ARLINGTON, VA — On April 20, the Consumer Brands Association released the CPG Economic Pulse: 2020 in Review, a first look at a full year of economic data highlighting the consumer packaged goods (CPG) industry response to a year of unpredictability and unrelenting consumer demand.
In March 2020, there was no way to predict how COVID-19 would affect the U.S. economy, and what followed was a roller coaster year. The CPG industry, however, experienced a vastly different 2020. As it made the products that American consumers depended on to quarantine, the industry’s economic year stood apart from its surrounding context.
“As the world was swirling in chaos, CPG companies had to focus intensely on output because people needed their products to stay home,” said Consumer Brands’ President and CEO Geoff Freeman. “The 2020 economic data is the paper trail of a year when the CPG industry rose to the occasion and delivered.”
Key Takeaways from the CPG Economic Pulse:
- Delivering for consumers amid incredible, unrelenting demand. CPG demand in 2020 grew by 9.4% over 2019, creating a true stress test for the industry. After an unprecedented 21% increase in March, the industry found its footing and delivered for consumers throughout the year.
- Increasing production capacity through hiring. The CPG industry quickly recovered the initial jobs lost at the start of the pandemic, bringing employment levels up to 98% of pre-pandemic level by October, outpacing the overall economy — and still hiring.
- Rewarding its essential workforce. The CPG essential workforce worked overtime to make the products Americans needed. Wages in the third quarter of 2020 were 3.4% higher than the same quarter a year earlier, all while wages in the broader economy declined 0.8%. This increase in wages comes at a time when CPG companies were also incurring higher costs for sourcing raw materials, warehousing and transporting goods.
“2020 was a historical anomaly in every way, and its conclusion doesn’t inform the future so much as tell a story about the CPG industry’s response to incredible demand,” said Freeman. “The industry continues to sprint a demand marathon that didn’t end with the calendar year.”
Consumer Brands’ 2021 forecast anticipates demand will be 7.4%-8.5% higher than 2019, the last normal year on record. While some demand is expected to decrease from 2020 levels as the pandemic fades away, long-term behavior and lifestyle changes will inform more at-home consumption.
For more on the 2020 economic data and the Consumer Brands’ 2021 industry forecast, read the full report.