Consumer Brands' 2022 Outlook: Cautious Optimism and Informed Pessimism

Supply-chain blind spots and reluctance to evolve work models can stymie CPG companies' growth, association says
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U.S. workers are seeking greater flexibility in where and when they get their job done, and that shift has sustained the pandemic-driven trend of more meals and snacks consumed at home, the Consumer Brands Association notes in its newly released CPG outlook for 2022.

That, in turn, means that demand for consumer packaged goods is likely to remain elevated over prepandemic levels, according to the Arlington, Va.-based CPG trade group—good news on one hand for CPG makers, but a challenge on the other as persistent and new supply-chain issues threaten CPG companies' ability to meet that strong demand, and do so at prices that don't deflate volumes and encourage brand switching.

Amid supply-chain disruptions exacerbated by factors ranging from Russia's invasion of Ukraine to Indonesia's recent move to ban palm-oil exports and California's persistent drought, with 40% of the state currently facing "extreme drought," CPG makers and retailers aren't seeing the relief they had hoped would be in sight by this point in 2022, according to Consumer Brands.

"Less than one month into the second quarter of the year, the continued feeling of unease informs the trends we see emerging for the rest of the year," the association states in its CPG outlook. "In 2022, optimism is cautious, pessimism is informed."

That seems to be true for consumers as well as for businesses: Consumer confidence in April sat at the second-lowest level in a decade, with consumers expressing concern about inflation. That said, grumble though they might about grocery prices—and they are grumbling, with 30% blaming the pandemic for grocery inflation, 27% blaming policies of the Biden administration and 21% blaming supply-chain costs and constraints, according to Consumer Brands' polling—they're still spending, because many are still working from home more often than they used to.

"The pandemic resulted in a seismic shift in American life that has heavily influenced the future of the economy, workforce and how the CPG industry operates in ways that are starting to take shape," Consumer Brands CEO Geoff Freeman said in a statement. Nearly 6 in 10 respondents (59%) to a Consumer Brands/Ipsos poll in March said they favor schedule flexibility or the option to set their own hours, the association reported, compared with 39% who said they prefer a fixed, predictable schedule. Further, 4 in 10 are working remotely exclusively or at least a few days per week. 

"The incredible demand of the last two years is the new normal," the association stated, noting that the past eight months "have seen CPG product sales that surpassed the shelf-clearing hysteria of March 2020."

For CPG companies to meet that demand, fundamental changes in how they make and transport and track goods is needed, according to Consumer Brands. One move the association continues to beat the drum for: the creation of a federal supply-chain office to coordinate interagency supply-chain actions and address U.S. supply chain concerns. Consumer Brands praised the Biden administration for acting earlier this spring on another of the association's recommendations, establishing a national freight data portal to support information-sharing across supply chains. Still, as of today, "there is alarmingly little visibility into the U.S. supply chain," the association asserted, leaving companies with "massive blind spots that undercut the ability to build resiliency into the system."

Consumer Brands also urged CPG companies to consider whether the production roles and shifts they offer meet the needs and evolving demands of workers today.

"After two years of watching white-collar jobs reshape, blue-collar workers are looking for a version of flexibility and are poised for their own revolution, even if what it looks like has yet to come into focus," the association stated. "Companies will have to anticipate and adapt or risk their workforce heading for the door."

Consumer Brands cited Amazon's introduction of Amazon Anytime Shifts, a flexibility-oriented offering for roles in the company's grocery and fulfillment center warehouses, as an outside-the-box type of move that could generate interest in ways that higher wages alone may not. "Companies willing to take the risk [on more-flexible scheduling] may find they have a larger talent pool available to them," the association commented. And the need is there: CPG companies added just shy of 4,300 jobs in April, Consumer Brands reported, while the industry still has 120,000 job openings. 

It all necessitates a critical, holistic analysis by CPG makers—with support at the federal level for a data infrastructure that allows such analysis—of how and where business gets done, the association suggested. "The volatility of today’s inflationary environment emphasizes the need to focus on meaningful solutions in our control," said Tom Madrecki, the association's VP of supply chain and logistics. "Limiting the impact of the next supply-chain crisis starts with being able to spot it before it happens."




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