Hershey, Nestlé, and Procter & Gamble all reported gaining market share during the first quarter of this year. Hershey gained 3 points against its competitors during April.
New food items and brands, particularly health- and energy-oriented foods, have been gobbling market share from majors for years. In January and February this year, so-called insurgent brands – those growing at least ten times faster than their category in general – rose 35 percent. In March, they added just 5 percent.
While the big brands tout consumers “coming home” to the familiar in times of crisis, reasons for the gains are largely financial, not sentimental.
Supermarkets have been reducing the range of items and brands they carry to open more shelf space for essentials, such as canned goods and paper products. Most of that reclaimed shelf space was occupied by niche or specialty brands.
Brands must pay “slotting fees” to occupy shelf space in chain supermarkets. Large companies have the cash to keep paying those fees as sales diminish; smaller companies do not.
Also, major companies often have their own factories and can increase production if needed. Small brands typically use third-party manufacturers and have to vie for run times.
In addition, large consumer products companies represent a significant share of business for carriers and distributors along the supply chain, often giving them priority over small or upstart brands.
As a result, many of the novel food items and their makers might not have the cash to survive the current economic lockdown.
Squeezing start-ups harder, venture capital funding for consumer brands fell 26 percent in this year’s first quarter compared to a year previous. In 2019, funding was down 54 percent.
PUBLISHER’S NOTE: People also are returning to major brands simply because mass-produced and processed foods tend to be cheaper than smaller, more specialized items. With millions of Americans unemployed and millions more in fear of losing their jobs, cheap now defines the bottom line for these households.
Moreover, it also exemplifies how Americans, who lead the developed world in obesity, are hooked on junk food. And despite fresh foods costing a bit more, to eat healthy… from making soups with natural ingredients to feeding a family with eggs and potatoes, it is cheaper to eat healthy then buy pre-cooked, packaged, and can foods.
TRENDPOST: This is a likely time for major consumer products companies to quickly buy up distressed start-ups and specialty brands to add to their growing stables of niche products that have special appeal to younger consumers.
