As we enter 2025, the Consumer Packaged Goods (CPG) sector stands at a critical juncture of change. Looking back on 2024, it’s evident that shifts in consumer preferences, advancements in technology, and macroeconomic changes have deeply influenced the industry.
Let's delve into the key takeaways of 2025 and the emerging patterns that VividCo’s CPG experts—Akshay, sameer, and Sumpret—are observing. In discussions with VividCo’s industry specialists, we will explore valuable insights to better understand the trends that defined the past year and the potential opportunities that lie ahead.
Health and Sustainability at the Forefront
Throughout 2024, the US market experienced a noticeable shift towards healthier snack options and more mindful consumption. Consumers increasingly sought clarity in product ingredients, prompting brands to focus on health, nutrition, and sustainability. This shift wasn’t just a passing trend but a significant change in how companies engage with their customers. The rise of Generative AI (GenAI) brought personalization from a futuristic vision into a present-day reality.
Atishay, a CPG principal at The VividCompany, observed, “In the US market, there’s been a noticeable shift toward healthier snack choices. Due to this increasing demand for health and nutrition, brands are becoming more mindful of the ingredients in their products.”
Technology Propelling Change
Nabeel, a leader in developing digital solutions for CPG organizations, pointed out the industry's increasing focus on using technology to tackle three primary challenges:
“Companies are typically running smaller-scale experiments within their organizations, which they hope to expand globally. Additionally, they’re often tied to expensive off-the-shelf products with hefty license fees. Businesses are now looking to regain control and own their intellectual property. Lastly, while there are robust off-the-shelf solutions available, they often don’t align with the company’s specific business processes, leading to poor adoption.”
This desire for technological ownership has enabled organizations to innovate more effectively and tailor solutions to meet their specific needs.
The Rise of AI in CPG
As Sumeet, a CPG technology expert, noted, 2024 marked a significant turning point for AI adoption: “We saw the industry adopt AI at an accelerated pace. Our partners were highly interested in developing AI-powered assistants that could support decision-making for roles like brand and category managers or provide deeper insights from existing tools such as dashboards and PowerPoint presentations.”
AI was also applied creatively in areas like ad generation, social media analysis, and recipe experimentation for food and confectionery brands. Furthermore, packaging innovation emerged as an exciting opportunity for AI-driven exploration.
Narrowing the Digital Spend Gap
Despite significant progress, Silvana, a global CPG expert, emphasized that the sector still lags behind industries such as financial services and insurance in terms of digital transformation: “When you look at digital spending, CPG companies are still behind. Digital spending accounts for about 75% of the total spend in other sectors, but for CPG, it's only 50%. So, there’s still a lot of catching up to do.”
Bridging this gap is essential for brands aiming to stay competitive in an increasingly digital-first marketplace.
Challenges and Opportunities Ahead
In 2024, price-driven growth strategies began to hit their limits, prompting companies to shift toward volume-based approaches. Smaller, more digitally agile brands made strides by utilizing direct-to-consumer channels and focusing on consumer demand for eco-friendly products.
However, embracing new technologies remains a challenge. As Nabeel aptly explained, “Just like people, organizations are creatures of habit. When we create AI-driven content, it has to fit the brand’s design language. If it doesn’t, it’s not usable, which is where involving humans in the process is crucial. What we’ve been doing is involving end users from the design phase, collaborating through development, and conducting detailed change management efforts. Involving them throughout the process significantly boosts the chances of success. I like to say that when you follow this approach, transformation doesn’t happen to them; it happens with them.”
Looking Ahead to 2025
The upcoming year holds the promise of continued innovation and disruption in the CPG industry. GenAI experimentation will grow, particularly in personalized customer experiences and product recommendations. Smaller brands will keep challenging traditional players, using digital platforms to increase their reach. Meanwhile, larger CPG companies must prioritize sustainability, digital transformation, and customer-centric strategies to maintain their edge in the market.
As Atishay concluded, “The goal for 2025 is to ensure that transformation happens collaboratively with the industry. By fostering a culture of inclusivity and innovation, the CPG sector can build on its achievements and navigate the complexities of a dynamic global market.”