Europe Consumer Packaged Goods (CPG) Market Outlook to 2028

Europe Consumer Packaged Goods (CPG) Market Overview

The Europe Consumer Packaged Goods (CPG) market was valued at USD 702 million. This growth is driven by a combination of factors, including increased consumer spending, technological advancements in packaging, and a growing preference for convenience products. Consumers increasing demand for high-quality, diverse, and convenient products is fueling the market expansion.

The European CPG market is dominated by several key players, including Nestl, Unilever, Procter & Gamble, L'Oral, and Reckitt Benckiser. These companies have established themselves as market leaders through extensive product portfolios, robust distribution networks, and strong brand recognition.

The development in the market was the announcement by Unilever in 2023 of its ambitious plan to achieve net-zero carbon emissions by 2030. This commitment aligns with the increasing consumer demand for sustainable and eco-friendly products, reflecting a broader trend within the industry towards sustainability and environmental responsibility.

Germany and France, dominates the market. In 2023, they accounted for major part of the total market share, driven by a high level of consumer spending, a strong economy, and a well-established retail infrastructure. Germany, for instance, saw a 5% increase in CPG sales in 2023, reflecting its robust market position.

Europe Consumer Packaged Goods (CPG) Market Segmentation

The Europe CPG market is segmented into various segments such as product type, distribution channel and region.

1. By Product Type: The market is segmented by product type into Food & Beverages, Personal Care, and Household Products. In 2023, the Food & Beverages segment held the largest market share. This dominance is attributed to the increasing consumer demand for convenience foods and beverages, driven by busy lifestyles and the growing preference for ready-to-eat meals.

2. By Distribution Channel: The market is segmented by distribution channel into Supermarkets/Hypermarkets, Online Retailers, and Convenience Stores. In 2023, Supermarkets/Hypermarkets dominated the distribution channel. This dominance is due to their extensive reach, wide product assortment, and convenience offered to consumers. The availability of a vast range of products under one roof makes them a preferred shopping destination.

3. By Region: The market is segmented by region into Germany, France, UK, Sweden, Italy and Rest of Europe. Germany is the dominant region in this market in 2023. This dominance is driven by high consumer spending, a strong economy, and a robust retail infrastructure, which supports extensive distribution networks and a wide variety of CPG products.

Region

Market Share (2023)

Germany

25%

France

20%

United Kingdom

18%

Sweden

10%

Italy

15%

Rest of Europe

8%

Europe Consumer Packaged Goods (CPG) Market Competitive Landscape

Company

Establishment Year

Headquarters

Nestl

1866

Vevey, Switzerland

Unilever

1930

London, UK and Rotterdam, Netherlands

Procter & Gamble

1837

Cincinnati, USA

L'Oral

1909

Clichy, France

Reckitt Benckiser

1999

Slough, UK

1. Nestl's Investment in Plant-Based Products: In 2024, Nestl announced an investment of 1.5 billion euros in its plant-based product portfolio to meet the growing demand for plant-based alternatives. This investment includes the expansion of Nestl's production facilities in Europe and the development of new plant-based products, including meat and dairy alternatives. This investment reflects Nestl's commitment to innovation and sustainability, positioning the company as a leader in the growing plant-based segment of the CPG market.

2. Procter & Gamble's Digital Transformation Initiative: In 2024, Procter & Gamble (P&G) announced a major digital transformation initiative aimed at enhancing its online presence and e-commerce capabilities. The company has invested 900 million euros in digital marketing, data analytics, and e-commerce platforms to better understand consumer preferences and improve customer engagement.

Europe Consumer Packaged Goods (CPG) Industry Analysis

Growth Drivers

1. Increase in E-commerce Sales: In 2024, the European Consumer Packaged Goods (CPG) market has seen a boost from the growth of e-commerce. E-commerce platforms have expanded their reach across Europe, leading to an increase in online sales of consumer goods. This growth is supported by investments in logistics and distribution networks by major e-commerce players, allowing for faster and more efficient delivery of CPG products. With over 500 new distribution centers established in 2024 alone, the e-commerce channel is expected to continue driving growth in the CPG market, particularly as more consumers prefer the convenience of online shopping.

2. Rising Demand for Health and Wellness Products: In 2024, the demand for health and wellness products in Europe has surged, majorly impacting the CPG market. Consumers are increasingly seeking products that promote health, well-being, and sustainability. Sales of organic and natural CPG products reached 95 million units in 2023 which has heightened awareness of health and hygiene.

3. Expansion of Private Label Brands: Private label brands have continued to expand their presence in the European CPG market in 2024, driving growth. Retailers across Europe have been increasing their investment in private label products. This growth is influenced by consumer demand for affordable alternatives to national brands, as well as retailers' efforts to improve the quality and variety of their private label offerings.

Challenges

1. Rising Raw Material Prices: The cost of raw materials, including key ingredients and packaging materials, increased due to supply chain constraints, impacting the profitability of CPG companies. The shortage of transportation and labor further exacerbates these challenges, causing delays and increasing operational costs. This increase in raw material costs has put pressure on profit margins, forcing CPG companies to either absorb the additional costs or pass them on to consumers in the form of higher prices.

2. Intense Competition from Private Labels: The market faces intense competition from private label brands in 2024, which has put pressure on national brands. Private label products have gained traction among consumers due to their affordability and perceived value for money. In 2024, private label products accounted for close to one third of all CPG sales in Europe, representing a major share of the market.

Government Initiatives

1. Single-Use Plastics Directive: The European Union's Single-Use Plastics Directive, implemented in 2021, continues to impact the CPG market in 2024. The single-use plastic items restricted from being placed on the market from 3 July 2021 include cotton bud sticks, cutlery, plates, straws, beverage stirrers, balloon sticks, and expanded polystyrene food and beverage containers. The transposition of the extended producer responsibility (EPR) provisions must be operational by 31 December 2024 in most EU countries.

2. Farm to Fork Strategy: The European Union's Farm to Fork Strategy, part of the Green Deal, aims to create a sustainable food system by promoting organic farming, reducing food waste, and encouraging healthy diets. In 2024, the strategy led to an increase in organic farming in Europe, contributing to the growth of the organic CPG market. The strategy also emphasizes reducing food waste, with the European Union setting a target to halve food waste by 2030.

Europe Consumer Packaged Goods (CPG) Market Future Outlook

The European CPG market is expected to continue its growth. Factors such as technological advancements in packaging, increasing health consciousness among consumers, and the expansion of digital retail channels are anticipated to drive this growth. Furthermore, sustainability will play a crucial role in shaping the future of the market, with consumers increasingly seeking environmentally friendly products.

Future Trends

1. Expansion of Digital and Omnichannel Retail: The digital transformation of the market is expected to accelerate over the next five years, with a focus on expanding digital and omnichannel retail capabilities, driven by advancements in digital marketing, data analytics, and logistics. Companies will invest in enhancing their online presence, developing personalized marketing campaigns, and optimizing their supply chains to meet the growing demand for online shopping.

2. Adoption of Smart Packaging Technologies: The adoption of smart packaging technologies is expected to grow over the next five years, transforming the market. Smart packaging solutions, such as QR codes, RFID tags, and interactive labels, will enhance the consumer experience by providing information on product origin, ingredients, and sustainability.
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