Innovation, convenience and sustainability: the FMCG industry is evolving
The FMCG industry is constantly evolving, driven by changing consumer preferences, technological advances and global sustainability concerns. As we enter the next decade, FMCG companies need to stay on top of the latest trends that will shape the industry and capitalize on growth opportunities. In this article, we will explore five key trends that will define the future of the FMCG industry.
The FMCG industry – what is changing?
From the article, you will learn about the key trends shaping the FMCG market landscape in 2023, such as:
- Artificial intelligence and digitization
- Customization of experiences
- Increased cost consciousness among customers
- Increased importance of health and well-being
- Commitments to people and the planet
Artificial intelligence and digitization – the future of the FMCG market
Digital transformation in the FMCG industry is quickly becoming a necessity, not just an option. With the proliferation of e-commerce, the share of B2C and B2B sales in FMCG e-commerce is growing, opening unprecedented opportunities for brands to create direct-to-consumer channels and gain greater control over the customer experience. FMCG companies are finding innovative ways to leverage digitization and artificial intelligence (AI) to optimize their operations. For example, solutions such as Eskimi allow automation of advertising campaigns, and partners such as Paretos facilitate demand forecasting and inventory management.
From smart solutions that monitor the quality of products created with special cameras to systems that enable customers to shop using virtual reality, new technologies will play a key role in transforming the FMCG landscape. The integration of artificial intelligence in various areas, such as customer insights and data analytics, process automation, supply chain optimization and quality control, will allow companies to make data-driven decisions and streamline processes.
Exploring customized experiences
Today’s consumers are becoming more sophisticated in their tastes and preferences, making the demand for personalized experiences growing. Tailoring products to customers’ needs can tip the balance especially among companies with similar offerings. Among other things, FMCG companies are using data analytics and artificial intelligence to offer personalized products and experiences that cater to individual needs.
From meal plans to virtual fitting rooms, brands are focusing on creating products and services that align with their customers’ preferences. Modern tools that gather insights into customer behavior, such as Dragonfly AI, as well as those that help create new offerings, such as AI Palette, are coming to the rescue.
Moreover, with the fast pace of many consumers’ lives, there is a growing demand for convenient products that can be easily prepared and consumed on the go. FMCG companies will continue to innovate and prioritize convenience to meet the needs of time-constrained people.
Consumers are increasingly cost-conscious
With growing economic uncertainty and the rising cost of living, the need to save is a trend that is gaining traction. Increasingly, consumers’ budgets are shrinking, causing them to focus on their most important needs. At the same time, they are trying to maximize value for money, preferring products that meet various health and personal needs while offering good value.
In this context, FMCG brands that can deliver high-quality products and services that resonate with consumers’ low-price priorities, combined with an attractive value proposition, will thrive in this increasingly challenging market landscape. Supporting companies here can be partners that offer solutions to streamline pricing processes, such as Revonics or Peak.
Great importance of health and well-being
Health-conscious consumers are increasing demand for healthier foods and beverages. The FMCG industry and companies are recognizing and responding to this trend by developing more functional and healthy products. Consumers want to know what ingredients are in the products they consume and are looking for transparency and information on whether ingredients are responsibly sourced. In response, startups are offering, among other things, solutions that allow companies to monitor the sources of their products, such as Farmer Connect.
The increased importance of health and wellness has also led to an increase in the popularity of products such as probiotics, plant-based foods and supplements. The emphasis on these will continue to shape the FMCG industry as companies focus on meeting changing consumer needs. They are being helped by startups that use modern technology to create healthy alternatives – NotCo is an example of such a company.
Commitments to people and planet
As global sustainability concerns become more prominent, FMCG companies are making commitments to reduce carbon emissions, invest in renewable energy and support closed-loop economy initiatives. The importance of corporate social responsibility and sustainable practices is driving companies to reduce their carbon footprint, use green materials and create more sustainable packaging. Startups such as Notpla can become potential partners for companies to help meet these needs.
At the same time, more and more customers are sensitive to the greenwashing of companies, so they expect them to be more transparent and to carry out activities that have a tangible, positive impact on the environment. At the same time, consumers are trying to become more aware of the environmental impact of long-distance transportation and want to support local companies and locally sourced products. FMCG brands that embrace sustainability will create a competitive advantage and resonate with environmentally conscious consumers. Solutions that measure a company’s environmental impact and support positive change, such as HowGood, can help.
FMCG industry – time to evolve
The FMCG industry is evolving rapidly, driven by digitization, consumer health consciousness, sustainability concerns, personalized experiences and globalization. Companies that stay ahead of these trends and embrace innovation will be well positioned to succeed in a dynamic market. By integrating technology, focusing on health and wellness, adopting sustainable practices, personalizing consumer experiences and expanding their reach, FMCG brands can shape the future of the industry and meet ever-changing consumer needs.
If you want to gain a deeper understanding of the evolution of the FMCG market, be sure to check out our list of exceptional startups here.