- Small and mid-sized CPG companies continue to gain on larger competitors. They accounted for 46.4% of CPG sales last year, a 0.5% increase from 2014 and 2.7% increase from 2011, according to a recent report from IRI and The Boston Consulting Group. That's a shift of more than $18 billion in market share.
- The report found that small companies are achieving growth by expanding distribution of their product. In some cases, that includes better placement on retail shelves or forming distribution partnerships with larger companies.
- Industry leaders identified by this report tended to have a common portfolio strategy: high-protein foods and beverages and mindful snacks.
Among the reasons for the sustained growth of smaller food and beverage companies are lower barriers to enter the business, available capital, fragmentation of the marketplace and talent, Krishnakumar "KK" Davey, president of strategic analytics for IRI, told Food Business News.
Larger companies could be contributing to the competition by creating that large pool of available talent. Cost-cutting measures have led to consolidation on the factory floor but also among upper management, marketing teams, and other areas. Many with specialized skills want to remain in the food industry. They may then pivot and take their industry experience to an existing startup or establish one.
Or, they may create investment companies that can provide financial support for other startups, such as CAVU Venture Partners (founded by former Coca-Cola exec and Sweet Leaf Tea founder) or Sonoma Brands (launched by Krave Jerky founder).
Smaller companies are also more apt to identify and pursue new opportunities that larger companies may overlook or pass up because the potential sales in the short term may not be up to par, Davey said.