According to retail research firm IRI, large industry players saw their combined market share drop to 55.5% from 57.7% in 2013 and that more than $17bn in CPG sales shifted to their small competitors over the same period.
Of particular note, “extra small” brands – defined by IRI as those with sales of under $100m – increased their sales by 4.9% this year, while “small” brands (those with sales of between $100m and $1bn) witnessed sales growth of 4%.
By contrast, “large” CPG brands with annual sales of more than $5.5bn have seen growth of only 0.6% so far this year, while “mid-size” brands, or those with sales between $1bn and $5.5bn, have had sales growth of 0.5%.
IRI also reported that brands with sales of under $1bn saw their combined market share rise to 25.7%, up from 23.5% in 2013.
“Size used to be one of the most important factors of success, but e-commerce has leveled the playing field, subsequently allowing smaller brands to reach consumers in unprecedented ways,” the report said.
“E-commerce has established itself as a viable CPG channel, thereby reducing barriers of entry and allowing smaller brands to reach consumers, without needing to fight for limited shelf space or making large investments on brand,” it added.
The report went on to say that the emergence of these “solid” small and mid-size players that offer products that anticipate consumer needs has spurred several larger brands to seek out mergers and acquisitions as a way to stay competitive.
And it recommends that brands ramp up their adoption of artificial intelligence and machine-learning techniques, which IRI expects will make the difference between winners and losers in the highly competitive CPG market.
Sourced from IRI, Forbes; additional content by WARC staff