Nov 11 2022

Consumer Packaged Goods with a Focus on Sustainability and Technology

Nowadays, consumers have become more conscious of health and sustainability when making their groceries and going through the purchase decision process. Consumers are building their purchasing decisions on the sustainability of products and companies since awareness has been raised over the past few years on these matters.

The bar is raised in terms of what grocers must do to deliver value, therefore, consumer-goods companies are setting ambitious sustainability targets for themselves to keep up with today's market and consumer needs.

It is estimated that the supply chain of a typical consumer goods company generates far more environmental costs than in-house operations. It accounts for more than 80% of greenhouse gas emissions and 90% of air, land, water, biodiversity, and geological resources. 

The consumer-goods industry is facing a huge environmental challenge. To meet the current EU climate targets, it will have to more than halve its greenhouse-gas emissions by 2030. As population and food consumption rise, a fundamental shift in the ways food is produced is required. New business models, related to sustainability (applying circular economy for example), will gain traction. In this matter, “green” start-ups are increasingly gaining market share in consumer-goods segments, as well as established companies are also driving their business and innovation based on the subject of sustainability. Nevertheless, the question remains, what are companies' efforts to be more sustainable? How is technology helping with this?

Innovation in the shelves

Companies are responding to consumers' needs, which are influenced by the planet's needs, with innovation. Companies are taking various approaches to promote sustainability, from sustainable packaging to alternative proteins, which are getting through prepared meals services. This shift is shown by numbers, 57% of all startups in consumer goods are green startups, meaning that their mission revolves around sustainability. Over time, these "green startups" are gaining more market share as a result of their efforts.

To begin with, sustainability is being adopted by many companies in the industry, from large corporations to startups, in response to consumer demands for more environmentally friendly products. People are concerned about how their purchased products were packaged. The government is taking action too, The EU is setting high targets to reduce plastic waste by implementing ¨plastic tax¨ and making plans like Circular Economy Action or the Green Deal. Sustainable packaging may have different objectives, from reducing plastic waste overall, to reducing food waste.

Some examples of sustainable packaging include Heura, a Spanish brand that produces plant-based, sustainable, and healthy meat alternatives. In 2020 they announced their commitment to reducing plastic use, with their new packaging that has 80% less plastic than their previous one. Also, MOONWATER, the first company of healthy sparkling beverages in Spain launched its products in aluminum cans, a material that is 100% recyclable. Furthermore, new Spanish startups whose focus is specially on sustainable and smart packaging are offering new solutions to sustainability in the food sector. For example, Oscillum is a Spanish startup, which developed smart packaging that with a simple color change, the smart label can alert about spoilage or freshness of food placed in contact with it. The startup's goal is to reduce food waste and make the food value chain more sustainable.

The new big category on the market shelves is alternative proteins. This sector is thriving at a worldwide level. Since the new generation is more health-conscious and sustainable, grocery stores see a need to offer alternative protein products. Products made from alternative proteins are emerging everywhere around the globe, and Spain is no exception. Market research firm Research and Markets indicates Spain’s plant-based meat market will be worth more than $620 million by 2023. In the last few years, plant-based protein has gained popularity and startups have emerged from this new market need. Innovation knows no bounds, being shown by the variety of alternative proteins offered, varying between them with ingredients (such as soy, beans, mycelium, vegetables, tofu, etc.) and technologies.

Initially, these products were consumed exclusively by vegans, but over time more people without diet exclusions are willing to try them.

Some leading Spanish alternative protein products that are already hitting the market include the plant-based “chicken” in form of nuggets, and bites, as well as plant-based chorizo, sausages, and burgers by Heura Foods, the plant-based, sushi-grade, ready-to-eat seafood by Current Foods, the plant-based Magic Burger by Campofrío, plant-based croquetas by Flax and Kale, among many others.

Increasingly, supermarket shelves are filled with plant-based, sustainable products, and this trend is expected to continue growing, becoming the norm for regular local supermarkets.

Another big sector involved in innovation is ready meals. For busy consumers, ready-meal products are part of their day-to-day diet. Around 20% of people regularly purchase ready/frozen meals in France, Germany, Italy, and Spain.

As in other sectors, ready meals are in need of innovation due to health and sustainability demands. Spain’s companies are getting one step ahead in this trend. For example, Flax and Kale already adopted three vegan-ready meals to their catalog of products.  Also, Carretilla has launched a partnership with Heura, enhancing and amplifying its business with more plant-based options.

By offering new products, companies reach new target markets, not having to worry about new trends affecting their sales. Plant-based ready meals are slowly starting to gain market share and space in the industry.

Browsing the web is the new market

Technology is driving innovation, making every sector grow at an exponential level, including food & beverage. Online grocery shopping skyrocketed during the pandemic, but now, everything going back to normal, and people are continuing to purchase online, keeping the trend still alive.

Through E-Commerce, social media, smartphone innovations, and robots, the online-retail industry is shifting, improving delivery and, with it, improving customer service.

There is a thriving market for delivery apps that focus on selling CPGs directly. New emerging companies such as Spanish startup Getir, has their own marketplace with almost every product the customer may need. Thanks to technology, the need for a physical consumer-facing market it’s not necessary anymore. Only with a mobile app, people can have pictures, nutritional value, and price of any CPG they wish to have on their shopping list. In this matter, Mentta is another example of an online marketplace delivering CPG , even including ready-to-eat meals. Their business model is similar to Getir’s, but with a more sustainable and healthy approach. Also, the unicorn Spanish company Glovo, part of their marketplace is dedicated to the delivery of CPGs. This new way of getting your groceries done saves the customer energy and time.

With this digitalized way of purchasing CPGs, companies have brought new products to the market 50% faster, ⅓ cheaper, and doubled their ROI (return on investment). It is worth highlighting the role social media has in this trend, being the principal way that the brand gets to the customer.

Reducing food waste with technology is another route that this industry is taking. As an example, Too Good To Go acts as an intermediary between stores, restaurants, and supermarkets, preventing large amounts of food waste by selling goods before they are discarded or perishable for less than half their cost to consumers seeking cheaper alternatives.

To conclude, the whole food and beverages industry has been going through a phase of change to endure the sustainability challenge. There is no planet b, therefore companies, multinationals, startups, and consumers are taking awareness and accountability for their consumption and actions. Consumer packaged goods are no exception on this path. As mentioned, lately, they are focusing on sustainability by creating eco-friendly packages, plant-based alternatives to reduce meat consumption, and plant-based ready-to-eat meal options, being better for you and the planet.

Technology continues to go beyond its limits, and social media, delivery apps, and e-commerce are helping to cope with this challenge. Spain is an important player and has successfully been able to keep up with implementing sustainability through innovation.