Senior Partner & Managing Director
Which companies are leading the pack when it comes to growth in the U.S. consumer packaged goods (CPG) market? For the second year in a row, BCG and Information Resources, Inc. (IRI) have set out to answer that question, ranking more than 400 CPG companies—both public and private—with annual U.S. retail sales greater than $100 million. Among the key findings: while small companies continue to take share from large companies, some top-performing large players are fighting back.
The study evaluated each company on three metrics—dollar sales growth, volume sales growth, and market share gains—and then ranked companies based on their performance. Recognizing that manufacturers of different sizes face disparate challenges and opportunities, BCG and IRI grouped companies into three categories on the basis of sales: small ($100 million to $1 billion in IRI-measured retail sales), midsize ($1 billion to $5 billion), and large (more than $5 billion). A company’s score reflects how well it performed on those three metrics relative to its peer group. A score of zero indicates performance in line with the overall industry within a given size group, while a positive score reflects outperformance.
The study reveals that large companies lost 0.5 percentage points in market share from 2012 to 2013. That trend has been ongoing for the past several years: since 2009, large players have ceded a total of 2.3 share points to midsize, small, and extra-small (organizations with sales of less than $100 million, which were not ranked in the study) companies, representing $14 billion in lost industry sales. The inroads made by small and extra-small companies in particular have come in part through reduced barriers to entry, including the emergence of digital media, which lowers advertising costs, and the rise of online and specialty retailers, which offer new selling opportunities for smaller players.
Despite the share gains by smaller companies, large companies collectively performed better in 2013 than in 2012. This is especially true for the five top-ranked large companies, which actually recaptured market share. Improvements were largely driven by a renewed focus on delivering healthier and more sustainable growth through volume gains instead of relying on pricing tactics alone to achieve short-term increases in dollar sales. (See “Growth for the Rest of Us,” BCG Perspective, January 2014.)
That focus on volume was a hallmark of all winning companies, regardless of size. In addition, successful companies across the revenue spectrum also tended to generate growth from their base businesses, a break from 2012 when a number of top-ranked companies posted weak growth—or even deterioration—in their base. And these winners often created offerings that were focused on specific, unmet consumer needs that frequently served as a replacement to undifferentiated products found in large, established categories.
For more detail on the methodology, please see “Large Companies Claw Back Some Momentum in 2013’s Slower-Growth U.S. Consumer-Packaged-Goods Market.”