According to Catalina Data, ninety of the top 100 brands lost market share in 2017. One reason is the unprecedented increase in venture capital and private equity funding for disruptive new products and brands. Many of these new products are introduced on line or directly to the consumer by- passing the retail channel.
Large CPGs are being challenged by these new marketing strategies. They have responded by significantly reducing costs through plant closures, lay-offs and a reduction in capital spending. As a result the remaining workforce is tasked to do more with fewer resources. Although this provided a short term increase to profitability and stockholder value, it has the long term effect of decreasing their ability to compete effectively.
CPG growth is now coming from acquisition and the introduction of more fresh, less processed foods. The ability to get new products to market quickly through various distribution channels with reduced budgets is critical to the success of this strategy.
Co Packers, packaging machinery and material suppliers will have to become partners willing to develop innovative ways of reducing the time required to get a new product launched as well as a method that allows the new product to generate enough revenue quickly to finance the introduction. Many of the venture and private equity backed food & beverage companies are utilizing these new strategies now.