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Small CPGs see big growth in 2020

Smaller CPGs gain market share over big players in 2020.jpg
New research from IRI found that small and extra-small CPG manufacturers’ and retailers’ own brands gained U.S. market share during 2020.

Small businesses in the food and beverage space are on the rise—at least according to the latest research from IRI.

The U.S. CPG industry as a whole grew 10.3% in 2020 to $933 billion, according to IRI; nearly one-third of that growth was thanks to smaller manufacturers, defined as “players with annual measured channel sales of less than $1 billion.” Private label CPGs accounted for 18% of the overall growth.

“These impressive growth rates resulted in smaller manufacturers and private label products gaining 1.1 and 0.2 share points, respectively, from larger manufacturers (companies with measured channel sales exceeding $5.5 billion annually), which captured 34.1% of total CPG growth in 2020,” IRI’s report read. With the loss in 2020, large manufactures have lost market share for the fifth consecutive year. However, even with those losses, large CPGs still represent nearly half (46.7%) of total U.S. sales in measured channels.

“The consumer shift toward smaller manufacturers and private label products is something that IRI has been documenting for several years, and we saw the trend accelerate during the COVID-19 pandemic,” wrote Dr. Krishnakumar (KK) S. Davey, president of Strategic Analytics for IRI. Davey pointed to supply chain issues as a result of surge purchasing at the height of the COVID-19 pandemic, an opportunity smaller CPGs then jumped on. Quarantines—both mandated and voluntary—also led to a lag in growth in the convenience channel, which Davey pointed out tends to be dominated by larger CPGs.

Smaller CPGs gained market share in 9 of the 10 categories measured by IRI, including alcohol, frozen food and breakfast—all categories that saw overall growth in 2020 as at-home eating (and drinking) occasions soared. IRI also saw growth for smaller CPGs in shelf stable foods as well as pet care as consumers became more adventurous with not only their own snacks, but their pets’ as well. In fact, success for smaller CPGs wasn’t even contained to the food aisle, as growth was seen in categories including health and beauty, personal care and general health and wellness.

As for predicting 2021 and beyond, Davey suggests some COVID-related trends may dissipate while others remain.

“Looking ahead, we anticipate that consumer mobility will increase substantially over the next few months, and the convenience channel will bounce back,” he remarked. “While some of the 2020 consumption trends will continue with consumers working from home at least part-time, away-from-home consumption will continue to gain back lost share. We expect smaller and mid-sized players to continue to gain share from large manufacturers.”

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