Consumer packaged goods (CPGs) add more than $2 trillion to the US’s GDP, dominating the retail sector both online and in-store. But while legacy megabrands like P&G, Unilever and Nestlé have long controlled the market, upstart CPGs are fighting back — and winning.
In fact, as of 2020, small and extra small brands are now the fastest growing segment of the CPG market.
So what exactly are these indie CPG brands doing, and how are they doing it so well?
Upstart CPG success has a lot to do with authenticity, innovation and putting the customer first in the era of e-commerce. Let’s take a closer look...
6 ways upstart CPGs are beating mainstream competition
Here are five ways that small and scrappy CPG brands are getting their voices heard — and flying off the shelves.
By tapping into conscious consumerism
Modern customers want more than just a good product. They want to buy from brands that prioritize the planet and its people, not just their bottom line.
Don’t believe us?
Take a look at these statistics…
- 9 in 10 Americans would switch to a brand associated with a good cause
- 66% are willing to pay more for a sustainable product
- Almost 70% of US consumers think it’s important that a brand is eco-friendly.
All of which points to the rise of the conscious consumer: customers who are on the hunt for products that make the world a better place.
And upstart CPG companies, like Beyond Meat, are able to tap into this growing market far more effectively (and authentically) than legacy megabrands. Why? Because they’re able to offer genuine solutions to the concerns of conscious shoppers. And, crucially, they can do so without having the baggage of being seen as “part of the problem”.
Whether it’s by providing plant-based alternatives or sourcing eco-friendly materials, upcoming CPGs are perfectly placed to appeal to today’s conscious consumer — and that’s gotta be one of the biggest reasons for their recent success.
By cultivating a sense of community
SproutSocial reports that 78% of consumers want brands to bring them together, showing us that customers crave a community aspect when buying from a brand.
And while all businesses can (and do) build customer communities, new CPGs have an obvious advantage over industry giants.
Think about it. When a customer buys from an up-and-coming CGP brand, they’re immediately going against the grain and buying into something new. They’re also likely to be attracted to the brand for a very specific reason — not just because it’s a household name.
As a result, it’s much easier for upstart CPGs to build valuable communities; their customers have the shared experience of being ‘first to the party’.
That’s why you’ll see upstart CPGs going that extra mile to bring their customers together and create a sense of community. They’re much more likely to:
- Put values at the core of their business (to attract like minded customers)
- Offer incentives and rewards for customer referrals
- Invest in social media content that speaks to a specific person and their mindset
- Dish out discounts to loyal customers (via social pages or email lists).
Combined, moves like these help customers feel part of something bigger than just an average customer base. And that’s simply something that mass market CPGs can’t do so well.
By genuinely connecting with their customers
As well as connecting customers to each other, upstart CPGs also have an advantage when it comes to connecting to customers themselves.
Why? Because their — usually value-driven identities — make it much easier to connect with their target customers on a genuine level. Smaller brands are also able to be more transparent about their processes and supply chain, which brings about more trust and customer connection.
One trend in the upstart CPG market, for example, is to put openness at the heart of brands — because modern customers demand it. They want to know the ins-and-outs of where a product is from, how it’s been made, and what impact it has on the world.
They also want to know the people behind the product, with around 70% of consumers feeling more connected to a brand when its CEO is active on social media.
The savviest CPG upstarts, like Kween, whose CEO is super visible, have tapped into the power of connection by being vocal about what they (and their target customers) care about and putting transparency first.
The result? Increased growth by appealing to the 76% of consumers who are more likely to buy from a business they feel connected to, regardless of the competition.
By being innovative and flexible
Smaller CPG brands are able to operate far more flexibly than their mainstream competitors, allowing them to innovate at a much faster pace.
As such, disruptive upstarts in the CPG space are firmly leading the way. They set the agenda, and the big guys tend to follow behind.
From harnessing the power of personalization to pioneering the Direct-to-Consumer (D2C) subscription model, up-and-coming brands have changed the CPG industry at rapid pace, and — as a result — have been able to outgrow their once unbeatable competitors.
The lesson? Being smaller doesn’t mean being any less mighty. In fact, it can be a serious benefit when trying to stay ahead of the curve and meeting the ever-changing demands of the modern consumer.
By mastering the art of gold-standard customer service
With fewer customers, new CPG brands have the time (and need) to deliver customer service that never disappoints.
That’s why you’ll find the best upstart CPG brands taking customer service seriously and building it into their business models. We’re talking…
- Making sure customers receive a speedy service
- Investing in experiential packaging that guarantees a great first impression
- Communicating with customers across all channels
- Going that extra mile to impress (like by sending samples and offering discounts).
Sure, big brands can do this, too. But added to the excitement of discovering a new brand, gold-standard customer service can be what turns a one-off customer into a diehard indie fan.
And with US millennials willing to spend up to 21% more for good customer service, it’s no wonder that upstart customer-focused CPGs are booming.
By hitting the ground running with all things digital
70% of yearly growth in the CPG market is generated online — and it’s the new kids on the block that are leading the way.
Right off the bat, they’re on Amazon, they’re across social, they’re launching e-commerce sites, and they’re ahead of the game with all things digital.
As a result, legacy brands no longer have such a monopoly over the market.
Thanks to social media, for example, an upstart CPG can reach (and sell to) their ideal customer in a direct and authentic way. It’s an approach that bigger brands couldn’t do at all until recent years — and upstarts are doing it for a fraction of the cost.
And so now, as more and more brands enter the CPG space with a digital-first strategy, the market has finally made room for new names and given customers the alternatives they were once unable to dig out.
Ready to join the upstart CPG revolution?
We can help. Buffalo Market is the world’s leading distributor of mission-driven food and beverage brands — helping our clients get in front of the right people, at the right time.Get in touch with us to find out more, and, together, let's give the big guys a run for their money.