By Krishnakumar (KK) Davey
Every year, IRI and the Boston Consulting Group (BCG) rank more than 400 U.S. CPG manufacturers on three critical growth metrics: dollar sales growth, volume sales growth and market share gain. These individual metrics are generally insufficient on their own to measure growth but combining them provides a more complete picture of which companies are leading performance in the industry. Below is a list of the top CPG companies across size tiers.
Overcoming Distribution Losses with Velocity Gains
The top 10 large growth leaders continued to win based on velocity, even though they were losing overall on distribution. The top 15 midsize growth leaders won via a combination of distribution and velocity gains, and the top small growth leaders won mainly based on distribution. Growth leaders increased distribution via over-the-counter conversions, partnerships and channel/national plays, and smaller companies captured the majority of share from large companies.
Premiumization, Mindfulness and Convenience
Premium players continued to win this year as consumers’ economic outlook improved. In beverages, consumers traded up to natural premium refreshments such as San Pellegrino and Smart Water, contributing to their significant growth, while traditional juice sales decreased. Consumers also sought restaurant quality food in the grocery store aisles.
Similarly, the mindful snacking movement had consumers seeking “free from” products to limit their intake of harmful chemicals and purchasing portable, functional snacks that promote health and wellness – and they were willing to pay more for them. Companies that focused on simplicity in packaging and ingredients, such as Bai (offering five-calorie beverages with no artificial sweeteners), saw great success while consumers’ demand for protein, which increased from 39 percent in 2014 to 53 percent in 2015, also created an opportunity for companies to launch “better for you” options. Even candy giant Hershey’s is now planning a “SoFit” brand based around fruit and protein-filled healthy snacks.
The convenience channel continued its reign over other channels in 2015 with 6.9 percent sales growth versus 3.1 percent for all outlets. This helped contribute to many companies’ “growth leader” status. In fact, manufacturers of product categories that are top-sellers in convenience stores delivered some of the strongest growth in 2015.
Making products easier to use and more convenient for consumers is an ongoing opportunity for CPG manufacturers as people’s lives grow busier. Land O’Lakes and Vita Coco increased their packaging options when they learned that multi-serve and multipack options would make consumers’ lives easier.
Ten Key Takeaways for CPG Marketers
So what does all of this mean? There are several opportunities that CPG marketers can leverage to win:
- Understand what specifically drives growth in your industry to refine your products and stretch your platforms.
- Identify key trends, such as premiumization and channel trends, that are impacting your categories in order to capture current growth opportunities and position your portfolio ahead of tailwinds.
- Leverage price pack architecture to drive your growth.
- Expand the definition of your competitive set to capture adjacent white spaces.
- Focus on category management with retailers to drive category growth and make it easy to shop your category.
- Focus on CPG fundamentals relentlessly, e.g., leverage deep consumer insights, own a consumer benefit and connect it to consumer lifestyles, and invest in distribution gains and brand building.
- Compete more like a startup, using e-commerce and digital media to tell your story to reach new audiences.
- Remember that e-commerce and millennials offer new growth opportunities for just about every CPG brand.
- Offer choices to consumers, e.g., healthy and indulgent alternatives and be transparent with them.
- Encourage your teams to be flexible, nimble and entrepreneurial!
For a copy of the Growth Leaders report, click here. And, write me at Krishnakumar.Davey@IRIworldwide.com with any questions about how IRI can help you grow.