Are brands still relevant in CPG?

According to CNBC “shoppers are increasingly shunning the center of grocery stores and hugging the perimeter as they trade packaged food for fresh food. That’s bad news for an industry that’s already struggling Packaged food sales have declined, and earnings have disappointed. Some companies have cut jobs and shuttered factories”.

The S&P 500 has increased nearly 14 percent over the last 12 months, while packaged foods and meats companies in the index are down more than 11 percent over the same time period. Kellogg, General Mills, Campbell Soup and J.M. Smucker all hit 52-week lows Tuesday.

The same ingredients that helped propel big brands to the top two decades ago are helping erode trust in them today. Brands are scrambling to scrub their products of fat, sugar and other unwanted ingredients, while convincing consumers they still deserve a spot in their shopping carts.

Even when shoppers do venture down the aisles in the center of grocery stores, they may grab private-label products instead of the name-brand ones . Many shoppers overcame their aversion to store brands during the recession, said Yosi Heber, founder and president of Oxford Hill Partners and a former marketing executive at Kraft and Dannon. Once they took the risk, they liked what they tasted.

Even P&G, the consumer marketing powerhouse, has cut marketing budgets.  Are consumers falling out of love with brands and are they still relevant?

What’s going on here?

1ne: The quality and brand elements of private label have lured more shoppers and they realize that it’s not worth the money to buy the branded item.

2wo: Too many brands have fallen into the trap that brands have to be all things to everyone.  For CPG’s that’s just not true, it could be just delivering on the simple brand promise of delivering a good product.

3hree: Too many CPG brands are allocating too much to digital marketing. How many items in your pantry do you really want to have a digital relationship with?

4our: Not enough CPG marketers are spending enough time in stores both observing consumer behavior and looking at how their brands are being displayed.

5ive: Marketers are drowning in irrelevant data.  The truth is that data driven marketing moves you further away from your customers.

Despite all the hype around “branding” by people trying to sell books, some brands just aren’t that important to consumers when it comes to CPG’s.  Sure, I like a Haagen Dazs ice cream, but my brand relationship starts and ends with the package and its contents. Do they really need to rebrand?

In the end branding is very simple.  It’s the brand promise once the package is in the cart and home in the pantry .  Lose that and all the best marketing in the world won’t save you.

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