1.  Online CPG Growth Stays Strong CPG e-commerce saw a boom in consumer spending with the onset of pandemic in the US, and the channel has retained its appeal with shoppers seven months into the crisis.

• Online CPG sales soared 60.6% for the four weeks ended October 4, much higher than pre-pandemic figures.
• Total CPG e-commerce growth has hovered around 60% for four consecutive periods—since June/July.

As the pandemic stretches on, we believe that consumers will continue to gravitate toward e-commerce for CPG shopping, which will sustain the channel’s growth above pre-pandemic levels for the remainder of the year. [caption id="attachment_118315" align="aligncenter" width="700"] Historical data have been revised in the latest period
Source: IRI E-Market Insights®/Coresight Research [/caption]   2.  Food & Beverage Continues To Experience High Online Demand Food & beverage continues to see high online growth, relative to other categories, soaring 74.7% in the four weeks ended October 4. Several grocery retailers are benefitting from the strong grocery e-commerce trend. Albertsons, for example, saw its online sales surge by 243% in its second fiscal quarter, ended September 12. The company said that it will significantly ramp up its e-commerce capabilities to capitalize on the expanded addressable grocery market as consumers continue to stay home to avoid exposure to the coronavirus. Health & beauty e-commerce sales growth is on an upward trend, strengthening for two periods in a row. General merchandise & homecare saw slight growth erosion in the latest period, decreasing from 59.0% in the four weeks ended September 6 to 57.8% in the four weeks ended October 4 (slowing by 1.2 percentage points). [caption id="attachment_118316" align="aligncenter" width="700"] Historical data have been revised in the latest period
Source: IRI E-Market Insights®/Coresight Research [/caption]   3. Breakdown of Online CPG Sales: Health & Beauty Picks Up The chart below shows the breakdown of online sales by type of CPG category. Health & beauty, which contributes nearly half of online CPG dollar sales, picked up again to reach 42.2% for the four weeks ended October 4. Food & beverage fell below the 35% mark for the first time since April, reaching 34.4% in the latest period. Meanwhile, general merchandise & homecare’s online share stayed almost flat relative to last period, at 23.4% for the four weeks ended October 4. [caption id="attachment_118317" align="aligncenter" width="700"] Historical data have been revised in the latest period
Source: IRI E-Market Insights®/Coresight Research [/caption]   4.  Frozen Food Continues To Outpace Other Food Departments in Total Sales Total food & beverage sales stayed strong, holding up at 14.3% for the latest two periods. So far, we are not seeing evidence of a rumored second wave of grocery stockpiling, which would be reflected in a marked acceleration of growth in food & beverage sales. Sales of frozen food saw an incredible surge in March–April and are not showing any signs of abatement. For the latest period, frozen food posted total sales growth of 21.2%, driven by seafood (up 41.2%), meat (up 38.6%) and processed poultry (up 27.6%). Conagra Brands reported that its frozen-food sales grew 18.0% for the quarter ended August 30, reaching $935.6 million (35% of total revenue). The company expects growth of the frozen and refrigerated segment to remain high in the upcoming holiday season due to persisting strong in-home consumption trends. Costco, which posted a 16.9% increase in net sales for the four weeks ended October 4, attributed some of the growth to strong frozen-food sales. General foods saw the biggest online gains in the four weeks ended October 4, with growth of 96.3% versus last year, driven by marshmallows (up 275.7%), baking nuts (up 169%) and frosting (up 162.7%). [caption id="attachment_118318" align="aligncenter" width="700"] Source: IRI E-Market Insights®/Coresight Research [/caption]   5.  Homecare Posted the Strongest Online and Total Growth Among Nonfood Departments Homecare products continue to remain at the top of consumers’ shopping lists as they become more receptive to the pandemic-induced social importance of hygiene. The online channel saw the highest growth among nonfood departments, at 67.5%, while total sales increased by 24.6%. Homecare e-commerce sales were driven by cleaning tools (up 115.1%), sponges and scouring pads (up 74.1%) and household cleaners (up 67.2%). Homecare product sales have remained exceptionally high over the past seven months. In its third quarter ended September 30, 2020, Reckitt Benckiser saw the sharpest growth of 19.2% for its North American region, which the company primarily attributed to its disinfection brands, including Lysol. The company noted in the earnings call that despite significantly increasing the supply capacity for Dettol and Lysol, it is unable to meet existing demand for these brands. Reckitt Benckiser expects higher demand for disinfectant products to persist in the longer term as new consumer habits related to cleaning and sanitization become more ingrained. This trend is also supported by a recent Coresight Research survey, conducted on October 13, which found that a substantial 43.4% of US consumers are currently buying more household items, such as cleaning or laundry products, than pre-crisis. [caption id="attachment_118319" align="aligncenter" width="700"] Source: IRI E-Market Insights®/Coresight Research [/caption]   What We Think CPG firms have traditionally reached their customers through brick-and-mortar stores. However, heavy reliance on this channel means that CPG companies can be negatively impacted by changes such as the frequent out-of-stocks that occurred at retail stores during the stockpiling and lockdown phase of the Covid-19 crisis. Additionally, the pandemic resulted in a rise in online shopping, behavior which will likely become more ingrained in consumers’ buying habits, underscoring the fact that the online channel will expand at a more robust rate than before Covid-19. Against this backdrop, CPG companies cannot afford to be anything but aggressive and proactive in their e-commerce strategies. CPG firms must step up their digital game and piggyback on the e-commerce boom by diversifying to online channels, including by selling directly to consumers through standalone e-commerce websites and by partnering with online retailers. The demand for food & beverage stayed strong for the latest period, but we are yet to see any unusual accelerated growth that could be attributed to a further wave of stockpiling in food. Looking forward to the upcoming holiday season, grocery retailers must be equipped to deal with accelerated demand on top of peak holiday sales: As we recently noted, we expect online food sales to grow by 60+%, year over year, in the holiday peak, as total food retail sales climb by 9.0–9.5%. CPG firms must gear up for the unprecedented demand for food and homecare items as more people stay home and organize small get-togethers at their places rather than heading outside to dine at restaurants or attend social events.  

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