There is something happening in CPG as mass brands realize that the success of small brands is the new normal. It has become obvious that many of these little guys who seemed like a passing fad, are here to stay. And if they’re not, there are 10 more brands waiting to take their place. In the condiments, dressings and marinades category alone there are literally thousands of unique brands all fighting for the attention of their consumers. Smaller brands are now real forces that need to be acknowledged, dealt with, and maybe even imitated.
These little guys are leading because they are able to make a stronger connection to modern consumers. Why? Because of their “on-trend” positioning (authenticity, transparency, good ingredients and integrity). Examples include Annie’s, Amy’s, Organic Valley, KeVita, Ancient Harvest, and Kind Bar. Brands like this continue to see billions of dollars in sales growth.
And for the opposite reasons, Mass Brands aren’t faring as well. Not only is Kraft-Heinz, the umbrella company which includes Oscar Meyer, Plantar’s, Philadelphia Cream Cheese, and Jell-O not growing, they have actually seen an almost 2% loss in the second quarter. This storyline is increasingly common.
Smaller Brands do the Details Better
When it comes to personalization, the little guys get it. They innately feel more personal because they’re steeped in values and product offerings that feel right to today’s consumers. These smaller brands also offer extreme customization and are able to implement that faster. For example, Bear Naked Granola offers consumers the ability to customize their granola with over 50 chef-inspired ingredients, then have it shipped to their door. Because consumers are connected directly to the brand, they are automatically in a relationship.
Mass Brands are trying anything and everything to catch up
In reaction to success of these small products and brands, we’re witnessing Mass Brands make acquisition after acquisition to boost sales, improve their reputation to consumers, and leverage the smaller brands’ ability to do certain things well.
Sources reported that Kellogg purchased “RXBAR, a niche protein bar company, for $600 million, in conjunction with the company’s pivot away from sugary and processed foods which continue to experience declining sales.” This was a smart move for Kellogg and I’ll tell you why.
RXBAR is a huge success because their natural ingredients deliver the transparency consumers have asked for. I mean they literally lay out the 5 ingredients (yes there are always only 5) on the front of the packaging.
And then there’s Unilever. They purchased the highly successful Dollar Shave Club with the goal of leveraging their Direct-to-Consumer (DTC) capabilities and provide consumers a unique, personalized experience – in contrast to their original selling model of going through retailers like Walmart and Target.
The tables have turned and they’re not turning back.
Small brands have created a revolution in both the food and CPG industry. Mass Brands are going to have to quickly evolve and change perceptions or acquire before the little guys aren’t so little anymore.
If you are working with a brand that’s looking to be acquired or if you are a Mass Brand that needs some catching up, let’s talk. I can help.