Economists' Outlook

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Online CPG Sales Continue Growth

The acceleration of e-commerce last year, on-the-whole, has been well documented, but let us dive a little deeper into the online sales trends of the U.S. CPG industry (consumer packaged goods). While the e-commerce portion of the U.S. CPG industry, comprised of food and beverage, general merchandise, homecare, and health and beauty, remains a small portion of total CPG sales today, it remains at an elevated level.

Line graph: Total CPG eCommerce Sales Year-Over-Year Percent Change, January to December 2020

According to IRI data, online CPG growth is quite strong. Online CPG sales continued their year-over-year expansion, increasing 64% for the four weeks ending December 27, 2020. This represents a 1% increasing difference from the 63% y/y recorded in the prior period. The increase in online CPG sales was underpinned by consumers' shift towards online shopping as consumers continued to shop online throughout the holiday season given increasing COVID cases and the return of lockdowns in some states.

Line graph: Total CPG eCommerce Sales by Department Type: Year-Over-Year Percent Change January to December 2020

The chart above illustrates the online sales growth by CPG department type. Total U.S. CPG e-commerce growth was driven by growth in the Total Edible department. Total Edible CPG e-commerce sales grew 79% year-over-year for the four weeks ending on December 27, 2020, which is a slight decrease from the prior periods 84% year-over-year growth rate.  

Total Edible (food and beverage), continues to see elevated levels and the most significant increases with respect to the other categories as it is supported by consumers continuing to stay in and prepare meals at home.

Line graph: CPG eCommerce Sales by Category, Four Weeks Ending December 27, 2020: Year-Over-Year Percent Changes

Within Total Edible, Refrigerated Foods continue to outpace the other food categories in CPG online sales. Refrigerated Food growth led, with 95% year-over-year growth in online food sales in the four weeks ended December 27, 2020. Refrigerated Food growth also outpaces growth for Total Non-Edible categories as well with Total Non-Edible department, Home Care, closely following with 91% year-over-year growth.

So, what does all of this mean? The effects of the coronavirus pandemic have reinforced the position of CPG e-commerce with accelerated online shopping trends and changes in consumer spending habits fueling the online channel’s December period increase as growth remains at higher levels than pre-COVID levels. Provided the current state of increasing COVID cases and with some vaccine distribution currently underway, current consumer meal preparation, staying at home and online shopping trends may maintain CPG e-commerce growth levels moving forward. As consumers spend more time in the current pandemic-induced environment, online spending behavior and e-commerce are likely to become ingrained into consumers' spending habits post-pandemic.

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