Consumer Products

Consumers are increasingly preferring brands that can clearly articulate their value proposition and how this fits into broader consumer trends, building trust with their customers over time. Successful brands develop a strong connection with their customers and often build a community centred around the brand, engaging new consumers through interesting and educational content that increasingly reaches the audience through influencers due to the relatively high levels of trust that influencers have with their followers.

Brands’ new product development (NPD) often taps into overarching consumer trends of health & wellness and sustainability. For example, as consumers develop more nuanced views of fats, food & beverage companies are rethinking product formulations and marketing (specifically “low fat” claims appear to be of diminishing interest). Also, brands are creating innovative ways to add healthy ingredients to mainstream products, with a renewed focus on food fortification and ability to add health shouts on their products (e.g. protein, fibre, etc.). Demand for better-for-you products also applies to other categories such as skincare, where “natural” products are gaining momentum.

In terms of sustainability, brands have a number of avenues that they can pursue to address consumer concerns. For example, Ocado has embraced vertical farming for fruits and vegetable, but even consumers that are not prepared to go vegan or vegetarian increasingly want their meat and dairy products to be raised and harvested through more ethical, sustainable, healthy, and safe means. Additionally, while sustainable packaging solutions have historically focused on reducing waste and recycling used materials, with the introduction of new materials, the focus is slowly shifting towards using packaging that is produced from plants, is biodegradable and / or edible, and therefore is “environmentally neutral”. There is consumer interest in using sustainable packaging, however, their willingness to pay a premium to do so is still limited.

The increased need for brands to develop a direct relationship with their customers has also lead to significant growth in direct to consumer (D2C) business models that are part of the overarching growth in online and omnichannel shopping. However, D2C can often create a channel conflict, especially for more niche products, where brands need to decide whether D2C, retailers (both ecommerce and physical retail), or both are the most optimal choice.

For some product categories brands also need to consider the potential competition from retailer own brands – e.g., brick & mortar shopping has experienced a notable shift due to the rise of discounters (e.g., Aldi, Lidl), which has resulted in growth of private label (PL) product ranges across most major retailers as PL appeals to consumers that exhibit less brand loyalty and instead look for the best value for money for their everyday products.

The rise in Private Label is affecting not only value brands, but also premium brands. Private label has not been insulated from the wider trend of premiumisation across consumer products (e.g., the rise of masstige and prestige brands in skincare and cosmetics), with major retailers significantly expanding premium private label ranges (e.g., Co-Op Irresistible, Sainsbury’s Taste The Difference, etc.) that are often priced significantly below premium branded equivalents, while providing comparable or better quality. Even relatively wealthy consumers are buying premium PL as they become more familiar with it and the fact that often their preferred brand is the one producing private label products as well. This trend is forcing brands to re-think their sources of differentiation as it is no longer a given that branded products are of higher quality than private label.