The brand growth paradigm
Navigating the ‘constrained customer
It is easy to forget that the 8% growth rate of the FMCG industry represents billions in extra consumer spending, from the essential purchases to the personal indulgences that make life worth living. As the grip of inflation weakens across the global economy, FMCG brands face a paradox: customers are paying more yet feel less fulfilled. Indeed, for many consumers, the value exchange is increasingly broken. This price pressure is a labyrinth for brands to navigate to uncover growth in an era marked by restraint and the rising cost of goods.
When prices remain stubbornly high, consumers' spending habits are change not out of choice, but by necessity. The $1,360 that buyers of FMCG products part with annually, has seen a grim 60% hike over the past decade, whilst their wages have stagnated. How can brands find ways to matter more and sell more in this dynamic?
Frugal futures forecast
The global financial outlook remains sombre. Households continue to manage their budgets tightly in every continent, and brands need to understand the changes across multiple markets and sectors.
Counterintuitively, the current economic squeeze has not shrunk the size of consumer purchases but expanded it in some markets with some consumers bulking up on larger pack sizes, drawn by the lure of volume discounts and trying to manage their consumption as part of their budgeting. This trend has further helped the growth of discounters and wholesalers in markets across Europe and some of Latin America. Discounters alone have notched up growth of 14.1% year-over-year on a global basis.
Private labels are also stepping into the fray, chipping away at the market share of brands. Private label now represents 22.7% of share globally — the highest ever — representing USD$308 a year per household. Consequently, amidst the 460 billion brand choices made last year — or 29 brand decisions made by consumers each month — the retail battlefield is fierce. Yet, in this crowded arena, only half the brands available manage to capture and retain consumer interest consistently. Moreover, when we look at the numbers through the lens of local brands versus global brands, there is a clear and growing shift in favour of local players. Shopper choices on local brands now accounts for a record 68.2% of CRPs.
Penetration prowess
Our latest annual review proves that winning brands, unsurprisingly, secured high levels of penetration to outpace the market. A dominant 86% of brands achieving growth did so through improved penetration.
Penetration — getting more households to buy a brand — is, of course, fundamental to growth. It is straightforward yet powerful: the more households a brand reaches, the larger its potential market base becomes.
86% of brands achieving growth did so through improved penetration
This expansion is critical because it typically sets the stage for more sustainable growth. Brands have not only captured new consumers via penetration but have also successfully navigated the natural churn that all brands face — losing customers to competition or changing preferences.
The power of frequency
While penetration builds the foundation, frequency — how often consumers purchase a brand — amplifies the impact. Increasing frequency ensures that once a consumer is brought into the fold, they are engaged and retained. For smaller brands, a third of the growth will primarily come from new buyers; for super brands, getting customers to buy one more product one more time brings in the big numbers.
If you're a small brand (<10% penetration in a market), overperforming means growing your penetration by 0.7 points in a year. Large brands need to triple that target, aiming for a 2.2-point increase to be among top performers. Remembering that only half of FMCG brands manage to grow, it is critical to set the right growth targets based on country, category, and competitive situation to achieve success and maximise your chances of success.
Blueprint for Brand Growth
In all the winners in our brand rankings, we see that once they identified and created their brand’s meaningful difference for more people, Kantar’s three growth accelerators come into focus:
It is not just about your brand being preferred; you need to be pertinent. Brands need to resonate deeply with consumer needs and desires, to turn casual browsers into defined customers. The best performers also found scale with global multi-channel campaign platforms with consistent messaging as their foundation and stack the odds in their favour.
Being seen is as crucial as being relevant. You need to be easy to find and easy to buy, whenever and wherever shoppers and consumers encounter you. Our case studies in this report demonstrate time and again that exploring everything from foodservice to e-commerce and sari-sari stores in rural communities are presence-led pathways to growth. Presence is a common denominator.
The journey doesn't stop at visibility or relevance; it extends into uncharted territories. Your brand size fundamentally affects the likelihood of success of the way you can identify and exploit new market segments, or how once you know what your customers unmet needs are, how you can serve new consumption occasions and introduce fresh and incremental growth vectors, much like Nescafé entering the ice cream market.
These three growth accelerators don’t happen in isolation. FMCG brands must ask and answer pivotal questions: Which consumer needs can we meet more effectively? Who are our most accessible and lucrative target shoppers? How and where do they shop? The answers will define strategies and create pathways to growth.
