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9/13/2011
New Symphony Consulting Executive Briefing Reports Reveal Key Sales Strategies to Drive Growth in CPG Industry
Executive Briefings Highlight Strategies for Penetration-Driven Volume Growth for Mature Brands Across Food and Non-Food Segments
CHICAGO, September 13, 2011 – Tepid CPG category growth in recent years resulting from an environment of economic uncertainty has presented the industry with a daunting challenge to increase product sales and remain profitable. Inspired by those stagnant sales, Symphony Consulting just released two new Executive Briefings: “To Drive Brand Growth in Food and Beverage, Penetration is the Key” and “To Foster Brand Growth in Non-F&B, Penetration is the Key.” The research explores what drives sales for high-growth brands and, in general, when different strategies such as price/mix, penetration-driven volume or volume per buyer-driven growth work best for brands across food and non-food segments.
“Today’s marketers are clearly aware that attaining new customers is critical to long-term brand growth,” said Krishnakumar (KK) Davey, managing director, Symphony Consulting. “However, most are focused on increasing sales among their current customers. Our retrospective look at consumption patterns during the past four years shows that while large brands should focus on retaining their current customers before moving on to growth by penetration or by increasing trips per buyer, mid-sized brands need to appeal to new consumers, extending new usage occasions and expanding their distribution.”
Principal findings from the reports found that from 2007 to 2011, less than half of large food and beverage brands experienced growth in both dollar and volume; approximately the same percent experienced growth in the non-food segment. As such, penetration-driven volume growth was found to be the predominant determinant of sales increases in these brands, even in impulse categories within the food and beverage segment. Specifically, the top third, high-growth food and beverage brands grew dollar sales greater than 6.6 percent compound annual growth rate (CAGR), while the top one-third of non-food and beverage brands grew dollar sales greater than 9.0 percent CAGR.
Innovation, Sharp Communication of Benefits and Expanded Distribution Increase Penetration
Symphony Consulting’s analysis also confirmed that in the most successful companies across all CPG segments, product innovation to meet specific consumer needs represented the crux of the growth. For example, to reach new consumers, successful brands developed new SKUs with associated price premiums, created sub-brands, offered consumers a specific solution to age-old concerns, and introduced customizable products. Others significantly increased advertising investments, introduced new health-focused product lines, and emphasized potential uses of their products beyond direct consumption.
“To drive growth at the heart of any brand, companies must avoid targeting the same consumers with the same ideas hoping somehow that they will buy more of the same products,” continued Davey. “At best, this will have a brand resting on its laurels. To grow, brands need to appeal to shoppers that have never before considered their products and create new occasions when their products will improve the shopper’s quality of life.”
For high- and medium-growth brands, penetration drove volume sales growth (74 percent and 67 percent, respectively, in the non-food segment), whereas in low-growth brands, volume per buyer drove the majority of growth (55 percent in the non-food segment). When concentrating on growing through volume per buyer, brands largely employed attractive pricing, frequent promotions, and extended usage occasions in order to generate increased demand.
The reports found that most successful mature brands were also careful to retain their existing buyers, preventing any declines in their sales, in addition to gaining new customers. For smaller brands, achieving penetration was the top priority in achieving growth in a difficult market.
Marketing Investments Critical for the Future
With continued cost pressures due to commodity price increases, some manufacturers are slashing their advertising budgets to invest in in-store marketing aimed at driving more purchase occasions among existing shoppers. However, Symphony Consulting predicts that this will only have limited value for many manufacturers, particularly those in the non-impulse categories, as this research shows.
“Brands need to increase their marketing investments to sharpen their value propositions and attract new buyers. This will be hard to do, more so because of the continuing competitive retail landscape; retailers are demanding more support from manufacturers to attract and retain shoppers,” concluded Davey.
About Symphony Consulting’s Executive Briefings
The new Executive Briefings, “To Drive Brand Growth in Food and Beverage, Penetration is the Key,” and “To Foster Brand Growth in Non-F&B, Penetration is the Key,” are available from SymphonyIRI. Symphony Consulting distributes these Executive Briefings periodically to offer senior leaders a holistic perspective on key issues affecting the CPG industry. In the past, these briefings have covered topics such as 1H2011 Food & Beverage Pricing Trends:
What Strategies Have Worked? and The U.S. Food & Beverage Market:
2010 Performance and Outlook for 2011 and 2012.
About Symphony Consulting
Symphony Consulting works with senior management at consumer packaged goods and retail companies to drive sustained, profitable growth. The group draws from industry expertise in marketing, sales, and strategy and SymphonyIRI’s granular and proprietary data, technology assets, and advanced analytics to develop actionable insights and recommendations for clients.
Its solutions help clients address complex issues in four areas:
Growth and Innovation - Refresh stagnant brands and identify attractive adjacencies for the product portfolio or high-potential consumer groups
Customer-specific Growth - Grow a category in ways that benefit both manufacturer and retailer and develop specific customer or channel strategies
Strategic Pricing - Drive higher efficiency for trade spending and fine-tune price-pack-channel architecture in order to boost profitability
Strategic Insight and Foresight - Assess marketplace shifts and emerging business opportunities in a fast, investor-oriented approach that informs strategic business decisions
Symphony consultants have worked with most of the blue-chip companies and many mid-sized companies in consumer packaged goods and retail industries across more than 100 projects. Its approach combines rigorous analysis of granular data and a deep understanding of the CPG landscape to produce actionable business recommendations that will boost growth.
About SymphonyIRI Group, Inc.
SymphonyIRI Group, formerly named Information Resources, Inc. (“IRI”), is the global leader in innovative solutions and services for driving revenue and profit growth in CPG, retail and healthcare companies. SymphonyIRI offers two families of solutions: Core IRI solutions for market measurement and Symphony Advantage solutions for enabling new growth opportunities in marketing, sales, shopper marketing and category management. SymphonyIRI solutions uniquely combine content, analytics and technology to deliver maximum impact. SymphonyIRI helps companies create, plan and execute forward-looking, shopper-centric strategies across every level of the organization. For more information, visit http://www.SymphonyIRI.com.
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SymphonyIRI Group Contacts:
John McIndoe
E-mail: John.McIndoe@SymphonyIRI.com
Phone: +1 (312) 474-3862
Pamela Njissang
E-mail: SymphonyIRI@stearnsjohnson.com
Phone: +1 (415) 397-7600
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