How Will the 2016 Election Impact CPG, Beverage Companies?

cpg storeAs people throughout the United States and around the world continue to digest November’s election results, businesses and organizations across nearly all industries are looking at how upcoming changes could impact consumer sentiment. This is certainly true for consumer packaged goods (CPG) and beverage and spirits companies.

 

For these types of businesses especially, consumer outlook is critically important. Even before the election took place, many economists were predicting a softening in consumer spending as we reached late 2016—no matter who won. In fact, a majority of consumers surveyed last summer said they believed their households’ financial health would be worse off whether under Donald Trump or Hillary Clinton.

 

This marked a shift in what had been a historically positive trend of U.S. consumers feeling optimistic about the future. It appears as if the negativity of this election in particular—and perhaps the unpopularity of the two leading candidates—had a strong effect on consumers’ outlook.

 

On the other hand, consumer sentiment in the United States did rebound in early November after hitting a lull in October. The final pre-election survey found that consumers overall felt better about the economy in the days leading up to November 8. We’ll have to wait until the end of the month to know for sure if the election results impacted that feeling in any significant way.

 

Consumers may shift spending habits

 

How does this all play out in practical terms? For one, more than 60 percent of consumers say they will be creating shopping lists before they head out to stores in the near future. For CPG and beverage/spirits makers, this means that people may be spending less on discretionary items to save money and prepare for what they see as possible rocky financial times ahead.

 

To that end, we may see a significant trend toward more consumers holding off on buying items they don’t need immediately and waiting until they go on sale. Some may be willing to try new, less expensive brands to reduce costs, while others may gravitate toward private label items. Now, more than ever, it is important to engage with consumers to share brand value beyond simply price.

 

Although consumer confidence may be questionable at this time, economists still predict that consumers will keep spending on certain indulgences from time to time. And, confidence among Millennials (individuals between the ages of 18 and 34) has been notably higher than we are seeing in older adults—at least in surveys taken before the election. Studies have shown that consumer confidence in a brand increases with one-on-one engagement.

 

During this time of seemingly endless turmoil, it can be difficult for CPG and beverage/spirits companies to effectively plan for the road ahead. By keeping an eye on consumer confidence metrics and industry trends, brands can determine the best ways to reach their target audience—whether it’s engaging through experiential marketing and social media, or through special deals, loyalty programs or a wide range of other tactics.

 

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