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The CPG Industry Challenges and Opportunities

October 3, 20232 min
Lauren Daniels photo
Lauren Daniels Tastewise
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As consumers become more health-conscious, the demand for plant-based diets has increased. Plant-based diets have become more popular due to their health benefits, sustainability, and animal welfare concerns.

This trend has presented an opportunity for Consumer Packaged Goods (CPG) companies to adapt their product offerings and cater to the growing demand for plant-based diets. However, there are also challenges that these companies face as they try to meet the needs of their customers.

This blog discusses the opportunities and challenges that CPG companies face in the context of plant-based diets.

CPG Industry Challenges: A Struggle

Product formulation

One of the biggest challenges that CPG companies face in the context of plant-based diets is product formulation. Formulating plant-based products that are both nutritious and appealing to consumers can be difficult.

Companies should invest in research and development to ensure their products meet consumers’ nutritional needs while being flavorful and appealing.

Cost

Plant-based products can be more expensive to produce than traditional animal-based products. The primary cause of high production costs is the cost of raw materials and research and development.

As a result, some consumers may be reluctant to pay higher prices for plant-based products, making it difficult for CPG companies to achieve profitability.

Consumer perception

Despite the growing popularity of plant-based diets, some consumers may still view plant-based products as inferior to traditional animal-based products. As a result, convincing consumers to try their plant-based products becomes challenging for CPG companies.

Companies need to invest in CPG marketing and education to help consumers understand the benefits of plant-based diets and the quality of their products.

The rise in demand for plant-based diets presents an opportunity for CPG companies to expand their product offerings and capture a larger market share. However, there are also challenges that these companies face as they try to meet the needs of their customers.

Companies should invest in market research and development, marketing, and education to overcome these challenges and succeed in the plant-based market. By doing so, they can improve their brand image, diversify their product offerings, and appeal to a larger audience.

Market Saturation

The CPG industry is highly saturated, with numerous brands and products vying for consumer attention. This makes it difficult for new entrants to establish themselves and for existing companies to maintain market share.

Technological Advancements

As technology continues to advance, companies are faced with the challenge of incorporating innovative solutions into their operations to stay ahead of the competition. This requires significant investments and a willingness to adapt and evolve.

Opportunities for CPG companies

Increased market share

The rise in demand for plant-based diets presents an opportunity for CPG companies to increase their market share.

According to a report by Grand View Research, the global plant-based food market will reach $71.3 billion by 2030, growing at a CAGR of 12.7%. The report reveals an opportunity for CPG companies to boost growth by diversifying product offerings and gaining a larger market share.

Improved brand image

CPG companies can improve their brand image and appeal to a global audience by offering plant-based products. Consumers are increasingly concerned about the environmental impact of their food choices, and offering plant-based products can help companies demonstrate their commitment to sustainability and reducing their carbon footprint.

Diversification of product offerings

CPG companies can diversify their product offerings by introducing more plant-based options. Introducing plant-based options will appeal to a bigger audience and cater to consumers looking for healthier and more sustainable food options.

Diversification can also help companies reduce their reliance on traditional animal-based products, which tend to be subject to fluctuations in demand and supply.

Cost savings through operational efficiency

Incorporating plant-based options into their product line can also lead to cost savings for CPG companies. Plant-based products generally require fewer resources and have a lower environmental impact compared to animal-based products. This leads to reduced operational costs for companies, contributing to improved profitability.

Partnership opportunities

The growth of the plant-based food market presents an opportunity for CPG companies to form partnerships with plant-based food manufacturers. By collaborating with specialized plant-based producers, CPG companies can leverage their expertise and resources to offer a wider range of high-quality plant-based products.

Partnerships can also lead to innovation and the development of new plant-based products that cater to specific dietary needs or preferences.

Meeting consumer demands

With the rise of conscious consumerism, more and more people are looking for sustainable and ethical options when it comes to their food choices. By offering plant-based products, CPG companies can meet these demands and demonstrate their commitment to sustainability and environmental responsibility.

Moreover, incorporating plant-based options into their product line allows CPG companies to tap into the growing market of flexitarians, who are reducing their meat consumption for health and environmental reasons. This can greatly expand a company’s customer base and increase sales.

Conclusion

Overall, the incorporation of plant-based options into CPG companies’ product lines can bring about numerous benefits.

From cost savings and partnership opportunities to meeting consumer demands and staying competitive in the market, adding plant-based products is a strategic move that can lead to long-term success for both the companies and the planet.

As more people become aware of the environmental impact of their food choices and opt for plant-based alternatives, CPG companies have a unique opportunity to cater to this growing market and establish themselves as leaders in sustainability.

With Tastwise’s extensive expertise in plant-based product development and collaboration with CPG companies, we believe that together, we can drive positive change and contribute to a healthier and more sustainable future. Let us help you take the first step towards incorporating plant-based options into your product line today!

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