Are small brands eating big food’s lunch?
New measured channel data shows that small and extra small manufacturers and private label suppliers gained market share in 2020 as a variety of factors helped accelerate trends that began well before the novel coronavirus pandemic hit the U.S.
The consumer packaged goods industry grew 10.3 percent last year and small suppliers and private label manufacturers accounted for 51 percent of total growth, based on retailer scan data collected and analyzed by IRI. Small manufacturers gained an additional 1.1 percent of the CPG market and private labels were up 0.2 percent. Large manufacturers, which now represent 46.7 percent of the market, saw their share reduced for the fifth consecutive year.
Dr. Krishnakumar Davey, president of strategic analytics for IRI, pointed to a number of factors that developed during the pandemic and played out in favor of the smaller firms and store brands.
“Many large manufacturers were not able to meet the surge in demand caused by the COVID-19 pandemic in the second quarter when they lost most share to smaller players who seized on this opportunity. Several brands attracted a number of new buyers as in-home consumption surged,” said Dr. Davey.
Large manufacturers saw their business pick up somewhat in the third quarter of last year, but still lost share (-1.3 percent on top of a -1.9 percent drop in 2019). Their share dropped 0.8 percent in the fourth quarter versus the previous year.
Small brands even made gains in the convenience store channel, a business that has long been a big brand stronghold. The smaller companies made gains in nine out of 10 categories, with home care being the exception.
IRI found that smaller companies were able to take advantage of large companies, for example, not being able to meet increases in demand for paper products and hygiene-related items. Similar stories were repeated in edible categories, as well.
“While some of the 2020 consumption trends will continue with consumers working from home at least part-time, away-from-home consumption will continue to gain back lost share,” said Dr. Davy. “We expect smaller and mid-sized players to continue to gain share from large manufacturers.”
- IRI Finds Small, Extra-Small and Private Label CPG Manufacturers Gained Market Share in 2020 – IRI/BusinessWire
- Should grocers just say ‘no’ to big CPG brands when it comes to shelf decisions? – RetailWire
DISCUSSION QUESTIONS: Why do you think Americans have been turning to small CPG brands in greater numbers in recent years? Do you expect this to continue and how will it affect how mass merchandisers, supermarkets, warehouse clubs, convenience and dollar stores make merchandise, space and other business related decisions about the vendors they work with?