Overall CPG growth across all categories is an almost zero sum game within the US. Why almost zero-sum game? Data from the US Census bureau shows that resident population growth rates and household growth rates are less than 1% a year. If you analyze the pre-covid and now also the 2024 outlooks for the largest CPG category players you will notice that the US is going back to the "old" revenue growth model of low single digit annual price increases that a) mitigates stagnant or low volume growth and that b) has a larger impact on gross and contribution profitability (than an equivalent increase in volume). Shoppers and consumers as a whole are not going to suddenly consume and use 10 to 15% more CPG products each year. For emerging CPG brands and for large CPG brands, that level of double digit volume growth is going to mostly be sourced by stealing consumption/usage share from competitors within the category and more importantly from stealing usage and consumption from other categories. Or by creating a new category that does the same. Unfortunately, within the US, we also see income level bifurcation and the growing polarity between premiumization and affordability. So there is a natural tendency by many emerging CPG brand founders to "follow the money" and launch in the premiumization price-tier of a category. Few are, however, able to innovate and painstakingly build a brand that is both premium-priced and that can capture mass-market growth from large cohorts of shoppers and consumers who have switched from other brands and other categories. John Foraker has shown the industry how it can be done with emerging CPG brands. Twice. Contrarian Note 1: There are too many foo-foo brands chasing hyper-fragmented categories that are too small to ever scale, given quick growth and exit expectations of founders. Contrarian Note 2: An emerging CPG brand that can innovate a "good enough" brand-product-solution for a large underserved "affordability" segment will create category disruption in its true sense. #CPGbrands #EmergingBrands #innovation #disruption
This remains one of the best market opportunity & demand side times for innovative premium #cpg #emergingbrands in memory. That gets lost far too often in the noise of the equally true difficult funding environment which persists for earliest stage brands. https://lnkd.in/gZpknWxD
