What Is the CPG Industry?

  Reviewed by: Michelle Seidel, B.Sc., LL.B., MBA
  Written by: Heather Skyler      Updated November 21, 2018
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Most of us come in contact with a CPG at least once a day, but not many of us know what the acronym stands for. CPG stands for consumer packaged goods and includes items such as food, cigarettes, beverages, cleaning products and clothing. CPG products are items that need to be replaced fairly often (food more often than clothing, of course) as opposed to products that you can use for a longer period of time, such as a piece of furniture or a car. Most of us interact with the CPG industry on a daily basis when we purchase candy at a convenience store, Q-tips at Target or a pack of gum at the grocery store.

Tips

  • The CPG industry primarily consists of goods that are packaged (as the name suggests), and had U.S. sales of approximately $635.8 billion in 2015.

The Four Types of Consumer Products

Convenience: This type of consumer product is purchased routinely and involves very little thought: think candy bars, toothpaste, a hairbrush or soda. These types of CPG products often inspire brand loyalty. For example, someone who wants a Coke wouldn't dream of buying a Pepsi and vice versa. Once the decision for a soda is made, it's purchased quickly. The consumer already knows he is loyal to Coke and doesn't ponder a Pepsi every time he's in the convenience store.

Shopping: A shopping product takes a bit more thought. This type of product requires a consumer to research and compare brands. There are two types of shopping products: homogeneous and heterogeneous. Homogeneous, if you recall from your high school social studies class, means two things that are alike. When trying to decide on a homogeneous product, such as a toilet cleaner or dishwasher, price will be a big factor in your decision. Heterogeneous products can be quite different and require considerations other than price. A smartphone is a good example of this type of product. An iPhone will have different features than a Samsung, for example.

Specialty: This type of product has unique qualities and is brand specific. If you want a Rolex, that's likely the only type of watch you want. You're not just looking for any old timepiece; you want a high-quality, luxury item with a specific reputation.

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Unsought: This type of product is either one that a consumer doesn't know exists or doesn't ever think about. A new tech tool not yet on the market is an unsought product, as is a grave plot.

The CPG Industry

This industry is very large and growing like crazy, mainly due to emerging markets, which have led to an increase in global consumption. U.S. consumers spent approximately $398 billion on CPGs in 2014; this number jumped by $237 billion the next year. Research shows that Baby Boomers and senior citizens buy more than half of the United States' CPG products.

Where Are Most CPGs Purchased?

The most popular places for buying CPG products are grocery stores, drugstores and mass merchandisers. This industry is competitive and doesn't show any sign of slowing down as long as we need small, everyday items that we can buy and dispose of quickly.

About the Author

Heather Skyler is a business journalist and editor who has written for wide variety of publications, including Newsweek.com, The New York Times and Delta's SKY magazine. She has a bachelor's degree in English from Miami University and a master's degree in writing from the University of Washington in Seattle. Before writing for a variety of publications, she taught business writing in Seattle.

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