As a company whose sole focus is driving growth for early stage and mid-market consumer packaged goods brands, we are constantly challenged with measuring success. According to Nielsen, more than 3,000 products are launched every year in CPG and 85% of these fail even after enjoying successful launches—sobering numbers, to be certain.
It’s easy to agree on the definition of failure for a new CPG: one that fails to achieve economic viability over a period of time post launch, typically two-to-three years. But what constitutes success?
Currently, to be considered a breakthrough innovative product (as defined by Nielsen), a product needs to be relevant, generating a minimum of $50 million in U.S. sales in year one, enduring, maintaining at least 90% first-year sales in year two, and distinct, delivering a new value proposition to the market.
Using these criteria, are we measuring today’s success with yesterday’s yardstick? Achieving $50 million in year one assumes a brand has already established a distribution network, has capitalization to support production scale, retail costs and consumer-facing marketing simultaneously. Are we slanting the criteria to only favor conglomerates that come in fast and furious and then try to “hold share?” The answer is yes.
My firm has worked with over 300 CPG brands over the past two decades, and it is increasingly clear that these are outdated measures. They fail to account for the influx of emerging brands driving new demand and the changing landscape of today’s market: A market in which, according to the Harvard Business Review, “over the past four years nearly 50% of the growth in the U.S. consumer food and beverage segment has come from 20,000 companies below the top 100 largest companies.”
Historically, the dominant metric for success of big CPG has always been market share. But how should the newly launched CPG brands define success in an increasingly fragmented world?
Reprinted from an original article published by Forbes.com on August 30, 2017, by Concentric’s Kelli Masilun. Masilun is Vice President of Brand Development at Concentric, a branding and marketing firm specializing in driving CPG brand growth.