CPG Market To See Innovation, More Advertising

The trend started during the recession. More consumers began purchasing private label products from their favorite grocery store. Some of these stores note that their private label products now account for between 19%-26% of total sales. With this trend firmly entrenched, marketing strategies are changing.

Rabobank analysts say the private label trend will likely allow store brands to capture up to 30% of the consumer packaged goods (CPG) market within the next few years. This growth will come from more innovation in product types and packaging. For example, stores will be introducing new offerings in the packaged meat and snack categories. To boost sales, they’ll also advertise to further develop their brands.

Well-​known brand operators will be competing to regain market share according to Rabobank. But they can't compete on price. One strategy will be to innovate with new food categories. For many years, new products have simply been extensions of existing lines.  Nicholas Fereday, Rabobank analyst, warns that marketers must introduce “new game-​changing food products and enter new categories”. By thinking like Apple, CPG firms can energize the sales of branded products.

An alternate strategy will involve forging stronger ties with their retail partners and helping to develop private label brands. In both cases, it is likely that additional advertising will play a key role in the increasingly competitive CPG market.

[Source: Retailer Food Brands. Rabobank​.com. 11 Oct. 2012. Web. 25 Oct. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.