The three routes to growth for fmcg brands

Almost every food company is trying to grow sales. Growth is the industry mantra. If you get growth, the economics improve. Factories, trucks and stores are fuller. Fixed costs are spread thinner. Jobs get easier.

It’s common to dimensionalise growth for a category or brand by looking at penetration, frequency, items per visit and price per item. These are the components of total sales – so they must help us think about growth, right? But often it’s not very illuminating. “It’s all about penetration,” people are fond of saying. Really? So what does that tell me to do?

It can be more helpful to think about three key axes: occasions, people and places. Each offers a route to growth.

Occasions

Consumers don’t really seek food products for their own sake. Instead, they seek a solution for a particular eating occasion. Breakfast, quick lunch, a midweek meal, a quick snack, or something more social for the weekend. Within each of those, there are a lot of niches.

Brands and categories that can find a role in extra occasions will find growth. Magnum Minis make weeknights more permissible for ice cream. Low & no-alcohol brands do the same for beer. Belvita took biscuits into breakfast. Brands and categories shouldn’t forget their core occasion, but if they can add new ones, sales will be incremental.

People

Needs and priorities vary across different groups of people. Affluence is a factor, leading to good, better, best ranging. Dietary needs are a factor: gluten-free, vegan, vegetarian, high protein, low fat. Ethical considerations like organic, working conditions and animal welfare are another factor.

The more needs and types of people that a category, brand or brand portfolio meets, the more it can grow. That’s why you see Peroni, Peroni Capri (lighter), Peroni 0%, and Peroni Gluten Free. The last three will sell less, but again, it’s about incrementality.

Places

If you’re not there, you can’t be bought. Yes, prioritise the channels, retailers and store positions that best fit your category and brand. But it’s also a numbers game. The best companies relentlessly target extra points of access for their category and brands. Coca-Cola’s “within an arm’s reach of desire” goal referred to exactly that.

So, if you’re a snack brand in the take-home aisle of a food store, can you also get near to sandwiches? Can you find a further spot near the till? What about the store entrance?

Beyond supermarkets, are you in forecourts, vending, bakeries, coffee outlets? These can be hard to crack, but if you can get there, you’ll find less direct competition. The water brand sold on a deal with coffee at Costa will shift a lot of volume.

Conceptually at least, the routes to growth are simple. More occasions, more people, more places.