the little cpg company that could shake up the market

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The Little CPG Company That Could Shake Up the Market

CASE STUDY

THE LITTLE CPG COMPANY THAT COULD SHAKE UP THE MARKET WWW.FULD.COM

A Surprise Shakeup Case Overview

A long-established market leader in a number of food categories let a new compact packing design opportunity slip through its fingers. A new entrant in the food business had adopted this packaging and along with savvy promotional campaigns soon held more than 65% market share, surprising the four incumbent market leaders. The question for the client was about the new entrant’s ability to sustain its market share and growth. Did it have the financial wherewithal as well as manufacturing and distribution smarts to hold its own? Our work concluded “yes” on every question.

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A Visitor from Another Planet Key Business Challenges

This new entrant launched its business a half-dozen years ago, generally staying under the radar the first few years, largely ignored by the major producers. Privately funded, and originating in Latin America, it slowly but surely gained shelf space. By the time the client asked for this analysis, this new entrant had won major supermarket chain store accounts throughout the US with a likelihood for more wins in the coming year.



The Margin Challenge Key Business Challenges

As Clayton Christensen states in his book, The Innovator’s Dilemma, large established companies generally do not enter new markets if the revenue potential does not meet expectations. By the time our client realized how far this new foreign company had come, it had already achieved economies of scale enabling further growth. The client needed to examine this new rival and consider the likelihood it could achieve the same or similar sales volume even this late in the game. Upon reflection, the client also asked the same question of its more established rivals.



The Solution Was Right Under the Client’s Nose The Fuld Approach

Co-packers were a critical piece of the puzzle for this segment of the market. These co-packers served both large producers looking for additional capacity as well as smaller companies that could not make the investment in capital equipment. Startups, such as this Latin American firm, experimenting with new designs and package sizes approached one of these leading co-packers, according to the report’s research findings.

The analysis provide a detailed assessment of five specific co-packers, including one the client had often used in the past. Based on the report’s recommendations, the client struck a deal with one of the co-packers to aggressively produce a directly competitive product.



Insight on Risk and a Motivation to Move Forward…Fast

Key Business Impact

During the assignment the client learned that the rival would plan to launch an IPO in the United States sometime over the next several years and would likely be aiming for near-term profitability rather than longer term revenue growth by continuing to develop new products. The client now had a window of opportunity over the coming year. With the client’s vast distribution reach and sales force, as well as its capital investment capabilities, it was able to move up to strong second place in this market with plans to possibly usurp the rival’s position in the next two years.

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A Second Look at the Rivals is Critical The Fuld Review

Markets do not stay the same for long. The client realized that its established competitors may all be considering the same moves and that the new rival will attempt win additional large accounts. If the client or its rivals could not achieve healthy margins, trying to catch up to the market leader could become a fool’s errand. It therefore was very important that the client benchmark the other four companies in this race and determine their likely margins. If it could determine which rivals may have weaker profitability, the client could better focus its marketing and investment plans to leapfrog the current category leader.



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About Fuld + Company

WHO WE ARE

Since 1979 Fuld + Company have pioneered competitive intelligence, and today we work with leading companies worldwide to deliver the competitive and market insights they need to make better business decisions. We don’t rest on our history and past successes. This means working hard to deliver uncompromising analysis that generates sound advice and earns us enduring partnerships with our clients.

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We are driven to expose our clients to insights about their industry, their competition and a changing market; designed to help avoid surprises and industry shocks. Through deep research, penetrating analysis and strategic gaming + advisory expertise, our team of professionals help you identify and solve tactical and strategic challenges. We help reduce the risks associated with business-critical decision making.

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