Our consumer packaged goods (CPG) sector experts anticipate a rise in ‘purposeful spending’ during 2025, with consumers paying more for features that matter to them. This is bringing different perspectives to the innovation of functional, formulated products. Brands with food and beverage, personal care, and home hygiene portfolios are looking to create compelling new propositions.

Let’s look at how three key drivers of CPG innovation – health and wellness, sustainability, and experience/convenience – are evolving in line with this trend.

1. Consumer health and wellness will align more closely with medical solutions

In the food and beverage sector, GLP-1 receptor agonists (medication originally developed to target type 2 diabetes), which suppress appetite and reduce cravings for hyperpalatable foods and alcohol, are making waves. Analysts at Morgan Stanley expect the number of consumers taking these drugs to increase 15-fold by 2030. So, it’s no surprise that food and beverage leaders are thinking carefully about the future of packaged foods, soft drinks, and alcoholic beverages.

Nestle has responded with the launch of its Vital Pursuit brand of ready meals for the US market. Designed to provide dietary support to GLP-1 users, the meals are described as ‘thoughtfully portioned’, high in protein, and containing essential nutrients. In an interview with CNBC, Nestle’s CEO Mark Schneider explained that taking the drugs results in consumers’ nutritional needs ‘shifting’. He suggests that this is an opportunity to “bring science to the table” and develop companion products to address specific needs.

More innovation along these lines is likely through 2025. However, some companies may approach the opportunity differently, for example by focusing innovation, promotion, and advertising on specific product lines over others. Similarly, increased awareness of non-communicable diseases with dietary links could pave the way for products tailored for consumers with different nutrition needs.

Another area of interest for food and beverage is the extension of functional nutrition into mental and physical health. As an example, Tropicana + Fuel for Thought has vitamins B3 and B6, which claim to contribute to the psychological function or “help keep focus”. We believe this emerging trend could become an innovation hotspot for 2025 and beyond.

We anticipate the consumer durables industry will also strongly focus on health and wellness, as consumers increasingly seek products that cater to their physical and mental well-being and  requirements.

2. Product sustainability will extend further into ethics and authenticity

CPG companies are increasingly thinking about how consumers engage with sustainability on an emotive level. Sustainability achievements linked to energy consumption and packaging are of critical importance and still demand focused effort, yet they don’t necessarily add to the product experience. On the other hand, framing sustainability in a way that underlines authenticity and ethical sourcing can translate into meaningful, persuasive propositions.

Innovations rooted in transparency of raw material sourcing, or production methods which contribute to an aspirational sustainability story, are likely to perform well in this context. It’s about improving products’ wider impact on people and planet, then conveying that message to consumers in an authentic way.

This need to think bigger when innovating around sustainability aligns with the sentiment of We expect innovation teams across all formulated CPG categories to place greater emphasis on this in the year ahead.

 3. User experience and convenience will win back spend

The cost-of-living crisis has seen many national CPG brands lose product market share to distributors’ own brands. Consumers have become more discerning in purchase decisions, meaning products offering demonstrable value are more likely to secure their spend. Quality and performance are key factors here: if your product is more expensive than rival products the cost must be justifiable.

As national brand owners of everyday items look to win customers back, maximising convenience will be a goal for many. This might be seen in innovations for packaging and dispense mechanisms, or value-adding interplay between physical products and digital platforms. The prevalence of e-commerce is another influential factor here, as brands look for ways to earn digital standouts.

While consumers’ day-to-day cost-saving habits have become well embedded, there are signs that spend on non-essentials is going up. In the UK, this trend has been reflected in Barclays’ Consumer Spending Reports for 2024. Recent reports have shown that while consumers look to get more value from their weekly shop or reduce how much they spend, many continue to buy treats and luxury products even when trying to budget. Priorities include sweet treats and beauty products. Going into 2025, we expect innovation teams to focus on new ways of enhancing consumer experiences linked to treats and occasions.

Wider macro trends will impact innovation too

We’re entering 2025 with high levels of geopolitical unrest and uncertainty, which will undoubtedly affect confidence. The ability to adapt and pivot innovation without losing sight of goals will be critical if supply chains are affected or new trade barriers and regulations emerge.

Technological developments also require close monitoring. As mentioned above, the popularity of e-commerce continues and it now accounts for around a fifth of global retail sales. Meanwhile, artificial intelligence (AI) is still attracting headlines, but corporations are beginning to understand its limitations as well as the niche applications where it can add value. It’s important to keep up-to-date with progress in these areas so opportunities and challenges can be navigated strategically.

All in all, 2025 looks set to be a year of purpose-led innovation for formulated CPG products. Identifying what matters most to consumers and then delivering on that in an authentic way with quality products will be key. Sagentia Innovation is here to support CPG businesses on that journey, across core products, packaging, or manufacturing processes. Find out more about our services here.