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1/ Fantastic thread about current state of CPG, and recent results of all major CPG companies.
3G capital’s classic “let’s buy them up, cut costs, and shore up share price” didn’t really last. Perhaps one of the rare missteps from the great Warren B, Charlie M and Berkshire.
3G capital’s classic “let’s buy them up, cut costs, and shore up share price” didn’t really last. Perhaps one of the rare missteps from the great Warren B, Charlie M and Berkshire.
2/ Yes, cut costs where it doesn’t add value to customers: executive compensation, marketing overspend, corporate jets, excessive hierarchy, etc.
What you don’t do is cut R&D, product dev costs. You need to spend money to figure out what customers want and provide it to them.
What you don’t do is cut R&D, product dev costs. You need to spend money to figure out what customers want and provide it to them.
3/ As @ryan_caldbeck has said time and time again, oldies are struggling. They spend nothing on R&D, spend way too much on marketing (placement and promotion only, not product) and executive compensation, and are unable to meet emerging customer needs.
4/ The key is to indeed “build a portfolio of brands that are smaller and that can meet the needs of a fragmenting consumer base.” (Not all but most) DTC brands & emerging CPG are figuring this out, and capturing market share from incumbents.
4/ M&A for emerging CPG will see increased activity. But that won’t save the oldies. Every major CPG company - Pepsi, GMills, Nestle, Unilever, P&G - will struggle next few years. Some (Pepsi, Gillette?) have already started layoffs.
5/ This is greay for customers. The more emerging brands can tell their story directly to customers, the better niche markets can be served. Don’t be surprised if you find more stores forced to stock more than just Sriracha in the ethnic isle! 😁
en.m.wikipedia.org/wiki/Long_tail
en.m.wikipedia.org/wiki/Long_tail
