FMCG categories to watch in 2022

The pandemic altered consumer shopping habits within the FMCG sector, but now that the world is returning to some semblance of pre-pandemic normality, will the shopping habits go back to normal?

June 23, 2022

5 mins read

Alexandra Smith

With a current growth rate of 14.7%, the FMCG market is projected to grow to almost $220 billion by 2025 (Financial Express).

The pandemic altered consumer shopping habits within the FMCG sector, with cleaning products, toilet roll and long shelf-life food and beverages seeing a major influx in purchases online. But now that the world is returning to some semblance of pre-pandemic normality, will the shopping habits go back to how they used to be?

In 2021, the top 5 fastest growing FMCG products and categories were:
·      Rolling tobacco: +£790 million
·      Cigarettes: +£686.2million
·      Spirits: +£393.9 million
·      Wine: +£295.1 million
·      Free-from alternatives: +£212.9 million (The Grocer)

What products are rising in popularity in 2022?

1.    Tobacco, e-cigarettes and vapes
Despite consumers displaying an increasing concern around health and wellbeing, demand for tobacco is still high and stable, with the global market estimated to grow at a rate of 3.75% year-on-year between 2022-2027 (Morder Intelligence). This mainly comes down to the product innovation seen in this category, for example with menthol cigarettes, slim cigarettes and flavour capsules. Also, with people returning to pre-pandemic social activities, such as going to pubs, bars and nightclubs, the number of people partaking in “social smoking” has returned.

The past two years has also seen a remarkable surge in the number of people using e-cigarettes and vaping alternatives to cigarettes, especially amongst younger people in North America and Europe. The global market for e-cigarettes and vapes was worth $18.1 billion in 2021, and is forecasted to expand at an annual growth rate of 30% between 2022 and 2030 (GVR). Even the world’s largest tobacco brands, including British American Tobacco and Imperial Brands, produce e-cigarettes and vapes in addition to their traditional tobacco products.

The increase in popularity comes down to the rising awareness around these products being safer than traditional cigarettes, and them being seen as cheaper alternatives. Younger consumers are also enticed by the large range of sweet flavours available, from watermelon and grape, to cotton candy and custard.

2.   Spirits and hard seltzers
Spirits are another stable market, expected to reach a value of $56 billion by the end of 2022, growing at a rate of 5.2% a year between 2022 and 2032 (FMI). Retailing via direct-to-consumer (DTC) sites has given spirit brands the opportunity for a point of difference, offering exclusive, personalized or bundled products, which is exactly what William Grant & Sons did when they partnered with THG Ingenuity. Click here to see their destination for award-winning spirits.

This has been supported by an emerging global trend toward health and wellness in the food and beverage industry, which has resulted in some consumers trying to limit their alcohol intake by looking for low alcoholic or low-calorie beverages. Hard seltzers are a flavoured alcoholic sparkling water containing only 4% alcohol and usually under 100 calories, making it the perfect drink to fit this trend. The global hard seltzer market size was valued at $4.4 billion in 2019 and is expected to grow at an annual growth rate of 16.2% from 2020 to 2027 (GVR). Beverage brands are seeing the opportunity in this emerging market, with American multinational drink and brewing company Molson Coors recently announcing it will be investing $65 million to expand its hard seltzer capabilities.

3.   Plant-based and free-from foods
The food and beverage industry has recently seen several growing trends around sustainability and healthy living. With an increasing number of people following a flexitarian, vegetarian or vegan diet, plant-based foods have risen in popularity, with the plant-based segment expected to be worth $37.9 billion by 2027 (Triple Pundit).

Additionally, the global free-from food market is projected to grow 9.5% year-on-year between 2022-2027 (Morder Intelligence), due to the increasing health trend and a growing population having allergies, sensitivities and diseases. Gluten-free and dairy-free products have seen the most substantial transformation, causing an increasingly competitive market, with key players including global leaders in the food and beverage industry; General Mills, Mondalez, and Danone.

Food & beverage manufacturers, ranging from start-ups to multinational leaders, are rapidly innovating in this market. Popular FMCG brands are jumping on the trend with Babybel introducing a vegan version of their famous cheese snack, and Ben & Jerry’s offering a range of non-dairy and plant-based flavours. Beyond Meat, Impossible and Quorn are some examples of plant-based start-ups, with Beyond Meat generating a gross revenue of $464.7 million in 2021 alone (Beyond Meat).

THG Ingenuity X MIGHTY Drinks

Last year, THG Ingenuity partnered with plant milk producer MIGHTY Drinks to help the brand on its ecommerce journey, launching a UK site for them in December 2021, enabling the brand to sell its dairy-free milk alternative direct to their consumers. Since launching the site, MIGHTY Drinks has experienced an increase in performance, including a +1.7% conversion rate (CVR) for Q2 2022 and a +34.1% MoM average order value (AOV) in May 2022.

Ingenuity is also working with the brand to launch a further two sites in more territories in the coming months. In addition to our ecommerce platform, Mighty Drinks has also benefitted from Ingenuity’s fulfilment solution and our award-winning customer service offering, THG Orbit.

At THG Ingenuity we have powered the growth of global leaders in FMCG, including Coca-Cola, Nestle, Unilever and Procter & Gamble, through our tried and tested digital marketing, technology and fulfilment capabilities. For more information on how THG Ingenuity can help your FMCG brand, contact us today.

For more insight into the FMCG sector, download our report.

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