“Industry 4.0” is another term for what is being called thefourth industrial revolution. Why is it the fourth? The first industrial revolution involved using steam and water power to mechanize means of production. The second industrial revolution harnessed electricity to speed mass production, and the third used electronics and information technology to automate production.
Several new technologies will coalesce to usher in the fourth industrial revolution.
The fourth industrial revolution, or Industry 4.0, builds upon the third and involves bringing together many disparate technologies and ultimately blurring lines amongst the physical, biological, and digital worlds. Just as with previous iterations of the industrial revolution, Industry 4.0 is changing how ordinary people live their everyday lives and how they select and consume the products they use.
Consumption Patterns Are Changing as a Result of Industry 4.0
Technologies like robotics, 3D printing, advanced materials, and artificial intelligence are already disrupting industry. As a result, behaviors and aspirations change, as do consumption patterns. In fact, the very nature of “consumption” is changing. Not that long ago, people “consumed” music by buying CDs, but now they dispense with media altogether and consume music through services like Spotify and iTunes. The rapid rise of e-commerce is another disruptor of consumer patterns, as is growth in “subscription” consumption models.
CPG Trends Adapt to Changing Consumption Patterns
As what and how people consume change, production systems and consumer packaged goods also change. What exactly is a store today? How do people obtain ordinary items like food, household products, and clothing compared to how they obtained them a decade ago? A global shift in logistics has occurred because of the rise of completely new sales channels and manufacturing methods. Agility, “smart” production, and interconnectivity are all driving CPG trends from the design and manufacturing end of things as well as from the consumer’s perspective.
Sustainability and Functionality Are Watchwords for Products and Packaging
Sustainability can no longer be an afterthought for any brand.
There is simply no getting around the importance ofsustainabilityin the modern business model. People want their purchases to be ethically sourced, environmentally sustainable, and socially responsible, and with the world of information in the palm of their hands almost 24/7, brands that succeed have to be transparent about how their products are sourced, made, and packaged. In fact, sustainability is a major priority among the burgeoning Millennial population, which is gaining unprecedented buying power with each passing day.
How CPG Brands Can Address Industry 4.0 CPG Trends
There is no single prescription for brands to make the most of Industry 4.0, but there areseveral clear trends. For one, reconsidering packaging in terms of both context and “friction” (the burden packaging puts on the consumer or fulfillment provider) will be necessary across many industries. For another, embracing collaboration allows brands to respond faster to changes in CPG trends rather than ignoring what is going on in the world.
Data acquisition and analysis is another growing necessity due to Industry 4.0, as brands learn to listen to consumers and respond to them quickly. Analytics may cover any and every aspect of industry from the supply chain to packaging to consumer sentiment after the sale. As a result, a new breed of professionals will be needed who can understand the fundamentals of today’s CPG trends while keeping an eye on the data to predict future trends.
The one unequivocal statement that can be made about success during the fourth industrial revolution is that brands simply cannot be afraid of change. Organizational inertia, whether that refers to infrastructure, manufacturing, or entrenched attitudes, is going to be deadly to some brands, including some that have been around seemingly forever. CPG trends have always been an issue for brands, but never before have technology and the speed of information transfer had such a profound effect as they are having now, and will have in coming years.
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