The CPG Post-Pandemic Outlook
Consumer Brands/Ipsos Poll Methodology
The Consumer Brands survey was conducted by Ipsos, using KnowledgePanel as the sample source. A total of 1,008 surveys were completed among a nationally representative sample of Americans, age 18 and older. The Margin of Error for the total sample is +/- 3.1 percentage points at the 95% confidence level. The survey was conducted between December 18 – 28, 2020.
About the CPG Economic Forecast
The economic forecast is developed by Consumer Brands in conjunction with economists at JEK Analytics. The forecast assumes that the upward trend in CPG purchases will continue. The monthly trend from 2018 through 2019 indicates a 3.2% year–over–year growth rate for CPG sales. Such a trend provides a baseline rate of growth that can be extrapolated to examine growth if COVID-19 had not existed.
If Q1 2021 purchasing habits remain unchanged from those in the latter months of 2020 — that is, purchases near $1.55 trillion (a seasonally adjusted annual rate), as witnessed since June 2020 — the 2020 three-month average of purchases for September, October and November can be used as estimates for December, January, February and March. We extend the 2020 sales through March (the first quarter of 2021) in recognition that a return to the trend will not occur early in 2021. Purchasing patterns will not shift significantly until a strong percentage of Americans have received the vaccine. The University of Washington’s Institute for Health Metrics and Evaluation projected that by mid-April 2021, daily COVID-19 infection rates will have declined to levels seen since mid-March 2020
If we assume the vaccinations continue and are effective, starting in April, there will be the a moderation to the extraordinarily high CPG demand as more people eat in restaurants and resume non-pandemic spending habits. This assumption is supported in part by Consumer Brands/Ipsos polling. The survey revealed that prior to COVID, 76% of respondents felt comfortable dining in indoor restaurants. That statistic dips during COVID to 47%, but 75% of respondents said that when vaccines are widely available, they will feel comfortable dining at restaurants indoors.
Two scenarios are modeled based on when normalcy may be attained. The first assumes a return to the pre-pandemic trendline to occur in September. Dr. Anthony Fauci has stated that by fall, we could return to normal activities. To represent his view, from April through September a straight-line extrapolation is made from April sales of $1.55 trillion (annual rate) to September predicted sales of $1.48 trillion (annual rate).
In the second scenario, we assume a return to pre-pandemic behavior occurs in May. This contrasting assumption requires the public to feel comfortable going out sooner. It also is supported by the University of Washington IHME forecast indicating greatly reduced infection rates by April.
Finally, the application of the trendline in this forecast assumes a full return to pre-pandemic spending behavior and employment and income levels. The forecast results are sensitive to the degree to which individuals return to pre-pandemic habits. The Consumer Brands/Ipsos poll implies that many Americans will be slower to resume typical behaviors. That combined with the long-term and permanent lifestyle changes that many Americans made during the pandemic—working from home, getting a pet, etc.—suggests the later scenario of September is more likely and that the forecast could be conservative. With these additional factors, consumers may shape a new baseline, pushing it to a level above the historical normal trend and growing CPG sales more than forecast.
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