Over the past decade, CPG markets have experienced remarkable diversification and growth. This has created new opportunities, but also new challenges. On one hand, manufacturers have more avenues to launch new products than ever before. On the other, competition is higher than ever — making it that much harder to stand out on the shelf.
A few short years ago, the refrigerated beverages section of any supermarket would provide a relatively standard chilled drink selection. Today, our growing natural food categories have created a plethora of options — cold brews, kombucha, bone broths, immunity shots, etc. And regardless of what Greg Focker or the FDA says, just about anything can be “milked” nowadays!
Unfortunately for manufacturers, the available shelf space for this expanded selection refrigerated beverages hasn’t grown along with the category. That forces retailers to become far more selective about what goes into each square foot of shelving. As this competition increases, eventually, someone will be kicked off the shelf.
CPG manufacturers rely on multiple strategies to mitigate this issue, some of which we’ve explored in previous blog posts. Now, we’ll focus on the factors that help this new crop of alternative and competing products stand out in crowded shelves, noting how these strategies differ between emerging and established CPG brands.
For emerging brands and CPG startups, the existing rules for data-driven sales presentations still apply. That being said, velocity and brand stories take on enhanced importance in a crowded product category.
Emerging brands can spin a data-driven story in several ways, but high velocity usually makes a big impression. Anything that highlights product movement — especially movement that grows on an annual basis — will almost always get a retailer’s attention.
Let’s say you’re trying to stock an alternative cereal product on a retail shelf. Let’s also assume your brand only controls 5% of shelf space with another retailer, while established vendors control 80%. But if your velocity is 40% while the competition’s is below 2%, that’s a great sign of a healthy, growing brand. It even makes for a great data-driven brand story — “I’m small, but I’m growing faster than everyone else.”
Actually achieving this sales velocity is a challenge, but it’s not impossible. Even small manufacturers can become $10 million companies using direct-to-consumer markets such as Amazon or Facebook. With a strong marketing team, it’s possible to jumpstart your business without a storefront presence. Once you’ve accomplished this, your online sales will provide enough data for engaging sales presentations to more traditional brick and mortar retail channels. Just don’t forget to conduct a competitive analysis as well, because retailers still want to know what your product brings to categories as a whole.
Retailers are pragmatists by nature. They would much rather have data-driven stories than heartwarming tales about a grandmother’s chili recipe that brought families together. Yet brand stories still have value. Products that represent transparency, quality, or sustainable practices can resonate with today’s consumers to generate growth.
When presented effectively, brand stories can catch consumer attention when all else fails. Branded messaging might explore narratives diversity and locality — women-, minority-, or family-owned businesses. They can also highlight legitimate distribution voids the brand will address, like allergy-free foods.
It’s difficult to measure brand stories from a data perspective, but they can attract enough customers for repeat purchases — which is when conventional grocers start to take notice. Much like your grandmother’s chili, sometimes the hottest story does win.
Velocity and brand stories are important to established manufacturers, but the associated strategies are quite different compared to emerging brands. Consumers are already familiar with established brands. In addition to nostalgia and loyalty, these name brand companies also have more money to invest in marketing, trade spend, and strong relationships with their retailers. If you’re among the Kelloggs, Pepsis, or General Mills of the world, you will probably always have space on store shelves.
But that doesn’t mean established brands don’t get complacent. Emerging brands have the advantage of being lean, nimble, and able to attack (or start) new trends faster.
A few short years ago, major brands were slow to respond to demand for non-dairy alternative to dairy products. As a result, smaller, regional boutique brands have now pretty much cornered the market on products like alternative yogurt, milk, and cheese. Large CPG companies have to overcome more inertia when launching new products, and sometimes fall victim to being trend followers — instead of trend setters. Once that happens, they too can be at risk of losing customers, and the task of staying on shelf in the coveted refrigerated set becomes increasingly challenging.
So what can be done? First of all, established brands must innovate, seek out new opportunities, and take risks, and quickly! These strategies are easier for agile startups, but still allow companies of all sizes to capitalize on emerging trends. Second, leverage data opportunities using analysts and data visualization software like Bedrock — because if you don’t, you can be absolutely certain the competition will in order to continue chipping away at your legacy dominance.