If you believe in the mantra “innovate or die,” you might conclude that the largest consumer and retail brands are terminally ill. Giants like Kraft and Clorox all seem to be too slow and enslaved to shareholders to innovate. At the same time, they may be too large to perish… at least for now.
What we have here is the perfect storm for consumer mergers and acquisitions (M&A) avalanche.
Big consumer packaged goods (CPG) companies are struggling to sell their products to a new generation of shoppers. A quick look at sales across various product sectors shows a steady downward slide for big brands. In the past five years, large brands lost market share to small brands in 42 of the top 54 most relevant food categories, according to Jefferies. Erosion is happening in nearly every consumer category.
The specialty food industry continues to draw new consumers, particularly men and millennials. Nearly six in 10 consumers surveyed purchased a specialty food or beverage in the past six months, up from 47% in 2015.
The findings are based on an on-line survey of 2,155 adults in July. Specialty food sales last year rose to a record $120.5 billion, driven by the growth of small businesses and consumer trends. The core specialty food shopper is between the ages of 25 to 44 with a household income of $75,000 or more. Last year, men for the first time surpassed women as more likely to buy specialty food, and the gap has widened in 2016.