What is CPG? What are Consumer Packaged Goods? 

In this article we’ll give you the lowdown on what it is, CPG's essential features, types of CPG, and some real-life CPG examples. 

With that said, let's dive into the nitty-gritty of this blog post:

CPG Definition

As mentioned above, CPG is an industry term for consumer packaged goods. These are typically products shoppers use daily and have to restock and repurchase regularly. Examples include household products, makeup, drinks, food, toilet paper, and clothes. 

Usually, such products are sold to consumers at a low cost. As a result, these products generate low profits but are more likely to sell in high volumes. 

Consumer packaged goods that sell particularly fast are sometimes called fast-moving consumer goods (FMCG). 

Demand for CPG is pretty consistent and doesn’t usually wane due to economic downturns. In fact, the worldwide CPG market size is expected to reach $2,459,800 million by 2028, from $1,995,100 million in 2021, at a CAGR of 3% during 2022-2028.

Simply put, consumers continue to need or use CPG in their daily lives. For this reason, CPG is an attractive option to businesses willing to vie for consumer attention using marketing strategies to convince shoppers their consumer packaged goods are the best. 

Consumer Product Types

Interestingly, consumer products fall into four categories:

1. Convenience: products bought habitually and often with brands not differing their offering much, e.g., toothpaste, food, soap, etc.
2. Shopping: Higher priced products for which consumers research before buying, e.g., washing machines, furniture, cars, etc.
3. Specialty: unique products with a loyal following, e.g., iPhones
4. Unsought: products consumers don’t know about and don’t think about buying, e.g., prepaid funeral expenses

CPG goods typically fall into the first category. Simply put, consumers take less time to buy such readily available items. 

Here are a few examples of convenience consumer products:

• Washing powder
• Ready-meals
• Household cleaning products
• Bread
• Condiments

Common Features of Consumer Packaged Goods

As I've already mentioned, CPG items are used often and quickly. 

Some last longer than others. For example, food items with a shorter life span, like milk or fish, must be used fast. In contrast, others, like household cleaning or personal hygiene products, last longer. However, what they have in common is that they're all sold relatively cheaply and are in high demand. 

Standard features shared by CPG items include the following:

• Sold in high quantities
• Bought often
• Used frequently and quickly
• Available to buy at low cost
• Distributed widely
• Chosen by consumers quickly

Consumer Packaged Goods Examples

Now, let’s examine a few CPG examples in more detail: 

• Cleaning Items: for example, washing detergent, furniture polish, and kitchen cleaners. Companies often market these items using comparative marketing techniques to assert market dominance. 

• Clothes: although bought less frequently than other CPG items, clothes still fall into this category because they're often purchased with little thought and as a response by consumers to current trends and seasons. 

• Cosmetics: for example, lipstick, eyeshadow, and nail polish. These items typically last longer than some CPGs and are frequently marketed using influencer promotion via social media. 

• Drink: this includes alcohol, sodas, and energy drinks. Brands use various marketing techniques and rely on brand loyalty to persuade customers to buy their products. For example, Coca-Cola’s ongoing Share a Coke campaign.  

• Food: this is a high-demand CPG group and includes fresh items such as meat, bread, fruit, and vegetables. These items are perishable, and consumers buy them out of necessity. Sales of specific types of food vary according to dietary changes. For example, between 2018-2022, CPG plant-based food sales increased by 302%. 

• Medicine: this includes over-the-counter items such as painkillers, cold remedies, and so on. Other examples include bandages, plasters, and prescription medication from a physician. 

• Personal Hygiene Products: products like shampoo, shower gel, deodorant, toothpaste, and soap fall into this CPG category. This market was valued at $64.4 billion in 2021 and is predicted to grow at a CAGR of more than 5% from 2021 to 2026. 

Are Consumer Packaged Goods Different From Durable Goods?

In short, yes. 

CPGs don't last and are typically used quickly. As their name suggests, consumer packaged goods are packed so shoppers can quickly identify them. 

Take the example of makeup, which has a short shelf life and can be cheaply bought in individual packages. When it runs out, the packaging is either thrown away or recycled. 

In contrast, durable goods are longer lasting. For example, cars, white goods, and home appliances. They also have a higher price tag, so consumers may take longer to make a purchasing decision. 

It's also worth noting that durable goods sales sometimes drop during economic downturns because consumers are wary of spending more significant sums. 

Another key difference is that when you no longer have a use for the product (or it breaks), getting rid of it is much more difficult. You can't just put it in the bin or recycle it at home. Instead, you often have to take the product somewhere it can be disposed of safely. 

CPG in an Age of Digital Transformation

It’s also worth highlighting that while CPGs were traditionally sold in physical stores, they're now also online. For example, from supermarkets where CPG can be delivered to your home or on a ‘click-and-collect’ basis, Amazon Prime Pantry for next-day delivery, etc. 

In the US, 43% of consumers prefer to buy online vs 27% in-store. So, while CPGs were traditionally sold in physical stores, those same stores are now in competition with online sellers such as those we mentioned earlier. 

However, some brands buck this trend. For example, Primark in the UK and US. 

While other brands have both brick-and-mortar stores and an online presence, for example, Walmart.

CPG Industry Trends

It stands to reason that because the way shoppers buy goods and consumer behavior has changed over time, the CPG market has also changed. For example:

Data and Analytics

Brands selling CPG now use data and analytics to create personalized ads that target consumers. A McKinsey report found that data-driven marketing in this arena can drive sales growth by 3-5% and boost marketing efficiency by 10-20%. 

Subscription-Based CPG

Some CPG companies work to attract consumers by offering subscription-based discounted goods that represent more value for money and are delivered to consumers at specified intervals. 

For example, Hello Fresh and Blue Apron meal recipe and meal delivery services, and beauty subscription companies such as Ipsy and Allure. 

Brand Transparency and Sustainability

Some CPG brands are now more transparent about where they source their products from. This applies to food and clothing in particular and results from consumer demand. 

A report by Acosta found that 75% of millennials say sustainability is important to them when buying CPG. 

Where purchasing food is concerned, 92% of consumers want to know where their food comes from, with 68% stating that manufacturers don't provide enough information about what's in their food. 

Consumers are also increasingly focused on sustainability and fair labor where clothing is concerned. For example, one report found that 70% of Gen Z consumers stated that sustainability is essential to their fashion-buying choices. 

Frequently Asked Questions About CPG

Before wrapping up this blog post, I'll endeavor to answer some of the most frequently asked questions about CPG:

What are the biggest suppliers of consumer packaged goods in 2023? 

At the time of writing, the following companies and their sub-brands were the top CPG businesses (based on their market capitalization): 

• Procter and Gamble (P&G): their sub-brands include Pampers, Gillette, Olay, and Ariel, and their market capitalization is $364.22 billion.
• Nestlé: their sub-brands include Perrier, Nescafé, and Aero, and their market capitalization is $317.97 billion.
• Coca-Cola: their sub-brands include Coca-Cola, Sprite, Minute Maid, and Schweppes, and their market capitalization is $256.47 billion. 

The locations leading the CPG market are:

• North America
• Europe
• Asia Pacific
• South America
• Middle East and Africa

Which CPG categories are the fastest growing? 

This is no exact science; it depends on consumer demand and current trends. Interestingly, a McKinsey report predicts that several trends will influence CPG performance over the next decade, including:

• New (younger) consumers, with Gen Z making up 40% of the consumer market
• Consumers caring more about the environment and where their CPG comes from (see your earlier statistics).
• Increasing health and wellness concerns, with 50% of US consumers reporting this as a top concern, a rise from 42% in 2020.
• The rise of digital consumers (as our earlier statistics show).

At the time of writing, the following CPG categories were some of the fastest growing:

• Health and wellness products: e.g., vitamins
• Functional beverages: i.e. that offer more than simply thirst-quenching, e.g., protein shakes
• Natural personal care products, e.g., eco-friendly cosmetics and skincare
• Private label products: a CPG product a retailer gets from a third party and sells under its own label. For example, supermarket's own label food. 

How do brands market consumer packaged goods? 

CPG marketing is split into two categories:

• Paid: ads, influencers, etc
• Organic (unpaid): word-of-mouth, content, email marketing

CPG marketing is essential because there are literally thousands of brands consumers can choose from, so brands have to work extra hard to place their CPG in front of consumers who may not know or care which laundry detergent is the “best.”

In addition to the specific marketing methods mentioned throughout this blog post, other examples include word-of-mouth campaigns and billboard ads. 

Final Thoughts on CPG

That brings us to the end of this guide to CPG! Hopefully, it's given you a better understanding of what CPG is, what products fall into this area, and why CPG is essential to brands and consumers alike. 

There are examples of consumer packaged goods all around us, and most of us buy them in-store and online regularly without even thinking. Given that consumer shopping habits are changing, CPG brands must adapt and innovate to meet those changes. 

That's all from me! Over to you, do you sell CPG products? If so, I'd love to hear your thoughts in the comments box below. Speak soon!