Bernstein: ‘How the mighty in CPG have fallen’

In its latest Weekend Consumer Blast (‘How the mighty in CPG have fallen - the battle against smaller brands and private label’​), Bernstein analysts argue that many big brands in the food and beverage space are fighting to “remain relevant​,” although the #1 brands in petcare and home and personal care are faring better.

“We analyzed ~100 CPG categories, evaluating the market share performance from 2015 to 2016 for each of the #1 through #5 brands, vs. the remaining ‘smaller brands’ and private label. ​

“We found that on average, the #1 brand has actually seen greater share erosion compared to #2 through #5 brands, while smaller brands have been the key beneficiary, clearly posing a threat to our coverage universe. Our beverages and snacks companies have the most exposure to categories in which smaller brands are gaining share.​

“Meanwhile, branded players have by and large been able to keep private label at bay.”​

However, “not captured in this analysis is the shift from the broader category to fresher perimeter of store alternatives, in which private label has a stronger presence and also poses a threat​,” note the analysts.

“We do see a lot of little competitors coming into the marketplace with interesting new beverage offerings, some of which stick, many of them don't stick.​

So what we have to do is create an entity within our company that does smaller brands, but smaller brands that stick and grow into medium size and bigger brands.”​

Indra Nooyi, PepsiCo Q3 earnings call, October 4, 2017​