Are new brands getting squeezed out of the packaged goods markets? It seems like every day there’s some new merger to further consolidate the production, distribution and retail channels. The markets are getting monopolized by a few big players with hundreds of brands. Access to market is getting tougher and tougher! There’s less shelf space and more retailer-owned control brands.
So why do we think the time has never been better to start a new CPG brand?
1. Corporate Compliance.
Due to increasing litigation in the marketplace, the Big Boys who have a lot to lose have given tremendous power to their legal departments. “Everything has to go through compliance” is the refrain that echoes through their halls. For all its good intentions, this trend dampens risk taking and creativity at the corporate level.
New ideas tend to be copies of “safe,” pre-existing, already proven ones. Brands begin to look like each other. And nobody wants to do the missionary work necessary to actually lead (or disrupt) the market. As we like to say, “Everybody wants to milk the cow, but nobody wants to raise the calf!”
Small entrepreneurs have an advantage here. They have a lot less to lose, are more agile, and can put out more relative energy to make their new brand stick. These new brand builders can identify and access a few early adopters to help them refine their plans before they pitch the broader market. They simply have more energy, freedom and drive. They can quickly implement new ideas and are not bogged down by legal or compliance.
2. Shifting Demand.
Achieving market position is not a vaccination. It is an ongoing art to hit an ever-moving target. The shifts may be so subtle, most companies don’t see them coming until someone else is taking their former share.
Simple things, like what the market calls a particular product, how it’s used, or what product is used with it, can go undetected for years. With their myopic focus on the numbers and market share, the Big Boys may miss the changes slowly eroding the relevancy of their own brands.
The new, independent brand builder can turn on a dime. They slip through these cracks and address an existing market in a new, more relevant way, drawing off those formerly unaddressed corporate customers. Or they can disrupt the market altogether by offering entirely new products, demand for which is invisible to the Big Boys because there’s no history …yet!
3. Hungry Giants.
Part of the advantage of the big holding companies is their ability to consolidate production and supply. But this also puts a demand on them to get a return on their investment in those assets. They need “grist for the mill.” If their own brands are not keeping the wheels spinning, they have to go out and get some from the outside.
As time goes on and the market keeps shifting away from their brands, they must acquire new ones.
Entrepreneurs can free themselves from huge investments in equipment and labor by using sub-jobbers and already established production facilities to get the work they need done.
In today’s marketplace, you’re only as good as your latest hot brand, and the Big Boys know it!
The new brands that have redefined the market are the most valuable to them. Those new independent brands have already taken the risk, proven the market, and now can be scaled as only the Big Boys can scale them. They have to acquire those brands before their other big competitors do.
Shelf space is limited and valuable. The increasing competition from online sales has reduced development of new retail space. Now there’s is even less shelf to fight over. The Big Boys must acquire new brands to stay current. They must command that limited space in bricks-and-mortar retail where 90% of the CPG business is still happening.
So, the very forces that are reducing your access to market are creating new opportunities. Now is the time to carefully build and sell your new brand! For more information on how to accomplish this, check out Shelf Smarts.
