UK Consumer Packaged Goods Market Outlook (2025–2026)

The UK Consumer Packaged Goods (CPG) market is undergoing a transformative shift as it adapts to consumer expectations, digital advancements, and sustainability demands. With robust growth projected in packaging innovation, private-label expansion, and e-commerce enablement, the CPG sector is one of the strongest segments of the UK economy.

Key Drivers of Growth

1. Sustainability and Eco-Friendly Packaging

Consumer awareness and government regulations are rapidly shifting packaging preferences toward eco-friendly, biodegradable, and recyclable formats. Refillable and flexible packaging segments are expected to show the strongest growth through 2026.

2. Private Label Expansion

Retailers like Aldi, Lidl, and Tesco have aggressively expanded their private-label offerings, which offer value to consumers facing inflation. Private labels now account for 48.2% of UK supermarket sales in early 2025 and continue to rise.

3. E-commerce and Digitization

CPG companies in the UK have rapidly digitized their supply chains and marketing platforms. Online grocery and personal care purchases have grown at double-digit rates, with online sales expected to make up 32% of total UK CPG sales by 2026.

Inflation and Consumer Trends

In May 2025, UK grocery inflation rose to 4.1%, the highest rate in over 15 months. This has led to:

  • Increased private-label consumption

  • Higher product churn rates

  • More focus on value-based SKUs

Retailers are employing shrinkflation and price-pack architecture to manage profitability while maintaining consumer trust.

Major Companies and Strategic Shifts

Key players like Unilever, P&G, PepsiCo, Nestlé, and Reckitt are focusing on:

  • Digital personalization using AI

  • Zero-waste and circular packaging systems

  • Strategic price restructuring for inflation mitigation

In 2024, Unilever saw a 1.9% increase in turnover, with categories like skincare and premium foods outperforming.

Forecast for 2026

By 2026, the UK CPG sector is projected to reach USD 345–360 billion, led by sustainable innovations, private-label strength, and tech-driven retail strategies.

Key 2026 predictions:

  • E-commerce penetration: >35% of total CPG sales

  • Sustainable packaging share: >28% of total packaging

  • Private-label growth: 8–10% YoY in grocery segments

  • AI-driven marketing: mainstream across Tier-1 brands

Strategic Recommendations

To thrive in this evolving environment, CPG companies should:

  • Adopt sustainable packaging formats (refillable, recyclable, biodegradable)

  • Leverage AI and consumer analytics for faster product launches and better targeting

  • Invest in value-tier and premium-tier innovation simultaneously to serve both inflation-hit and premium-seeking consumers

Sources

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