CPG Demand Grew in Second Quarter

The 8.7% year-over-year growth puts pressure on the supply chain and labor.

September 08, 2021

Woman in Warehouse Checking Product Supplies

ALEXANDRIA, Va.—The demand for consumer product goods (CPGs) rose 8.7% year over year in the second quarter of 2021, according to a new report released by the Consumer Brands Association (CBA). The jump in demand intensifies supply chain constraints, as the cost to make essentials continues to rise, coupled with record-breaking monthly Producer Price Index readings.

Like many industries, including the convenience and fuel retailing industry, the CPG industry is experiencing labor shortages, with the CPG industry adding only 12,000 jobs during the second quarter, despite more than 800,000 openings in manufacturing.

“Supply chain bottlenecks and workforce gaps lead to delays and potential shortages, which are bothersome when a consumer must wait months for furniture delivery, but disastrous if those delays mean consumers don’t have access to essentials they depend on like baby formula, soap or toilet paper,” said Geoff Freeman, president and CEO of Consumer Brands Association.

Proctor & Gamble is upping its production of paper products, including toilet paper, as consumers are beginning to stock up, according to the Wall Street Journal. Market research firm IRI says that paper products were 86% in stock as of August 29, which is lower than average, but not close to the height of the 2020 toilet paper shortage when paper products were 40% in stock.

According to Proctor & Gamble, the government stimulus, back-to-school prep and the rise in COVID-19 cases are reasons why U.S. consumers are buying more, and retailers are still unable to stock the full variety of paper products they had pre-pandemic, plus many retailers are receiving incomplete shipments due to raw material shortages and CPG labor issues.

CBA’S Q2 report does not include potential changes in consumer habits brought on by the delta variant and vaccination rates. A poll by the association shows that Americans are spending the same amount (63%) or more (35%) time at home because of the delta variant. Only 3% said they are spending less time at home.

This month’s Category Close-Up in NACS Magazine dives into data on the general merchandise category and how retailers can make the most of the category in their stores.