GMA study separates CPG winners from the rest

September 07, 2012

Today's better-performing suppliers pursue high-growth channels and spend more on pricing and promotion technology.

This article is from the upcoming September, 2012 issue of Facts, Figures & the Future.

The nation’s top CPG performers are finding growth in the channels draining traffic from supermarkets. 

Winning brand manufacturers are three times likelier to invest in wholesale clubs, dollar stores, discount limited assortment stores and e-tailers, and this approach is paying off. “These emerging areas contributed more than 25% of total growth with winning companies achieving as much as 16% more channel growth than their category peers,” McKinsey & Company Master Expert, Consumer/Packaged Goods Practice Kari Alldredge, said upon the release of new research the consultancy conducted with Nielsen and the Grocery Manufacturers Association.

Moreover, the Winning Where It Matters: A Focused Approach to Capturing Growth study found that winning suppliers are:

  • Twice as likely to increase investments in Amazon by more than 10%.
  • 50% likelier to spend more on sales technology in the next two years.
  • Three times likelier than their competitors to focus on Hispanic consumers whose buying power is expected to surge by 50% between now and 2015. Executives at the CPG companies polled say they tailor products and marketing, and foster better in-store experiences with retailers. Their edge? They grew sales to Hispanics 2.5 percentage points more than the category average; they penetrated Hispanic households by 2.9 percentage points more.

They also aim to leverage data and advanced analytics to improve their competitive advantage. The companies are:

  • 50% likelier to use pricing diagnostics and pricing optimization tools. The study showed that pricing winners were able to raise unit prices by 1.2 percentage points more than the category average; they also gained share by growing sales almost a full percentage point ahead of their peers. Also, almost 40% of CPG winners, versus 24% of category peers, adjust prices on their top brands at least semi-annually.
  • More than 30% likelier to invest in trade promotion management and trade promotion optimization tools.
  • 50% likelier to analyze the impact of promotions on the entire category as well as on their own sales. Nearly nine out of ten (88%) conduct formal reviews of their trade investments at least quarterly, and change strategies as a result.

The better CPG performers also want to collaborate more with retailers, in initiatives that have shared accountability and targets.  They share data and ideas to develop win-win opportunities, and they are:
•    Five times likelier to see retailer collaboration as a strategic priority.
•    Six times likelier to share new-product ideas with retailers 18 months or more before launch.
•    Three times likelier to focus on the implications to retailer profit in order to sell in price increases.

In addition, the sales heads at CPG winners spend twice as much time to develop talent.

For this 2012 Customer and Management Channel Survey, 220 executives at more than 50 companies were interviewed, among them Coca-Cola, ConAgra Foods, Kraft, Kellogg’s and Unilever. To identify winning practices, the financial performance and in-market results of these suppliers were linked to self-reported business practices.

This article is from the upcoming September, 2012 issue of Facts, Figures & the Future.