Fast-moving consumer goods sprint toward a new era of conscious consumption.


Adrián Velázquez

Global clients partner

The global food and beverage sector started to grow 9.7 percent from 2022, with high single-digit growth predicted at least through 2026. It should be no surprise that key areas of expansion are in online food and beverage sales, as well as in app-based take-out and delivery, which are projected to account for every 1 in 5 consumer dollars spent in restaurants by 2025. The mainstream appeal of e-commerce has empowered brands to try out new direct-to-consumer (D2C) service models, which in turn give them direct access to rich data sets on consumer behavior and preferences. Meanwhile, shoppers are increasingly aware of how their buying decisions can shape their own health, community wellbeing, and the environment. The gap between what consumers say and do about social and environmental issues is shrinking, and they are voting with their wallets.

Digital technology has reshaped how food and beverage companies procure, manufacture, and market their products. Food and beverage sourcing is increasingly linked to macro-level issues, including climate change, food access, and animal welfare. With transparency in mind, the coffee brand Nespresso has partnered with technology startup OpenSC to automatically verify supplier claims at the source and trace the origins of its organic coffee.

Nespresso Sustainability

Digitally enabled traceability is impacting other areas of procurement, like the beverage packaging that accounts for up to 48% of urban solid waste and 26% of marine garbage. German company Vytal has developed packaging containers imprinted with machine-readable QR codes that trace the product throughout the supply chain. The company’s AI software then uses that data to optimize supply chain operations, reducing the overall need for packaging as well as unnecessary emissions from transportation and trash production at the end customer.

Traceability has emerged as a critical element of procurement operations, not only because it can drive efficiencies and mitigate supply chain disruptions, but because it can inform socially and environmentally beneficial business practices throughout the company and beyond. Armed with this valuable information, brands can show increasingly conscious consumers that their sustainability claims mean business.

Sustainability Actions for the FMCG industry

Bolstered by research that 74% of Gen Z considers local food integral to sustainability, many more food and beverage brands are relying on local producers. But it isn’t just upstarts like Wyoming Authentic Beef Jerky or Farm Juice that have embarked on local sourcing. Established brands and retailers are also looking to local producers in order to diversify their offerings and future-proof their supply chains. Grocery chain Food Lion utilizes a “Local Goodness” initiative to find locally sourced products, while its supplier diversity program seeks out suppliers that are “at least 51% owned, operated and controlled by a minority, woman, veteran, person with a disability or a member of the LGBT community.” Food Lion and the discount grocer Save a Lot are some of the retailers using the RangeMe online product discovery platform to discover new and innovative suppliers. In early 2022 RangeMe added new features to its software that allow retailers to purchase 1 million products directly from 200,000 suppliers and manufacturers around the world.

Supermarket with lots of brands

Beyond digital innovation, advances in food science have enabled entirely new kinds of food-tech brands that are driving seismic changes in consumer tastes. Impossible Foods, the plant-based meat maker, commissioned a survey that asked young consumers how they could combat climate change; 73% said they could make a difference through their personal choices, while 78% said it was essential to reduce meat consumption. The plant-based meat category has grown exponentially over the past few years, driven largely by Gen Z and Millennial consumers and their interests in ethical sourcing, sustainability, and local food. While Impossible Foods and Beyond Meat were some early players in the cultured meat space, the playing field has expanded significantly. Singapore aims to become a global hub for the alternative protein industry, while last year three European firms launched the Cultured Food Innovation Hub near Zurich to accelerate the development of “cellular agriculture” products, or cultured meat, fish, and seafood.

In addition to prioritizing social and environmental issues, consumers are actively looking for food and beverage options that support their own health and wellness. Brands are exploring ways to incorporate new iterations of functional ingredients into their products, such as adaptogens, probiotics, and nootropics. For example, adaptogens like ginger and turmeric that were formerly only available as powders can now be found in coffees, sparkling waters, energy bars, and chocolate. Amid lifestyle changes like increased screen time or the stress of hybrid work, shoppers are looking to food and beverages that promise to improve mood, sustain energy, and promote relaxation. Meanwhile, repeated studies have shown that “sober-curious” Millennials and Gen Z are drinking less alcohol and less soda than older generations, and the market for low- and no-alcohol beverages reached $3.1 billion in 2021. “Zero proof” drinks are increasingly common on bar and restaurant menus catering to young people.

Millennials and Gen Z are drinking less alcohol and less soda than older generations

Despite all emerging trends, consumers continue to demand value and low prices. Although the first two years of the pandemic saw high consumer spending in premium brands, heading into 2023 it is value brands that have an edge. High inflation is driving higher cost consciousness, and consumers who have resumed eating in restaurants are simultaneously looking to offset those expenditures by saving on home consumption.

Coca-Cola, a propelland client, has set a goal to accelerate the growth of both fountain-dispensed and returnable drinks to achieve its own sustainability commitments, while responding to evolving consumer demands as well as legislation. propelland helped facilitate the alignment of different stakeholders to drive expansion in package-less and returnable products. We collaborated with Coca-Cola to design the UX/UI to boost adoption for package-less items, and to define a comprehensive pricing strategy and business case for returnable items.

Food and beverage brands can keep pace with fast-moving consumer trends by developing a “Test and Learn” culture to experiment with new ideas and pivot quickly. They can reframe sustainability from a cost center to a source of innovation and a driver of customer loyalty. They can experiment with emerging digital tools to increase customer engagement and streamline procurement, all while generating data that helps reduce costs and drive efficiency. Companies should consider a 70/20/10 rule for innovation programs — 70% investment on short-term projects, 20% on the medium term, and 10% on the long term. The key is to decide what to prioritize in the short term while sustaining progress on long-term goals.