A Consumer Brands Association study predicted a steady continuation of elevated demand into the fourth quarter of 2021, moderating costs for the consumer packaged goods (CPG) industry.
“For 19 months, demand has steadily increased, rising beyond levels not seen since the shelf-clearing panic at the start of the pandemic,” Geoff Freeman, president, CEO, Consumer Brands Association says. “Today, however, the shelves aren’t empty. Despite a supply chain in crisis, a labor shortage and historic inflation, the CPG industry has learned, adapted and gone to incredible lengths to meet consumer demand.”
- According to the Bureau of Labor Statistics, CPG demand in the third quarter of 2021 was up by 1.8% from the previous quarter.
- Demand surpassed the March 2020 panic that cleared store shelves in both August and September. The wave of demand showed the shift in American behaviors and consumption habits following the COVID-19 pandemic.
- Wholesale costs have hit record highs, with an 8.6% annual increase in October, alone.
- Consumer Brands forecasts a slight slowdown in wholesale costs for food manufacturing, but one that is still 10.5-12% higher than the year prior. Had COVID-19 not happened, it would have been at 1.3% following pre-pandemic norms.
- Year-over-year prices have increased dramatically for commodities such as wheat (64%), aluminum (88%) and ethyl alcohol (62%).
“How fast and how much those costs moderate will be based on supply chain bottlenecks easing and the labor force growing,” Freeman adds. “Only then will companies — and consumers — see price relief.”