How to Innovate as a CPG

Innovation by CPG Companies

We’ve seen this in our own work: incumbent CPGs have struggled to keep pace with start-ups.

• McKinsey's analysis of the food and beverage market from 2013–17 reveals that the top 25 manufacturers are responsible for 59% of sales but only 2% of category growth, while 44% of category growth has come from the next 400 manufacturers

• Large consumer companies don’t suffer from a lack of ideas; where they struggle is in knowing where to make bets, moving products quickly to launch, and then nurturing them to scale

• Despite the many challenges, there are consumer companies winning in the market and driving profitable growth by focusing on targeted consumer needs, conducting smaller launches where the product is tested and refined in-market—accepting that some of them will sink, thinking like venture capitalists with a relentless commitment to pace and urgency of growth, and prioritizing first to scale versus first to market

• CPG companies can innovate by addressing the culture, creating high aspirations and hard, definitive metrics, making clear choices based on what consumers say, and reallocating resources to aggressive growth opportunities