We’ve discussed the challenging market U.S. grocery retailers are navigating in the face of market uncertainty. However, it’s not all bad news for retailers and manufacturers across the country. In fact, there are growth opportunity across the spectrum for fast-moving consumer goods (FMCG) companies . Across the world as FMCG companies – manufacturers and retailers alike – retool their businesses to make them more resilient in a slower-growth environment, they can take advantage of silver linings to plan for the future and become more resilient. These silver linings not only offer suggestions for growth but are opportunities across most categories that we believe will continue to drive growth for FMCG manufacturers in the years to come.

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As economic uncertainty subsides, consumers are looking for a taste of the good life. And it’s not just those who are wealthy as we see consumers trading up from value products to prestige/premium items (defined as products that are priced at 20% over the category average). Across the U.S., premium and prestige segments are outpacing FMCG growth in segments including personal care and the overall food category. Premium personal care alone is growing at a rate of 8%, compared to just 2% of the total category. Premium food products are also growing at 8%, versus 3% for total food. With this in mind, manufacturers and retailers need to shed old preconceived price barriers for what has worked traditionally in their categories and take a more consumer-driven view on what jobs the new product delivers against. Remember, consumers will pay premium prices for premium products.

Health & Wellness

Consumers’ growing focus on health and wellness make it one of the largest growth opportunities for FMCG companies. It presents itself in many forms, from food to non-food, like shampoo and organic laundry detergents.  As consumers strive for healthier lives, they will expect manufacturers and retailers to partner with them and offer the right assortment of products that help them in their quest. On top of that more than half (57%) of U.S. consumers are willing to pay more for healthier food items and 62% state quality is more important than price. Consumers are indeed backing up their sentiments with their wallets. In 2016, the $60 billion health and beauty aids segment in the U.S. was the only segment growing in the store (up 2.5%). On top of that, products that are antibiotic free (+21%), contain no artificial colors (+18%), no artificial sweeteners (+11%) and are GMO-free (+9%) are all seeing exceptional growth reflected at the cash register. In the personal care aisle, products that are labeled natural and also free from parabens, for example, grew 12% in the last year, compared to only 3% growth of natural personal care products that contained parabens.  By championing label transparency and building trust with consumers, the sky’s the limit when it comes to health and wellness.

Multicultural Demand

In the U.S. 92% of multicultural consumers (African-American, Asian-American and Hispanic) drove the population growth between 2000 and 2014. With this rise in population, multicultural consumers are collectively influencing mainstream American culture, including what products land in their grocery baskets. What makes this opportunity even more appealing is that multicultural consumers are a relatively younger group, giving marketers many more years of effective buying power once these consumers take to a brand (form meaningful relations with consumers). With the rapid growth of multicultural households in America and their shopping preferences in the marketplace, retailers and producers must consider new strategies that include a wider range of the fresh food products and flavor profiles that appeal to these critical consumers. For example, within the seafood department, multicultural households spend $62 a year on compared to non-Hispanic white households at just $43. The convergence of diverse multicultural taste profiles has encouraged many Americans who don’t identify with one of these cultural ethnicities to try new cuisines and create growing appetites for more adventurous meals, resulting in tremendous opportunities in food retailing. Taking the time to review the go-to-market strategy through a multicultural lens and embedding multicultural insights into their core business strategy and success metrics will help businesses grow.

Millennials

Millennials are a digitally driven consumer group and FMCG companies need to understand their unique shopping behavior and characteristics. That’s because not only does this generation now account for about one-quarter of the U.S. population, its buying power will grow as these consumers get older. So as members of this group mature into a main consumer group, retailers and manufacturers alike will need to account for their needs, buying preferences, changing geographic locations and increasing spending power. And let’s not forget, Multicultural Millennials who are fully ambicultural, effortlessly bridging the gap between their birth culture and other cultures. Multicultural Millennials broad and unique buying habits are inspiring successful, popular cultural trends, and are having a profound effect on their peers, their parents and their children. Millennials are globally connected and seek authenticity in their busy on-the-go lifestyle that demands healthy and convenient items. By providing up with a go-to-market strategy that will awaken their senses – aspirational, upbeat and quirky – and providing content in multiple formats will help FMCG companies reach this diverse consumer group as their spending power increases.

E-commerce/Direct to Consumer

While e-commerce is a challenge in the FMCG world it also represents an opportunity, as online and digital outlets create new and exciting touch points along the shopper journey. Through the first three-quarters of 2016, e-commerce represented an average of 8.1% of total U.S. retail sales, and 8.4% in Q1 2017. The pace of growth is increasing, however, and Nielsen projects that grocery e-commerce will grow at a combined average growth rate of 12.2% through 2020. As more consumers are shopping online for groceries, they’re simultaneously driving overall e-commerce growth (+1% across total store). The online grocery industry could grow into a $100 billion opportunity over the next decade due to the advent of disrupters like grocery delivery services, meal kits and direct-to-consumer brands. Retailers and manufacturers need to understand consumers, including which channels they use to shop and why, in order to build an effective strategy that focuses on the right category assortment and how to market these categories online to resonate with consumers.

To stay relevant and win, manufacturers will need to not only exhaust and optimize every organic growth opportunity they can spot easily but also build organizational muscle to adapt to newer shopping behaviors perhaps alien to them in the past. This includes fostering direct-to-consumer engagements and playing the ultra-premium game. Tough market environments also make way for industry consolidation that we expect to continue through the year, alongside the expansion of players in developing market.

As we continue through 2017, the glass is half full. In the short-term FMCG companies can emerge on the right side of the opportunity with short-term actions along with medium and long-term strategic thrusts in the light of the five silver linings and put words to action. As FMCG companies ride the growth momentum into the next few years by leaning into the five silver linings the glass will be at least half full.

Source: Forbes