As we prepare to enter a new year, what can we expect? To answer this question, the Food Biz Wiz team joined forces with the folks at ECRM & RangeMe to examine what’s been working – and what’s not working – over the past twelve months, and to share our views on how it will all play out in 2024.
We have good news and bad news for suppliers for the upcoming year so let’s outline it all. Below you’ll find a summary of our 2024 predictions, based on the conversation I had with Joe Tarnowski for my last Food Biz Wiz podcast of 2023 (no 226). To listen to the full conversation, you can find my podcast episode here! You’ll find Joe’s take on these predictions in the shaded parts of each segment.
Let’s start with the (potentially) bad news first…
Continued supply chain and labor challenges
We predict that we’ll continue to see increased challenges with labor shortages, supply chain hiccups in certain categories, and increased consolidation and mergers between retailers. Suppliers may feel a negative impact here: wholesale buyers will continue to have less patience for brands who aren’t truly ready for retail, as they don’t have the bandwidth to experiment with untested brands on their shelves, or brands who aren’t willing to work within their systems of distribution, promotional requirements, category review schedules and more.
Joe’s Take: While these indeed are negatives, what I’ve seen over the past few years of supply chain issues and labor shortages is that these challenges have actually forced both brands and retailers to find new and better ways to address them, and improve their resilience in doing so. Brands have become much more innovative in sourcing raw materials and ingredients, and buyers have gotten better at doing more with less, and this is a good thing in today’s world of CPG retail. However, one thing that buyers will have much less of in 2024 is time, so it’s important for brands to be considerate of this, and make sure you are well-prepared for any meeting you have with buyers.
Now, on to the good news…
Brands are more empowered to do their own thing
While brands may feel constrained by larger retailers insisting that you play by their rules, we predict we’ll see many brands decide to take more control of their own channel strategy and sales and marketing strategies as a result, realizing, once again, the importance of building a brand that works for YOU.
We predict we’ll continue to see creative marketing and alternative channel strategies: brands are getting even more creative on how to drive trial and get in front of their target audience outside of big retail shelves.
Whether that’s shifting away from mainstream grocery and focusing more on independents, moving beyond big box stores and focusing on foodservice accounts, prioritizing pop up shops within larger retails or saying yes to alternative events, focusing on DTC collaborations and, co-branded product lines (like Heinz + Absolut), brands are realizing that there isn’t just one roadmap to success.
We’ll also see brands shift away from carbon-copied marketing strategies from big agencies, realizing that authenticity and showing more of the “person” behind the brand wins consumers. Many brands are shifting back to being their own influencers, and are going back to being the face of their own brands.
After three long years of periods of isolation and doubling down on online experiences, AI, and streamlining of everything – consumers are craving real connection, in-person experiences, and personalization in their shopping – and we’re seeing brands respond by ditching the glossy, picture-perfect marketing strategies and showing up as themselves for their consumers.
Joe’s Take: Today’s brands are much more open-minded and adaptable. At ECRM sessions and on RangeMe we see time and again how brands have discovered new channels and formats they never before considered opening up new opportunities to sell their products. They are increasingly developing close relationships with independent retailers, as well. Indies are a great way for emerging brands to organically grow and establish their footprint in a given market, and catching the eyes of larger chains.
As Alli noted, many brands are becoming their own influencers. Fire Department Coffee and Pacinos Signature Line are two great examples of this. Each has millions of followers across several social media platforms, which helps drive traffic to retail shelves as well as boosts their DTC effectiveness. Pholicious, another brand with a strong social presence, actually leveraged TikTok videos to drive DTC sales when a change of buyers stalled a deal with a major retailer six months. We expect to see more brands getting into the influencer game over the coming months.
Wellness trend grows – but so does indulgence
It’s no surprise that we’ll see a continued focus on health and wellness, from both the supplier AND consumer sides – but there’s a twist.
Consumers continue to be more educated and curious about what they’re putting into and onto their bodies, and we’re seeing continued growth in products that are both delicious and functional. Shoppers want more information and transparency about what they’re putting in their bodies, and how it directly impacts their health, realizing that food and beverage has a direct correlation with their long term health.
But… we’re also seeing that consumers – particularly Gen Z and Millennials – are getting tired of everything claiming to be functional. Sometimes we just want a potato chip to be a potato chip, without claiming that it will help our mood, skin, digestive system, or immunity. When consumers want to indulge, they go all-in, without worry about the beneficial effects of what they’re consuming. Brands: if you aren’t a functional product line, don’t claim to be! There are still plenty of consumers who love you simply because of that.
On the business side, we’re seeing business owners and employees start to understand and prioritize their own health and wellbeing. There’s an increased realization that healthy teams are the KEY to a healthy business, and an increased awareness that financial growth can’t outpace personal growth. We’re seeing an increased interest in work/life balance, prioritizing rest and wellbeing, and interest in coaching (not just consulting!), and founders who are saying “no” to building brands at the expense of their own health.
Joe’s take: We have certainly seen this trend among buyers and brands at ECRM sessions. Wellness was already a big trend for the past few years, and the pandemic has only accelerated it. No longer do executives brag about burning the candle at both ends; they now brag about how much restorative sleep they’ve gotten, or how many miles they have run (or rucked, in my case!)
However indulgence is also here to stay. Consumers are for the most part seeking to live healthier lives, but when they indulge, they do it big and they do it unapologetically. As NielsenIQ noted in a presentation at a recent ECRM session, CPG growth is happening at the extremes of very healthy and very indulgent. And never forget, no matter how healthy a food product is, if it doesn’t taste great, it will never be a winner.
Category growth in Low & No, across the board
Seeing that health and wellness continue to grow into 2024, it’s clear that categories that have traditionally been “unhealthy,” “indulgent,” or “environmental taxing” will see innovation and healthy alternatives.
The low + no alcohol categories grew swiftly over the past few years and will continue to trend upwards as drinking culture shifts, as well as increased options for low THC cannabis-based beverages as more states shift their regulations on cannabis products.
Low and No continues beyond just the beverage category: low or no animal-based protein brands will continue to grow, as well as brands that highlight low and no carbon footprints, environmental impact, etc. The consumers’ desire to fuel and heal through food, plus increased awareness of climate change and environmental concerns continue to drive growth in better-for-the-planet brands.
Joe’s take: There is no better example of this than the no-ABV adult beverages, which are growing much faster than traditional beverage alcohol products, according to NielsenIQ data. And these are not just for people on the wagon – indeed, many wellness-oriented consumers are opting for these drinks as well. Early entrants like Blind Tiger Spirit-Free Cocktails started with a bang on RangeMe and have now expanded into multiple retail chains, and AF Drinks won the award for Most Innovative at the Grand Tasting Event during ECRM’s On & Off Premise Adult Beverage Session this year.
2024 will bring slight challenges with consolidations of retailers and distributors – which will likely impact brands and their channels strategies, but we’ll also see many areas of opportunity in our industry. This will include continued innovation, growth in many better-for-you categories, new ways of leveraging AI to support retail experiences and in-person marketing efforts, and a shift towards a more well-balanced founder-lead brand.
We’re finally starting to see the huge impacts of the pandemic recede in our packaged products industry, in-person events and ECRM sessions are back, and we’re all looking for a more stable year ahead!