FMCG trends 2023

Before we go into what 2023 looks like, let’s look at how the global FMCG industry performed in 2022. According to Nielsen IQ, at the end of 2022, the FMCG sector clocked in with 8-10% higher growth than to 2021.  

Another report suggests that the market is poised to grow by USD 310.5 billion between 2022 and 2026, while ‘decelerating’ at a CAGR of 2.27% during this period. 

Here are some key trends that drove the FMCG market in 2022. 

Digitisation is no longer an option 

One of the fundamental changes that took place when the pandemic hit was a shift in the way consumers purchased goods. They were no longer willing to stand in long lines at billing counters. This meant FMCG players had to innovate and find effective ways to achieve curb side pickups and be available across multiple channels where its consumers are present.  

In other words, FMCGs were forced to digitise their operations and rely on technology to meet customer needs, optimise operations, and bring efficiency into their processes. A study by HBR reveals that 73% of customers preferred to shop through multiple channels, and another study showed that customers who purchase through omni-channels generate 30% more revenues for businesses.  

Aligning with personal values matters  

More and more customers are doing their research about the brand and product before making a purchase. And, there is a significant rise in the number of customers wanting to buy natural produce, and products that are sustainable and environment-friendly.  

A study by Google reveals that 82% of shoppers prefer to purchase from a brand that aligns with their values. In fact, the study goes on to say that 39% of shoppers would boycott a brand they have been loyal to, if there is a value mismatch. 

It’s all about health 

Consumers are looking for products that are healthy and nutritious. What goes into a product matters more and there’s more concern about personal health and well-being when it comes to making healthy choices in food and food products. 

As an extension to this, while there is a preference for organic, healthy food and lifestyle, customers are still wary about paying exorbitant prices for it. They have a good understanding of how much is too much when it comes to paying for a healthy lifestyle choice. 

What 2023 Holds in Store for FMCG 

A Merit expert says, “At Merit, we’re seeing first-hand the value of using AI, data, automation and digital transformation to build FMCG brands that deliver value to customers – while meeting the requirements of their shareholders and other stakeholders.  

As the macro environment shifts – with both an inflation and recession hanging over our heads – FMCG brands will have to use data and digital technologies to drive change. Rapid decision-making enabled by the right data analytics will hold the key.”  

Below we list some other macro trends that will influence decision-making in the FMCG sector in 2023.  

Healthy but Affordable 

Like we said earlier, consumers will be wary of spending, which means brands will have to continue to cater to customers’ healthy lifestyle choices while making it affordable and competitive, so that they can continue to cater to the demand. 

More Tech-Driven Supply Chains 

We had recently written about best practices FMCG brands can adopt to optimise their supply chain process. The latest technology is primed to support optimisation, in 2023 we will see more FMCG brands choosing to focus their optimisation on making their supply chain process more efficient.  

This means, brands will get better at forecasting, stocking and management of goods and supplies, which to end consumers means, product availability when there is demand and a better understanding of what customers need and when.  

Optimising supply chains will become critical in the upcoming year because brands will see a rise in input costs as natural resources continue to deplete, traditional sales models get replaced to cater to the Internet audience, and brands struggle with labour shortages. And, they need to find cost-saving measures to ensure that the price of end products still remain affordable for consumers who are already counting the change in their wallets. 

The Opportunity Lies in Asian Markets 

We all know this by now and talk about it frequently that the future of FMCG lies in Asian markets like China, Indonesia and India. So, brands need to start looking at how they can cater to the needs of their new audience. They need to identify categories of products and markets that can help them break into the Asian markets and enable them to gain a competitive advantage. 

FMCG companies Need to Compete for Space with Online Retailers 

This has to be done by finding new ways to market to consumers across omni-channels and ensuring they make themselves seen amongst a host of e-commerce players that may have already captured a good share of the market.  

This means, brands need to prepare themselves for new trends like video shopping, a wider range of payment options and cross-geography purchases (purchasing from an international brand and having it shipped to their home country).  

Consumers will continue to be at the core of business decisions 

Data will play a key role in continuing to keep consumers loyal to the brand. While many businesses are already relying on tremendous amounts of data and insights to power business decisions, this trend is unlikely to change in the year ahead.  

With inflation, a changing demographic population (to a future which will have more ageing population compared to a younger population), and calculated spends by consumers, businesses need to be on the constant lookout for what is driving consumer spending and be prepared to cater to it. 

In conclusion, the major differences we see between this year and the year to come, is a higher reliance on innovative technology and tools to drive more process efficiency and a better customer experience. Also, a greater reliance on digitisation for every aspect of an FMCG business from sourcing and supply chain to end-customer’s retail experience, and a wider, more global market for brands to compete in, which may not necessarily be an easy thing to achieve. 

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