Crossing The Chasm In CPG

There are myriad business books out there in the ether nowadays which could be very helpful for founders and retail CMs to read.

If there is only ONE book that can point us as an industry in the right direction I highly recommend reading “Crossing the Chasm” by Geoffrey A Moore.

It was originally written about tech adoption in 1991 but it is still highly relevant to the retail grocery business today almost 25 years later.

In simplest terms, only around 16% of the consumer bell curve consists of people who are "Innovators" and "Early Adopters".

These "Early Market" consumers are risk tolerant and experimental. They want innovation, excitement, and they like to be challenged. They are the ones who are setting the trends and sustaining them into mainstream adoption through a cycle which usually lasts several years.

The "Mainstream Market" which covers the other 84% of the total addressable market is much more risk averse. They want consistency, reliability, and perceived value, and are much less willing to pay a premium to experiment on something they haven't tried before.

To be clear: there isn't anything at all wrong with a CPG brand deciding NOT to move into the Mainstream. There are thousands of examples of small to midsized businesses who do very well for decades without ever becoming mainstream household names.

...But the majority of brands and their investors are looking for something bigger, eventually.

We have a sample size of over 2000 brands and several hundred retailers active on the Pod Foods platform, so we have a front row seat to this bell curve in action.

The biggest mistake we see over and over again is brands who feel pressured into trying to jump straight from “early innovation” to “Early Majority” without getting a big enough installed base of loyal “early adopters” first. They don't have escape velocity to make that leap, and they end up running out of resources.

Without that stabilized user base as a foundation, the brands aren't ready to make the leap into mainstream adoption. That user base can be cultivated DTC, in retail, or in a combination of the two.

This isn't simply a matter of scale...it's a complete cultural metamorphosis that the brands need to go through. If the early-stage innovation brand is a caterpillar, their cocoon is what gets them across the chasm, and they emerge as a butterfly ready for 10x+ exponential growth.

That doesn't mean that the "mission statement" built into the brand's core DNA needs to change, or that it needs to be diluted. It does mean the mechanics of HOW the mission is accomplish need to fundamentally change from a startup mentality to a scalable enterprise.

What works with an innovative retailer doesn't necessarily work at a mainstream retailer, and vice versa.

This same bell curve applies to retailers as much as it does to CPG brands.

This is why retailers like Erewhon, Pop Up Grocer Central Market and Berkeley Bowl Marketplace are so important, because the earliest stage brands need innovation platforms for Early Adopters to become aware of them. Then, they need to be able to scale up into progressively larger early adopter chains (usually in the natural channel) while they prepare to "cross the chasm."

Interestingly, large "conventional" retailers like Wal Mart, Kroger, Albertson's and Target have been leaning into innovation programs of their own, so they can "Catch" brands just as they cross the chasm.

Their definition of "innovation" is different than a smaller company's, but in principle they are trying to do the same thing and bring new products onto the shelves faster. This speed-to-shelf has obvious benefits to the retailers, since it forms a protective moat of differentiation around their businesses.

EVERY CPG brand needs a Growth Plan for how to “Cross the Chasm” from Early Adoption without running out of Money, or Time. More often than not, Distribution, Trade Spend, and Sales Support end up being the bottlenecks to this growth trajectory.

Early-stage brands often learn the hard way that they needed a distributor with more geographic reach, or one with more cost certainty in their pricing model.

At Pod Foods our purpose is to help brands scale nationally from early adopters into mainstream "late majority" consumers with as little friction as possible, and at the right pace, from inception (often pre-retail) to escape velocity.