2023 reflections: currents in consumer behavior
Every year, agencies, thought leaders and LinkedIn influencers alike offer their insights into what they think the next 12 months will have in store for their respective industries. If you read our 2023 Currents in Consumer Behavior Report, you will know that we are guilty of this as well. But with good reason! Creating the Currents in Consumer Behavior Report allowed us to think both strategically and creatively about how culture and design can intersect to help our clients reach their target audiences. There is value in the exercise, not just for our readers, but for us as well.
And though it may be true that trend reports are a dime a dozen, one thing that is not as common is an honest reflection of those predictions once the year is through. Which trends came to fruition? Which are percolating but not quite there yet? Which ones were totally off the mark? Before we look ahead to 2024, let’s first look back at the year that was.
If you need a quick refresher, you can read the full 2023 Currents in Consumer Behavior here.
1. Consumer Packaged Goods
Image: Pat Whelen
1.1 Consumers Want to Support Environmentally Conscious Brands
“Transparency and accountability are essential for sustainability initiatives because consumers are increasingly skeptical of what brands tell them.”
If you have been following our Sustainability Watch series, you will know that there have been some positive steps made this year in regards to environmentally friendly packaging. For example, PepsiCo has introduced recyclable, paper-based designs for beverage multipacks, while Albertsons and Kellogg partnered together to create an in-store recycling campaign to celebrate Earth Day.
Despite some success stories, skepticism persists among consumers who question the sustainability claims that brands are making. A recent report published by Deloitte Canada highlighted this fact:
57% of consumers say they don't believe most “green” or sustainable claims brands make.
61% of consumers say they shouldn't have to think about sustainability while shopping.
94% of consumers believe it is a brand's responsibility to create products that are not harmful to the earth.
Clearly, there is more work to be done for CPG brands to not only improve their sustainability efforts but also gain the trust of consumers. We’ll call this trend a work in progress and say that it should be a top priority for brands in 2024 and beyond.
Image: Alex Moiseev
1.2 Personalization & Rewards
“Though 69% of consumers say that their choice of retailer is influenced by where they can earn loyalty or rewards program points, many CPG brands still need to catch up and provide more value to their customers.”
2023 may have seen us hit peak loyalty and rewards programs. For example, since 2017, the number of loyalty programs held by Canadians has consistently increased, with 52% subscribing to more than 13 programs. According to the LoyalT study put out by R3 Marketing and Adviso:
66% of Canadians find that loyalty programs help them save money.
45% say they dropped out of a loyalty program that they perceive as not generous enough.
“People now evaluate the value of a program not only by the exchange of points or discounts offered but also by the relevance and level of personalization of communication initiatives, in terms of content and/or offers,” said Hans Laroche, Senior Consultant Loyalty Adviso/R3 Marketing.
As brands look to compete for consumer loyalty, now more than ever it is important to differentiate loyalty offerings and ensure your rewards programs are delivering on the wants and needs of your audience. If your brand isn’t able to do this, consumers won’t hesitate to find someone else who can.
Image: Shelby Cohron
1.3 The Relationship Between Store Brands and CPGs is Going to Get Complicated
“As private-label and direct-to-consumer brands eat away at market share, CPGs need to work harder than ever to earn consumers’ trust and showcase their points of differentiation.”
Private-label popularity isn’t going anywhere. Gone are the days of generic packaging designs and sub-par product quality – consumers have embraced store brands and retailers are taking advantage of the opportunity. According to data released by research firm Circana:
Dollar sales of store brands increased 8.2% during the first half of 2023, outpacing national brand sales gains of 5.1%.
Compared to the first half of 2021, private-label sales are up 16%, or about $17 billion.
Interestingly, though, not all categories are seeing the same levels of growth. While the beverage category saw the largest jump over a 52-week period (+19%), beauty and health only saw increases of 5% and 3%, respectively. As consumers continue to embrace the idea of private-label brands, retailers should be exploring underserved categories and looking for new ways to convey quality, trust, and value. Invok's 7 Tenets of Iconic Packaging Design can help with that.
2. Health & Beauty
2.1 Accessible Packaging
“There is a growing list of inspiring, innovative brands that are finally considering accessibility. By improving existing products or introducing new lines, they are making their customers' lives easier and tapping into a cohort that is often ignored.”
With roughly 1 billion people worldwide living with a disability, there is still so much potential for brands in all categories to think about how they can help improve the quality of life for consumers. Back in 2019, a study conducted by P&G found that only 4% of beauty personal care products directly address the needs of those with physical disabilities. While this number is certainly improving, work remains. Here are some of the positive news stories from the past year:
Lancôme introduced the world’s first handheld computerized makeup applicator – HAPTA. Named as one of the Best Inventions of 2023 by Time, the device uses stabilizing technology and adapts to users’ needs to help those with mobility issues in their hands and arms.
Meanwhile, Estée Lauder has launched a voice-enabled makeup assistant (VMA) app for those with visual impairments. Driven by Augmented Reality and AI capabilities and developed using machine learning, the first-of-its-kind app uses voice instruction technologies to assist users in makeup application.
Founded in 2020 during the height of the pandemic, Meloway Makeup has become a leader in inclusive beauty packaging. In 2023, they launched a handful of products, including Your Way Mascara and Ready Set Primez, which feature their user-friendly, bendable wands.
From smaller start-ups to large conglomerates, there have been some truly inspiring accessibility innovations in 2023. Even with these announcements, though, have come questions about how accessible the products really are. In an interview with Cosmopolitan, Millie Flemington-Clare, founder of Human Beauty explained: “As someone with a disability, I have definitely felt the need to spend more money on my beauty routine to find products that work for me.” For brands, it is important to not lose sight of the end-user and ensure that any innovation is both uplifting and attainable. Here’s hoping that 2024 brings a bit more of that.
Image: Toa Heftiba
2.2 Alternatives to Single-Use Packaging Gain Traction
“Plastic alternatives, such as paper-based and sugarcane packaging, are becoming more popular. At the same time, innovations like compostable cosmetics show that the industry can find impactful solutions to our current climate crisis.”
With the UK and European Union set to implement strict sustainable packaging regulations over the coming years, the health and beauty industry should be well aware that both governments and consumers are expecting more from them. According to NielsenIQ:
62% of consumers find sustainability more pivotal today than two years ago.
Sustainable segments across the beauty category, such as cruelty-free (+18.1%), compostable (+30.9%), and plastic-free (+12.2%) are experiencing substantial dollar growth.
In 2023 there was also a significant +64% increase in online searches for refillable options.
The personal care and beauty industry produces more than 120 billion units of packaging every year, most of which are still not recyclable. That is not to say that there haven’t been some great circular, refillable, and sustainable beauty products launched this year – but simply put, the adoption of eco-friendly packaging is essential for brands that want to achieve sustained success. Consumers and governments are paying attention – it’s now or never.
2.3 Creating an Omni-Channel Experience Worth Talking About
“Consumers are no longer just interacting with a brand at the point of sale – they are reading and watching product reviews, scrolling through social media, comparing prices, and looking for perks from the brands they support.”
The beauty category is expected to reach $580 billion by 2027, growing a projected 6% each year – this is in line with or slightly higher than other categories such as food and beverages, apparel, footwear and pet care. A lot of this growth is thanks to the increase in options for consumers when it comes to researching, shopping, and engaging with brands. This, of course, is happening both online and in-store:
81% of beauty consumers still prefer to purchase beauty products in-store.
66% say that they search for information online before making a purchase.
E-commerce in the beauty category is expected to grow at 12% per year through 2027.
Connecting with consumers across multiple touchpoints is nothing new for health and beauty, but technology is really allowing the line to blur between online and in real life. Augmented Reality (AR) and Artificial Intelligence (AI) are giving brands the opportunity to recreate the retail experience for their customers in the most convenient way possible.
In-person shopping is never going to go away in health and beauty, but the path to purchase is ever-evolving. As Ulta Beauty’s CEO, Dave Kimbell, said: “Our consumer insights and member data confirm the importance of physical shopping in beauty. More than 75% of our members choose to transact with us only in stores, and yet we know many of these members use our digital platforms for discovery, try-on and inspiration.”
3. Alcohol & Cannabis
Image: Taylor Simpson
3.1 Hard Seltzers Were all the Fizz; Now it's all about Canned Cocktails
“RTDs deliver on both the wants and needs of consumers. They are convenient but also have the taste, quality, and variety that appeal to many audiences.”
With everyone from Blake Lively to The Keg hopping onto the Ready-to-Drink (RTD) bandwagon, it is safe to say that canned cocktails are having a moment:
According to projections, the RTD canned cocktail market is estimated to increase from US $18.82 billion in 2023 to US $33.25 billion by 2033.
The popularity of canned cocktails is mostly found in younger age groups, with 84% of RTD drinkers under the age of 55. Gen Z and Millennials have especially embraced this trend.
One interesting note is that the increased popularity in RTDs has led to a decline in sales of hard seltzers (once the darling of the industry). “Though it is difficult to say for sure, the correlation between the rise of ready-to-drink share with the declining share of hard seltzer in the past year is clear,” explained Liz Paquette, Drizly’s head of consumer insights.
Consumers in the alcohol category will always be looking for the newest and coolest drink to try out, and as more options become available, brands need to find some whitespace that they can own. Whether it is through flavour, branding or purpose, it is important for brands to find a way to stand out or risk being left behind.
3.2 Cannabis-Infused Beverages are Seeing Increased Popularity
“As consumers become more mindful of the impact of alcohol on their health and look for alternatives to smoking cannabis, the appeal of cannabis-infused beverages crosses a wide range of demographics.”
With more countries and states looking to legalize cannabis in the coming years, it is no surprise that the cannabis beverage market will continue to grow steadily over the next decade. In places like Canada where cannabis is already legal, governments are still working to refine their regulations, which should provide increased opportunities for the brands that are able to capture the attention of their audience.
At the end of 2022, for example, Health Canada amended the Cannabis Act to increase possession limits for cannabis beverages, an important change for both retailers and consumers. “We believe that increasing the number of cannabis beverages that can be purchased at one time will allow the category, and cannabis more broadly, to thrive,” explained Dave Schlosser, CEO & President of Truss Beverage Co. “These new conditions not only allow for a more convenient shopping experience, but provide legal-age Canadians with more opportunity to add beverages to their existing cannabis product order, driving in-store sales for licensed retailers.”
The global cannabis beverages market is estimated to reach US $3.9 billion by 2030.
Consumers are expecting more from the cannabis-infused beverages that they purchase, including organic and chemical-free options, as well as improved flavours and formulations.
Cannabis consumers are no longer satisfied with simply being able to make legal purchases. The bar has been raised and they are educated, curious and eager to find a product that suits their wants and needs. That could be something different for everyone, so brands need to ensure that they have a deep understanding of their target audience to truly alleviate some of their customer's pain points.
Image: Sigmund
3.3 Consumers Will Continue to Cut Back on their Alcohol Consumption
“Dubbed the sober curious, this consumer group is increasingly looking for fun, exciting alternatives to traditional alcoholic beverages.”
With Molson Coors debuting its first canned, non-alcoholic cocktail line and White Claw expanding its portfolio to now include 0% alcohol options, 2023 saw some of the biggest players in the category introduce non-alcoholic and low-alcohol beverage options. And with good reason:
69% of people who drink alcohol are interested in embracing a “sober curious” lifestyle. That number jumps to 81% for Gen Z.
Speaking of Gen Z, nearly 1/3 claim that they never drink alcohol.
“Damp drinking,” a viral TikTok trend that encourages people to drink less and in moderation, but not give up alcohol entirely, is gaining traction. 55% of drinkers who have heard of “damp drinking” are “very interested” in trying it out.