Consulting firm offers toolbox to help reinvigorate flagging big CPG brands

By Hank Schultz

- Last updated on GMT

Consulting firm offers toolbox to help reinvigorate flagging big CPG brands

Related tags Brand Term

Despite their natural advantages of name recognition and sales momentum, big brands have struggled of late. Consulting firm Seurat Group has put together a toolbox to help companies reinvigorate these key contributors.

It’s often remarked in the food industry that innovation comes from the smallest players.  It’s a natural aspect of the size of these companies; decisions can be taken by a small cadre of key employees and the limited market penetration means results—good or bad—are apparently quickly.  It’s far easier for a small, innovative brand to adhere to one of the mantras of modern business—fail fast.

Big brands, by comparison, are the aircraft carriers to the PT boats of the niche offerings. They’re much harder to turn and they acquire huge momentum, and that momentum can continue long after the primary impetus has waned. In other words, it takes longer to tell that all is not right with the ship, and longer to remedy that situation. And it has become apparent that consumers are increasingly opting to take a ride on the PT boat.

These effects have made themselves apparent in the years following the financial crisis. A recent report found that over the past year most of the top 100 CPG brands underperformed the markets they competed in​. The average decline in sales for these brands, which were measured in a variety of categories such as baby foods, grocery, cereals and dairy, was -4.4%; even the minority of brands whose sales went up trailed the overall increase in the categories in which they compete.

How to remedy the situation

Some attempts have been made to keep those aircraft carriers in commission.  A number of big brands have started to make a shift toward “natural” ingredients.  While it’s unclear if that will plump up flagging sales in the short term, market experts think it will at least help heal the breach of trust with consumers​ that has grown over the past 15 years or so.

Seurat Group has a more fundamental recommendation presented in a new study the group has released. Changes to packaging or new names on the ingredient deck are all fine and good, but the underlying orders under which the fleet sails must be altered in order to arrive at a new destination.

And the effort is of critical importance.  While the innovation, the “coolness” factor, resides with startup and niche brands, most of the money still comes from the big brands, even if they are slowing.  The paper notes that 70% of the sales of the top five CPG companies come from big brands.

“The most successful big brands have been able to drive consistent financial and brand performance, even in the face of consumer headwinds. Oreo, for example, drove absolute dollar sales growth of 26.9% from 2011 to 2014, despite its resistance to catering to health or gluten-free trends.2 Managed correctly, big brands can still be an engine for growth for CPG companies for decades to come,”​ the study says.

Called the Big Brand Playbook​, the document has five key recommendations to reinvigorate big brands. They are:

1. Keep your brand timeless and timely

2. Put your consumers in the driver’s seat

3. Be omnipresent through retail partnerships

4. Compete with an aspirational consideration set

5. Commit for the long term.

Case studies

In keeping brands timely, the authors note that a number of legacy brands, much as Oreo did, have found success by identifying, refocusing on and remaining true to their key value propositions. Starbucks, for example, had lost momentum by starting to emphasize merchandise and non-coffee sales, all of which detracted from the core experience—the customer’s one-on-one interaction withe barista. 

“In a massive turnaround, the company focused solely on the coffee experience, divesting itself from noncore activities like book and music sales and investing in barista training,”​ the study notes.  Since making that shift in 2008, the company has seen 22 straight quarters of growth.

While it is an often-heard soundbite—put the customer first—it’s harder to do in practice.  But the study notes that successful big brands look to their consumers as the source of their innovation rather than paying attention to market trends. Examples cited are Gatorade’s new product offerings, developed through interaction with athletes, one of the brand’s core consumer constituencies, and the new Frito Lay potato chip flavors, which arose from a crowdsourcing effort on the part of the company among its consumers.

Among retail partnerships, the study cites in particular the success Heinz has had in driving its food service penetration.  New ketchup flavors, such as sriracha or jalapeño, have appeared first in food service and have helped the company both build brand awareness and assess consumer reaction before the successful launch of those flavors on the shelf.

Commitment to quality, long term growth

To drive success of big brands, the underlying quality message cannot be compromised, the study says.  Careful attention to the quality of ingredients as well as communicating those attributes to consumers can help a big brand compete within the halo of quality put out by exclusive brands.  Victoria’s Secret is given as an example. The company’s lingerie successfully competes and is compared to brands whose products cost an order of magnitude more.

Long term growth is one of the advantages a big brand can bring to the table, the study noted.  This is a tricky proposition in public companies tied to short term results, but successful strategies that look toward distant horizons have been shown to be winners.  Among the examples cited in the study is Procter & Gamble’s Dove brand, which has had a multi-year “Campaign for Real Beauty” marketing message.

“ While seemingly tendentiously linked to sales of bar soap, the brand has nearly doubled in size since the campaign was inaugurated, growing to $4B in sales in 2014 from $2.5B in 2004,” ​the study notes.

Traditional brand marketing still needs to be part of a big brand’s strategy, the study notes.  But innovation within the brand’s strategy is still possible and indeed necessary to win back and keep consumers who have shown an increasing propensity to opt for new and unusual offerings.

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