How CPG brands can navigate the inflationary squeeze

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How CPG brands can navigate the inflationary squeeze

7 Nov 2024

Maddie Lambert

Maddie Lambert is a copywriter and editor from Joplin, MO. She graduated from Missouri Southern State University with a Bachelor of Arts in English – literary studies. When she’s not poring over the magazine or lost in the pages of a new novel, you can find Maddie exploring her local bookstores, spending time with her husband, or sharing her latest literary discoveries with fellow book enthusiasts.

CHICAGO — Inflation has impacted the entire supply chain, with rising costs and squeezed margins remaining a topic of discussion over the past few years. For CPG companies, maintaining steady consumer rates can be challenging. PMMI, the association for packaging and processing technologies, highlighted how to navigate these challenges during an educational session at Pack Expo, held Nov. 3-6 in Chicago.

Graphic Packaging International global marketing directors Adriana Dale and Jeannine Scherzer shared tips on how companies can use packaging to drive sales and overcome the “inflationary squeeze” affecting most US consumers.

The modern consumer is value seeking, convenience driven and technology focused, with sustainability playing an important role as well. Each generation of consumer shops differently; the oldest generations remain loyal to brands they’ve had a positive experience with, the youngest generations seek functionality and label transparency, and millennials prioritize convenience and on-the-go products.

“Over 70 percent of consumers are feeling an inflationary impact, which is affecting how they are spending their money at stores and through food service,” Scherzer said. “Whether it’s a high-, middle- or low-income class, everybody is reducing their waste and buying only the essentials.”

For brands to keep consumers, creating that connection and loyalty is crucial for bridging the inflationary gap, and packaging is critical to delivering a positive consumer experience. In response to this, companies are starting to incorporate convenience elements in their packaging to make their products easier to carry, dispense, consume, and then stack and store.

“Over 70 percent of consumers are feeling an inflationary impact, which is affecting how they are spending their money at stores and through food service.” — Jeannine Scherzer | global marketing director | Graphic Packaging International

“A really interesting example of this is in the potato chip aisle,” Scherzer said. “The companies have revolutionized the chip aisle by putting variety packs into boxes. Consumers weren’t getting a bag of broken chips, and the companies received better merchandising and more product on the shelves.”

Sustainability also plays a crucial role in brand loyalty. It is projected that roughly 30% of global households will be eco-conscious by 2028. Eco-conscious consumers care about the environment and what is happening with product waste, and they want to make the right purchasing decisions when they shop.

“Consumers are willing to spend a little bit more if it means that the product specifically is more sustainable,” Dale said. “You’ll see in a lot of today’s packaging that products advertise using less plastic or being 100 percent recyclable. Once the consumer sees that, it creates a connection and loyalty which ultimately helps the brand grow.”

The emphasis on sustainability is a trend that will consistently grow. CPG companies can utilize sustainable packaging to make a larger impact. To do this, Scherzer suggests brands make their packaging circular, engaging and convenient.

“This will allow consumers to feel like they are getting more value in the product that they are purchasing,” Scherzer said. “Understanding consumer interest and packaging with purpose will be very beneficial to sales growth.”

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