More than $17 billion in consumer packaged goods sales has shifted from large companies to smaller players since 2013, according to a new report from IRI. The Internet, e-commerce and social media have leveled the playing field, allowing upstart brands to reach consumers in ways that were previously impossible and upend an industry where size and brand pedigree had long ruled.
For the 52 weeks ended August 12, 2018, IRI's breakdown of the industry $686 billion in total sales by company size was: 55.5% from large, 18.7% medium-sized, 15% small and 10.7% extra small entities. In 2013, when revenues totaled $630 billion, the respective breakdown was 57.7%, 18.9%, 13.9% and 9.6%, with CPG revenue totaling $630 billion.
Titled, “The Next Frontier: Leveraging Artificial Intelligence and Unstructured Metrics to Identify CPG Growth Pockets and Outperforming Brands,” IRI's report outlines how CPG companies can gain competitive advantage in a market where many large players have lost share. Using real companies to illustrate strategies and results, the report makes recommendations on where companies should focus, which competitors to buy or draw inspiration from, and how to use non-traditional, unstructured metrics and AI to predict future growth areas.
“The market has been struggling in recent years, but pockets of growth are there and ripe for the taking,” said Connie Chang, principal of IRI Growth Consulting. “Tapping into them appropriately and effectively is key to future success. With experience and precision, CPG companies can identify those growth opportunities and develop innovative strategies that will bring differentiated competitive advantages.”
“Given the current climate where CPG manufacturers are struggling to expand, identifying attractive, sustainable pockets of growth and outperforming brands can be a game changer,” added Jamil Satchu, partner and practice leader at IRI Growth Consulting,
The three key actions discussed in the report are:
1. Where to Play Now: Using AI and machine learning to identify winning companies, brands and products in areas of the industry experiencing ongoing growth.
2. Where to Play in the Future: Using unstructured metrics to help predict the next set of top performers. This can expand a company’s acquisition lineup to include potential candidates that have not yet exploded in measured channels.
3. Prioritizing Between Present and Future: By understanding current and future growth pockets, CPGs can focus on creating a targeted acquisition roster.
IRI was was named a top 10 provider of Demand Data Analytics solutions in CGT's 2018 Readers' Choice Survey.
To download the report, click on the the link below.