In its latest Weekend Consumer Blast (‘How the mighty in CPG have fallen - the battle against smaller brands and private label’), Bernstein analysts argue that many big brands in the food and beverage space are fighting to “remain relevant,” although the #1 brands in petcare and home and personal care are faring better.
“We analyzed ~100 CPG categories, evaluating the market share performance from 2015 to 2016 for each of the #1 through #5 brands, vs. the remaining ‘smaller brands’ and private label.
“We found that on average, the #1 brand has actually seen greater share erosion compared to #2 through #5 brands, while smaller brands have been the key beneficiary, clearly posing a threat to our coverage universe. Our beverages and snacks companies have the most exposure to categories in which smaller brands are gaining share.
“Meanwhile, branded players have by and large been able to keep private label at bay.”
However, “not captured in this analysis is the shift from the broader category to fresher perimeter of store alternatives, in which private label has a stronger presence and also poses a threat,” note the analysts.
“We do see a lot of little competitors coming into the marketplace with interesting new beverage offerings, some of which stick, many of them don't stick.
So what we have to do is create an entity within our company that does smaller brands, but smaller brands that stick and grow into medium size and bigger brands.”
Indra Nooyi, PepsiCo Q3 earnings call, October 4, 2017