CHICAGO — The total CPG industry grew approximately 10.4% in 2020, outpacing the prior three-year annual growth rate of 1.8%, according to Boston Consulting Group (BCG) and IRI’s annual CPG Growth Leaders List.
Total CPG volume growth (6.4%) outpaced price growth (3.7%) for the first time in more than a decade, driven by heightened demand in the early months of the pandemic.
“The number to note is volume growth,” said Krishnakumar Davey, president of strategic analytics at IRI. “It’s about 6% more volume than whatever we did before. I don’t know if it will ever be that high again, because estimated volume growth is typically around 0.6% or 0.7%.”
The report highlighted 2020’s growth leaders among large, medium and small CPG companies. Food and beverage manufacturers dominated the rankings, propelled by the shift toward at-home eating. Bimbo Bakeries USA led among large CPG companies, followed by General Mills, Conagra Brands and Mondelez International and The Hershey Co. Mid-sized growth leaders ($1 billion to $6 billion) included Land O’Lakes and HP Hood, while Idahoan led among small players ($100 million to $1 billion).
Bimbo saw a 16% increase in dollar sales across its bread business and an 11.6% increase across its sweet baked foods business. The company benefited from more in-home breakfast occasions and innovation across key brands, including new Thomas mini croissants and banana English muffins.
Frozen meals and pantry staples were top growth drivers for Conagra, with the Marie Callender's, Birds Eye and Hunt’s brands accounting for a quarter of the company’s growth. Refrigerated dough was the top growth driver for General Mills, with the Pillsbury brand reaching more than $400 million in sales in 2020.
“We spent less time in store than we ever have before,” Mr. Davey said. “We entertained ourselves at home, we celebrated at home, we ate at home. The whole thing was a very surreal environment, and that’s what accounted for this growth.”
Food and beverage companies also benefited from pack size innovation. The Hershey Co. pivoted to provide larger pack sizes for at-home snacking. The company saw sales of its larger chocolate candy offerings increase 12.8%, while sales of smaller pack sizes grew 6.3%. Sales of HP Hood’s milk products grew 21.6%, driven by increased distribution of larger sizes and a greater focus on 96-oz cartons.
Premiumization was another key growth driver. Land O’Lakes leveraged Vermont Creamery’s premium positioning to help home-bound consumers bring restaurant-quality experiences into their kitchens. The company gained 6.7 million new buyers of butter in 2020, a 17% increase from 2019, while the overall butter category saw a 5% increase in buyers.
Idahoan benefited from expanded premium offerings, with premium flavored mashed items driving 92% of the company’s gains. New items like buttery homestyle mashed potatoes and roasted garlic mashed potatoes attracted more than 4 million new buyers during the pandemic.
Smaller players gain share
The report found small, extra-small and private label CPG manufacturers gained significant market share over larger manufacturers in 2020.
“We spent less time in store than we ever have before ... The whole thing was a very surreal environment, and that’s what accounted for this growth.” — Krishnakumar Davey, IRI
“When the pandemic happened and panic set in, people essentially cleaned out the entire store,” Mr. Davey said. “A lot of large brands went out of stock quickly. That timing effect meant private label foods and smaller brands flew off the shelves, too.”
Less traffic in the convenience channel also contributed to smaller players gaining share.
“The convenience category is highly skewed toward large players,” Mr. Davey said. “Out-of-stocks — particularly in the first half of the year — and convenience softness were the two primary drivers, in addition to the secular trend of more innovative, smaller players entering categories and taking share.”
IRI and BCG predicted the future trajectory of consumer trends that emerged in 2020. In-home food and beverage is likely to revert to flat growth as consumer mobility increases, according to the report. Consumers also are expected to return to smaller, single-serve and multi-pack products as they revert to pre-pandemic consumption patterns.
E-commerce channel penetration is expected to continue accelerating, along with spend bifurcation. Increased premiumization from large CPGs and hyper-targeted smaller players will accelerate alongside continued development of private label and value brands, according to the report.
“This is the K-shaped recovery economists are talking about,” Mr. Davey said. “More than 20 million jobs were lost during COVID. On the other hand, with all the stimulus payments and unemployment benefits, around 80% of people were flush with cash. Yes, there’s food insecurity at the bottom tier —that’s why we call it a K shape— but the 80% who had more cash had less avenues to spend, so people bought more higher quality products and didn’t mind paying the higher price. Even lower-income households are trading up.”