do In 2023
NIQ can help you put the pieces together in 2023
When the market is shifting, you Some of the solutions we can provide
need to be on top of your game if include:
you're going to come out on top.
• POS & Shopper Data
NielsenIQ offers emerging and • Product Attribute Trends
growth brands access to the
same best-in-class, accurate data • Omnichannel Sales Data
and high-quality insights that • Demand Forecasting Photo placeholder
Fortune 500 brands leverage—at • Pricing & Promotion Optimization
a price customized for their • Assortment Optimization
budgets.
• Expert Insights into Market Trends
We also know that businesses at • And More
different stages have diverse
needs. Whether you’re looking to
nail your next retailer pitch, are
expanding distribution, or need
to defend your turf, we have the Learn More About Our
data and tools you need to Emerging Brand Solutions
succeed.
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© 2022 Nielsen Consumer LLC. All Rights Reserved.For more insights:
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