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Tuesday, October 30, 2018

Small Brands and CPG

Is this ultimately an innovation and delivery problem?

Why haven’t CPG giants figured out what makes small brands so popular?   by Matthew Stern in Retailwire  with further expert commentary.

Titans of the consumer packaged goods industry may be in trouble as they continue to face significant competition from smaller counterparts. In fact, small CPGs are now leading the industry’s growth if not outright market share.

Since 2013, $17 billion in sales have shifted from major CPG players to small ones, according to Forbes. And the fastest growing CPG segment this year was “extra small” brands, defined as making less than $100 million per year, with growth of 4.9 percent. Large players, defined as making more than $5.5 billion per year, lagged behind with only 0.6 percent growth. There is a confluence of factors responsible for the spike in small CPG success and the waning market domination of conglomerates that once had only each other to worry about.

Direct-to-consumer e-commerce has allowed customers to discover and begin buying from brands they’re interested in without needing to visit grocers where big name brands may be more prominent. And with some direct-to-consumer brands, like “active” drink company Dirty Lemon Beverages, offering direct-to-consumer subscription services, the convenience creates an element of brand lock-in that may keep potential customers from trying competitors in the category.  .... "

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