A bigger and broader demand space for functional food

The global food and beverage industry is undergoing a structural shift. No longer is food simply about taste, convenience, or price: it is increasingly expected to deliver tangible, everyday health benefits. From gut health to cognitive performance, functional food has moved from niche to mainstream, becoming embedded in daily consumption rather than confined to supplements or specialist products.

This shift is being driven by a combination of factors: rising health awareness post-pandemic, ageing populations, and consumers taking a more proactive approach to wellbeing. Increasingly, food is seen not just as fuel, but as a tool for prevention, performance, health, and longevity.

The numbers reflect this momentum. The global functional food and beverage market is projected to more than double from roughly $400 billion in 2025 to nearly $1 trillion by 2034 (1). At the same time, high-growth segments such as gut health, protein, and “complete nutrition” are expanding rapidly across geographies and demographics, moving into everyday formats like snacks, beverages, and ready-to-drink products (2).

For CPG leaders – CMOs, R&D heads, and innovation teams – the challenge is no longer whether to play in functional food, but where to focus and how to build portfolios that remain relevant over time.

Five functional food platforms shaping future growth

A handful of platforms are emerging as the most strategically important for CPG players. These are not isolated trends, but broad consumer need-states that cut across categories, occasions, and demographics. Together, they are shaping where investment, innovation, and competitive advantage are likely to concentrate over the next decade.

Gut health, microbiome & fiber

One of the most established and fast-growing functional platforms, driven by increasing awareness of the link between gut health and overall wellbeing. Innovation is moving beyond yogurts into prebiotic sodas, cereals, snacks, and supplements, with fiber increasingly emerging as a key growth engine within the category. Much like protein a decade ago, fiber is now evolving from a broadly recognized health benefit into a primary purchase driver across everyday food and beverage categories.

Protein & active nutrition

No longer limited to athletes, protein has become a mainstream nutritional need, associated with satiety, weight management, and healthy ageing. Growth is driven by plant-based proteins, ready-to-drink formats, and fortified snacks, expanding across all consumption occasions.

Cognitive & mental wellbeing

An emerging but rapidly expanding space, reflecting rising consumer focus on stress, focus, and sleep. Products increasingly incorporate adaptogens, nootropics, and calming ingredients, particularly in beverages and supplements targeting everyday mental performance.

Healthy ageing & longevity

Fueled by demographic shifts, this platform is gaining traction beyond medical nutrition into everyday products. It includes benefits such as bone health, mobility, immunity, and vitality, often delivered through fortified foods and targeted formulations for older consumers.

Everyday “better-for-you” reformulation

The most scalable platform, focused on improving the nutritional profile of existing products, reducing sugar, salt, and fat while increasing fiber or micronutrients. Rather than creating new categories, this approach embeds functional benefits into everyday consumption at scale.

It is, in essence, clear that consumers are becoming less interested in specific ingredients themselves and more focused on the tangible outcomes they deliver, whether related to gut health, metabolic balance, cognitive performance, or healthy ageing. As a result, competitive advantage is increasingly moving away from simply adding functional ingredients toward building clear, claim-specific propositions that connect with identifiable consumer needs.

Which platform matters most?

While all five functional platforms offer attractive growth opportunities, they are not at the same stage of development. Some, such as protein and better-for-you reformulation, have already achieved broad consumer awareness and extensive market penetration. Others, including cognitive wellbeing and healthy ageing, remain earlier in their development, with consumer interest growing faster than the availability of scaled food and beverage solutions.

This variation in maturity creates different strategic opportunities. More established platforms offer scale and proven demand but are often becoming increasingly competitive. Emerging platforms may be smaller today, yet they provide greater whitespace for innovation and the potential to establish leadership positions before categories fully mature.

The key takeaway is that no single platform is inherently more attractive than another. Rather, each presents a different balance of risk, growth potential, and competitive intensity. Companies that understand where each platform sits on its development journey can make more informed decisions about where to invest, how to prioritize innovation, and where to build long-term competitive advantage.

The shift: from products to platforms and occasions

Despite strong category growth, many companies still struggle to capture value. The issue is not lack of innovation, but lack of focus.

Three structural challenges stand out:

1. Trend fragmentation

Functional benefits evolve quickly: from immunity (pandemic era) to gut health, mental wellness, and longevity today. Backing the wrong trend risks stranded innovation.

2. Portfolio complexity

Functional propositions cut across categories: dairy, beverages, snacks, supplements. This creates internal silos and duplication, rather than synergy, and without a clear organizing logic, portfolios become difficult to scale and communicate.

3. Credibility gap

Consumers are becoming more informed and skeptical. Claims must be increasingly science-backed and transparent, not just marketing-led. This raises the bar for R&D capabilities and regulatory rigor. (3)

At the same time, competition is increasingly shifting toward ownership of consumption occasions and delivery formats. Consumers are not only seeking specific health benefits, but also convenient ways to integrate them into existing routines. This is making “carriers” such as coffee, hydration drinks, snacks, and ready-to-drink beverages strategically important, as they allow functional benefits to be embedded into familiar daily habits. In this context, the ability to stretch a functional platform across multiple occasions and formats is becoming as important as the benefit itself.

In short, winning CPG players will be moving from isolated product innovation to scalable platform-based portfolio strategies that stretch across formats & occasions and that are anchored in enduring consumer needs, yet remain broad and flexible enough to adapt to rapidly evolving health priorities over time.

How large CPGs are rewiring their portfolios

A few examples on how large manufacturers are working in evolving their portfolios, capturing the functional food demand space.

1. Nestlé: scaling science across categories

Nestlé has leaned heavily into nutrition science as a core capability, building depth through its health science division and extensive R&D network. What started in infant nutrition has expanded into healthy ageing, medical nutrition, and specialized products such as fortified milk powders in Asia (4). Today, Nestlé’s Nutrition and Health Science division generate more than CHF 14 billion in annual revenues, accounting for roughly 16% of the company’s global sales. (5)

This science-led approach allows Nestlé to translate functional benefits across multiple categories – from dairy and beverages to supplements – while maintaining credibility with consumers and regulators.

Illustrative of this, Nestlé has recently strengthened its presence in the longevity space through the launch of Nestlé Vital, its first global brand dedicated to healthy ageing. The science-backed nutritional drink range targets consumers in midlife and beyond, with formulations designed to support energy, strength, sleep, focus, and recovery through tailored morning and evening routines.

Key takeaway: Build deep R&D capabilities, then scale across multiple categories (dairy, beverages, supplements).

2. Danone: owning gut health and “complete nutrition”

Danone has long anchored its portfolio in gut health with brands like Activia, building strong equity around probiotics and digestive health.

More recently, it has expanded into protein and broader nutrition spaces. The launch of Oikos, positioned as a high-protein Greek yogurt, illustrates this shift and allows Danone to move beyond digestion into satiety, fitness, and healthier indulgence, while staying close to its dairy core.

In parallel, moves into meal replacements and “complete nutrition” – e.g., through the €1 billion acquisition of Huel (6) – show how the company is stretching into new occasions such as on-the-go meals.

Key takeaway: Start with a strong functional “territory” (gut health), then expand into adjacent use cases (meal occasions, performance nutrition).

3. Unilever: portfolio pivot to wellbeing

Unilever is actively reshaping its business toward health and wellness, acquiring brands like OLLY (vitamins), Liquid I.V. (hydration), and newer entrants in supplement and functional nutrition, such as Grüns (nutrient gummies) (7).

Rather than relying solely on internal innovation, Unilever is assembling a portfolio of high-growth brands across multiple functional spaces. Its approach emphasizes:

• Science-backed positioning

• Lifestyle branding for younger consumers

• Maintaining startup agility within a corporate ecosystem

In 2025, Unilever’s Wellbeing division delivered double-digit growth, driven by strong performances from Nutrafol, Liquid I.V., and OLLY, underscoring the company’s strategic focus on high-growth health and wellness platforms. (8)

Key takeaway: use M&A to accelerate entry into high-growth functional spaces, especially where internal capabilities lag.

4. PepsiCo & Coca-Cola: functionalizing beverages

Traditional beverage players are rethinking their core categories by embedding functional benefits into familiar formats:

PepsiCo’s acquisition of prebiotic soda brand Poppi for $1.95 billion (9) illustrates the growing strategic importance of gut-health platforms within mainstream soft drinks.

Coca-Cola has experimented with fiber-enhanced and functional beverages, aiming to respond to growing demand for healthier alternatives. (2)

Rather than building entirely new categories, both companies are leveraging existing consumption habits and distribution scale to introduce functional benefits at mass level.

Key takeaway: retrofit existing categories (e.g., soft drinks) with functional benefits rather than building entirely new ones.

How challengers are shaping the future of functional food

Startups are shaping the future of functional food faster than any established CPG player can, often by focusing on a single, clearly defined consumer need.

• Huel, now acquired by Danone, has built a strong position around “complete nutrition”, offering convenient, nutritionally balanced meals designed to deliver all essential nutrients in one product. (7)

• Bio & Me focuses on gut health, translating microbiome science into accessible cereals and snacks. (11)

• Olipop (12) and Poppi (13) (the last one acquired by PepsiCo) are redefining soft drinks by combining indulgence with gut health benefits; Olipop, for example, markets prebiotic sodas positioned around digestive health.

• Athletic Brewing Company taps into wellness and moderation trends, with a mission focused on improving consumers’ health and lifestyle through non-alcoholic alternatives. (14)

• Mission Tea reflects the rise of functional teas, offering blends designed for sustained energy, focus, recovery, and sleep, and positioned as a natural alternative to coffee and energy drinks. (15)

What sets these players apart is not just the product, but how they build their brands:

• Clear, focused proposition: Each brand owns a specific functional benefit rather than spreading across many.

• Direct-to-consumer engagement: They build closer relationships with consumers, often through subscriptions and digital channels.

• Strong community and storytelling: Education, influencers, and lifestyle positioning help make complex health benefits easy to understand and trust.

At the same time, many startups face challenges in scaling, particularly in distribution and operations. This has led to a more symbiotic relationship with global players, where startups act as early indicators of emerging functional trends, whereas larger players provide scale, capabilities, and global reach.

As a result, acquisitions and partnerships are becoming a key route to growth, allowing industry leaders to stay close to innovation while giving challengers a path to scale.

Four principles to build future-proof portfolios

While approaches differ across companies and categories, the most successful functional food portfolios tend to share a common set of strategic principles. These principles help organizations move beyond short-term innovation cycles and build scalable platforms that can adapt to evolving consumer definitions of health and wellbeing.

1. Anchor around enduring needs, not trends. Gut health, energy, and ageing are structural needs, not fads. Build platforms here.

2. Design for multiple occasions. Winning brands stretch across:

• Breakfast (functional cereals, dairy)

• On-the-go (RTD drinks, bars)

• Supplements (capsules, powders)

Example: protein now exists in snacks, drinks, and meal replacements.

3. Combine science with simplicity. Consumers want credible but understandable benefits:

• “Supports digestion” beats “contains bifidobacterium DN-173 010”

• Clinical validation is becoming a key differentiator

4. Build modular innovation systems. Instead of one-off SKUs, develop:

• Ingredient platforms (e.g., probiotics, adaptogens)

• Reusable formulations

• Cross-category pipelines

This reduces cost, and accelerates speed-to-market.

Conclusions – Making clear choices

For CPG leaders, the real question is prioritization. Do you:

• Double down on core categories and functionalize them?

• Build new platforms (e.g., supplements, medical nutrition)?

• Or acquire capabilities through startups?

There is no single answer, but the winners are those who make clear choices and build coherence across their portfolio, which should look much less like a collection of brands and more like a health ecosystem, spanning:

• Food

• Beverages

• Supplements

• Digital services (personalization, subscriptions)

The companies that succeed will be those that move early from product innovation to system-level thinking, building portfolios that are not only relevant today, but resilient to tomorrow’s shifting definitions of health.

How Sevendots can support

At Sevendots, we help CPG companies identify and scale the functional food platforms that will drive long-term growth. Our work supports leadership teams in making clear portfolio choices across health and wellness spaces, from gut health and protein to longevity and better-for-you reformulation.

This includes helping companies assess where to play, which consumer needs to prioritize, how to stretch platforms across formats and occasions, and where acquisitions or partnerships can accelerate capability building and growth.

Free readers get our latest thinking on CPG growth. Paid subscribers get the frameworks, case studies, and tools to put that thinking into action.

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<sup>Sources:
1. Fortune Business Insights, Functional Food and Beverage Market, 2025
2. Food Navigator, Functional Food Boom, Are Big Brands Backing the Right Trend, 2026
3. Ingredients Network, McKinsey Health & Wellness report shows consumers expect effective, science-backed solutions, 2024
4. Media Market, Top 10 Functional food Companies, 2024
5. Nestle, Annual Review 2025, 2026
6. Financial Times, Danone To Buy Meal-In-Bottle Maker Huel in Euro1bn deal, 2026
7. Reuters, Unilever Buys Supplements Brand Grns, 2026
8. Unilever, Annual Reports and accounts 2025, 2026
9. Forbes, PepsiCo Buys Poppi, 2025
10. AG1 Website, 2026
11. Bio and Me Website, 2026
12. Drink Olipop Website, 2026
13. Drink Poppi Website, 2026
14. Athletic Brewing Website, 2026
15. Drink Mission Website, 2026</sup>

^{Further reading:
https://www.foodnavigator.com/Article/2026/03/20/gut-health-trend-enters-new-growth-phase/
https://www.foodresearchlab.com/recent-technology/uk-functional-foods-market-trends-innovations-for-2025/
https://www.bhg.com/2026-food-trends-11856743
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/future-of-wellness-trends}

The beginning of a strategic reset

For the first time in almost two years, something meaningful is happening in the CPG industry.

After a relatively flat 2024 and four consecutive quarters of declining volume throughout 2025, the largest global CPG companies are finally showing a noticeable recovery. Across the eleven companies analyzed (excluding L’Oréal, which does not disclose volume data), average volume growth exceeded 1% in Q1 2026 while average organic growth remained at a healthy 3.1%, suggesting that companies are beginning to replace pricing-driven growth with healthier, volume-led expansion.

On the surface, this may look like simply a stronger quarter. In reality, it could represent the beginning of a much deeper strategic shift.

More importantly, it may signal that the industry’s largest players have finally acknowledged a fundamental truth: pricing alone cannot sustain long-term growth, whether this shift is internally driven or triggered by financial market pressures.

Inflation changed the industry’s definition of growth

The inflationary years fundamentally reshaped how many CPG companies approached growth.

Between 2022 and 2025, pricing became an extraordinarily powerful lever. Companies successfully offset unprecedented increases in raw materials, logistics and labor costs by implementing multiple rounds of price increases, often delivering record organic growth while protecting margins.

Financially, the strategy worked. Culturally, however, it also changed the way many organizations thought about success. Revenue growth has increasingly become the headline KPI. Value market share became the preferred measure of commercial progress. Quarterly discussions naturally focused on pricing execution, revenue management and margin protection. Meanwhile, two of the industry’s most fundamental measures, volume and penetration, gradually lost strategic prominence.

Inflation, in many respects, gave the industry the illusion of almost unlimited top-line growth through pricing. That illusion lasted until consumer behavior began to change. As affordability deteriorated and household budgets tightened, consumers became increasingly price sensitive. Purchase frequency declined across multiple categories. Consumers traded down to private labels, smaller local brands and alternative channels. In many cases they simply eliminated purchasing occasions altogether.

The consequences became increasingly visible during 2025, when most of the large multinational experienced persistent volume declines despite still reporting positive revenue growth. The industry’s growth engine had become increasingly dependent on pricing while its underlying consumer base was slowly weakening.

Q1 2026 suggests companies have recognized the problem

The most encouraging aspect of Q1 is not the return of volume itself but it is the number of companies now actively pursuing it.

Only a year ago, just four of the largest CPG companies consistently reported positive volume performance. In Q1 2026, eight out of the twelve companies analyzed delivered positive volume growth, with AB InBev, P&G and Colgate-Palmolive joining companies such as The Coca-Cola Company, Unilever, Danone and Nestlé.

This reflects an industry gradually rediscovering that volume is not simply another KPI but it is the physical manifestation of penetration. Every additional unit sold represents another purchasing act, another household recruited, another consumption occasion captured, another opportunity to reinforce brand relevance.

Ultimately, volume remains the strongest indicator that a company is genuinely expanding its consumer franchise rather than simply extracting more value from existing buyers.

Volume cannot be promoted into existence

One of the recurring lessons emerging from the Q1 results is that companies are not growing volume through promotions alone but they are making deliberate strategic choices.

Three themes consistently emerge.

First, portfolio focus.

Successful companies are becoming increasingly selective about the categories, brands and pack formats they invest behind.

Rather than attempting to maximise breadth, they are concentrating resources where consumer demand, differentiation and scalability are strongest.

Second, geographic prioritization.

Growth is increasingly concentrated in markets where demographics, affordability and category development remain favourable. Rather than treating every geography equally, leading companies are allocating disproportionate investment behind higher-potential regions.

Third, cultural relevance.

Brands that create stronger emotional connections with consumers increasingly generate more purchasing occasions, improving both penetration and consumption frequency.

Perhaps no company illustrates this better than The Coca-Cola Company.

Coca-Cola shows what the new growth playbook looks like

Among all companies analyzed, Coca-Cola provides perhaps the clearest evidence of how the industry’s growth model is evolving.

Only two years ago the company represented one of the strongest examples of pricing-led expansion. Its extensive portfolio rationalization and disciplined revenue growth management significantly improved price-per-liter across the business, allowing Coca-Cola to become one of the industry’s strongest top-line performers.

The 2025 results perfectly illustrated this strategy. Organic growth reached an exceptional 12%, yet approximately 93% of that growth came from value while only 7% came from volume.

Many companies would have continued following that formula, instead, Coca-Cola recognized its limitations surprisingly early.

Q1 2026 tells a completely different story. Organic growth remained outstanding at around 10%, but this time approximately 80% of the growth came from volume rather than pricing.

The interesting question is not what changed but how it changed.

Portfolio architecture became a penetration tool

Rather than using portfolio management primarily to optimize margins, Coca-Cola increasingly used it to recruit consumers.

The company expanded its pack-price architecture with locally relevant formats capable of addressing different purchasing occasions, affordability needs and retail environments.

Mini cans launched through the convenience channel in the United States provide perhaps the best example. Rather than simply offering a smaller package, they lowered the entry price, expanded affordability, increased impulse purchasing and opened new consumption occasions.

Elsewhere, Coca-Cola introduced locally relevant pack formats, bundled offers, lightweight bottles and country-specific innovations, all designed around one objective: increasing consumer recruitment while maintaining pricing discipline.

The recent launch of Coca-Cola Black follows the same philosophy.

By removing sugar and caffeine while adopting a premium black identity, the company is attempting to create entirely new evening consumption occasions rather than merely competing within existing ones.

Cultural relevance creates consumption occasions

Equally interesting is Coca-Cola’s renewed emphasis on cultural relevance.

Rather than treating marketing as communication alone, the company increasingly uses local culture to create reasons to consume.

Campaigns linked to Ramadan, Chinese New Year, Carnival, March Madness and numerous local celebrations transform the brand into part of culturally meaningful experiences.

One particularly elegant example combines both portfolio architecture and cultural relevance.

The limited-edition mini-can collection celebrating individual U.S. states simultaneously leverages an affordable format while creating collectability, conversation and emotional engagement.

The result is not simply higher awareness, but it is more purchasing occasions and ultimately, more penetration.

Balanced geographical execution

Coca-Cola’s geographical performance reinforces the same lesson. As a Global business the company covers a high number of geographies but with a mix of different brands from the big blockbuster to some more local jewels.

Unlike many competitors, volume growth was broad-based across all four major operating regions, with particularly strong momentum in North America.

This is particularly significant. North America remains one of the most challenging consumer environments globally, characterized by slowing consumption, increasing price sensitivity and intense competitive pressure.

If Coca-Cola can successfully build volume in North America, it demonstrates that penetration growth remains achievable even under difficult market conditions.

ABInBev perhaps provides the most symbolic turnaround. After eleven consecutive quarters of declining volume, the brewer finally returned to positive volume growth. The recovery appears closely linked to deliberate portfolio choices: stronger investment behind megabrands together with rapid expansion of no-alcohol beer and beyond-beer platforms, both substantially outperforming the core business and capturing entirely new consumer occasions.

Nestlé illustrates another important lesson. Rebuilding volume is an organizational transformation.

Following several years during which pricing became the dominant growth driver, the company progressively lost purchasing occasions across parts of its portfolio as competitors, local brands and private labels expanded their presence.

Re-establishing Real Internal Growth (RIG) as one of the company’s principal strategic metrics went through multiple leadership transitions and several years of changing internal culture and perspective. The encouraging improvement now visible demonstrates that rebuilding penetration demands persistence, organizational alignment and long-term commitment rather than short-term commercial programs.

The beginning of a different growth philosophy

Q1 2026 should not be interpreted as the end of the industry’s volume challenge. One quarter does not reverse several years of structural change.

What it does suggest, however, is that the industry’s largest companies are beginning to rethink the very foundations of growth.

For almost three years, inflation allowed pricing to substitute for penetration. The strategy generated attractive financial performance but gradually weakened consumer recruitment, purchasing frequency and ultimately long-term resilience.

The companies showing the strongest momentum today appear to have recognized that sustainable growth cannot be built on pricing alone. They are making difficult portfolio decisions, prioritizing geographies with the greatest long-term potential, redesigning pack-price architecture and investing in cultural relevance.

Above all, they are placing penetration back at the center of their growth strategies. Because volume does not increase simply because companies decide to sell more products.

Volume grows when companies deliberately create more reasons, more occasions and more opportunities for consumers to choose their brands.

That may ultimately prove to be the most important lesson emerging from Q1 2026.

Turning penetration into a growth strategy

Recognizing that penetration matters is relatively easy. Building a business around it is considerably harder.

Penetration is not the result of one initiative or one successful innovation. It is the outcome of a series of deliberate strategic decisions that determine whether a brand recruits more consumers, creates new purchasing occasions and expands its relevance over time.

This is why, at Sevendots, we developed our Penetration Decision Framework.

The framework helps companies identify where the biggest penetration opportunities lie and, more importantly, which decisions need to be made to unlock them. It provides a structured path to prioritize growth opportunities and align the organization around the choices that matter most across four dimensions:

• Portfolio: Which categories, brands, innovations and pack-price architecture can recruit more consumers and occasions?

• Geographies: Where should investments be concentrated to maximize long-term penetration?

• Channels: Which channels and shopping missions offer the greatest opportunity to expand reach?

• Consumer relevance: How can brands become more meaningful by better addressing evolving needs and local cultural contexts?

The result is not simply a list of growth initiatives, but a clear roadmap that links strategic choices to penetration, volume and ultimately long-term value creation.

The encouraging Q1 2026 results suggest that many leading CPG companies have already started this journey. Those that sustain their momentum will likely be the ones that embed penetration into every major commercial decision—not simply as another KPI, but as the organizing principle behind portfolio, innovation, channel and geographic strategy.

At Sevendots, helping companies make those decisions is at the core of what we do.

Free readers get our latest thinking on CPG growth. Paid subscribers get the frameworks, case studies, and tools to put that thinking into action.

Go Deeper

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<sup>Sources:
1. Sevendots Top CPG companies ongoing monitoring, 2026
2. Companies financial reports, 2026
3. Companies earnings calls and press releases, 2026</sup>

High-growth retailers outperform through stronger supplier ecosystems.

Retail media, agility and supply chain collaboration are now major differentiators.

Executive Summary

Retailers that collaborate more closely with suppliers are growing much faster.

That is the headline from brand new research mapping the financial growth rates of retailers against Advantage Group International (AGI) supplier feedback.

The link is especially strong in areas connected to speed, execution, retail media effectiveness, data actionability, cross-functional alignment and supply chain integration.

In other words, the winning retailers are those that are closely working with suppliers where collaboration can be translated into commercial outcomes.

The results show that better collaboration is leading to more investment which is driving better execution which is in turn creating higher growth.

This is what we term the Collaboration Dividend.

Introduction

Across global retail markets, profitable growth is becoming increasingly difficult to sustain.

Retailers are simultaneously managing margin pressure, supply chain volatility, retail media complexity, omnichannel execution challenges, rising consumer expectations, and intensifying competition from both value and digital-first players.

In this environment, scale alone is no longer enough.

The retailers pulling ahead are increasingly distinguished not simply by pricing power, footprint, or negotiating leverage, but by how effectively they collaborate with suppliers.

New analysis across 21 major global retailers combining their financial performance with their supplier collaboration scores (as measured by the global leader in B2B engagement, Advantage Group International) shows that higher-growth retailers consistently outperform lower-growth peers across a broad range of collaboration-related capabilities, particularly in areas tied to retail media execution, agility, data actionability, cross-functional alignment, and supply chain integration.

The implication is significant.

Collaboration is no longer simply a relationship-management exercise or procurement philosophy. Increasingly, it is a structural growth enabler.

The retailers creating the strongest supplier ecosystems are also more likely to move faster, execute more effectively, unlock stronger retail media performance, improve forecasting and availability and translate insight into action more consistently

The evidence is compelling.

In a world where it’s easy to let differences in opinion or strategy get in the way of progress, the strongest retailers are leaning into suppliers and winning through stronger collaboration.

New Research: The Collaboration Gap Between High and Low Growth Retailers

To better understand the relationship between collaboration and retail performance, an analysis was conducted across 21 major retailers spanning grocery, discount, omnichannel, and mass retail formats across North America, Europe, Latin America, Asia, and Australia.

Retailers were segmented into high-growth and low-growth groups using publicly available revenue growth data and a median-split methodology. The winning retailers had an average revenue growth of 4.6% compared to the remainder who declined by 1.2%.

The winners had an average AGI score across all measured dimensions of 30 points, 15 points higher than the rest. A company’s AGI score is derived from anonymous supplier feedback, providing a benchmark of how retailers are viewed by their suppliers in areas like collaboration, service, and value creation.

In other words, the best-performing retailers from a financial perspective were rated significantly better to do business with by their supplier base. For context, 15 points difference is a highly significant number and shows that being more collaborative pays off with real commercial results.

Strikingly, high-growth retailers score better across every measured capability.

However, as the visual below shows, the real separation appears in a relatively small number of commercially critical areas where the gaps are extremely large.

The strongest performing retailers consistently outperform lower-growth peers in capabilities tied directly to retail media monetization, speed and agility, data activation, supply chain collaboration, cross-functional alignment, category and assortment execution.

These are not soft relationship indicators, they are increasingly the operational systems that determine how quickly retailers can respond, align, execute, and grow.

Viewed together, the findings suggest that collaboration increasingly acts as a multiplier across the broader retail operating model.

Retail Media Has Become The Biggest Point of Separation

The single largest performance gap between high and low-growth retailers appears in retail media capability. We commented on the rising power of retail media in our recent article from Colin McAllister (The Rising Power of Retail Media).

High-growth retailers outperform lower growth peers by 28 points in retail media — the largest gap observed across the entire analysis.

This is particularly significant because retail media is no longer simply about advertising product. Increasingly, it sits at the intersection of supplier investment, category growth, omnichannel activation, data monetization and digital execution.

The strongest retailers are not simply treating retail media as an isolated profit stream, instead they are integrating media into broader category, assortment, and shopper-growth strategies. As such, suppliers working with these retailers are more likely to experience clearer ROI measurement and better alignment between media and execution which in turn gives them greater confidence in investing.

By contrast, lower-performing retailers are more frequently perceived as operating fragmented retail media ecosystems where execution, insight, and commercial objectives remain disconnected.

High-growth retailers are more thoughtfully building out their teams and offerings in this space and consistently appear better able to help suppliers understand:

• Where to invest

• Why to invest

• How value will be created

• How performance will ultimately be measured

This matters because supplier investment increasingly flows toward retailers capable of demonstrating measurable commercial return.

Speed and Data Are Emerging As Competitive Multipliers

The next major point of separation is operational agility.

High growth retailers outperform lower growth peers by 24 points in agility and 22 points in data actionability. These are not simply operational metrics, they reflect how effectively organizations convert insight into execution.

In practice, suppliers describe high-performing retailers as organizations that make decisions faster, align teams more effectively, respond more quickly to changing conditions, translate data into action with greater consistency and remove friction from execution.

This matters because retail complexity is increasing rapidly.

Promotional cycles are shortening. Consumer behavior is fragmenting. Omnichannel execution is becoming harder. Supply chains remain under pressure.

In this environment, the ability to act quickly increasingly becomes a growth advantage in itself. Retailers that move slowly often create hidden execution costs for suppliers, even when strategic intent is strong.

By contrast, high-growth retailers appear better able to align commercial, supply chain, media, and category functions around shared priorities, allowing decisions to move more efficiently from insight to action.

Communication also plays a major role, with high-growth retailers outperforming lower-growth peers by 16 points in communicating strategy. Suppliers working with these retailers typically describe greater clarity of direction, faster organizational alignment, better visibility into priorities and more confidence in long-term planning

Taken together, these capabilities create faster and more coordinated ecosystems.

And increasingly, speed itself appears to be becoming a source of competitive advantage.

Supply Chain Excellence Is No Longer Just About Cost

One of the most consistent findings across the analysis is the strength of supply chain-related collaboration among higher-growth retailers.

High-growth retailers significantly outperform lower-growth peers across supply chain effectiveness and efficiency, as well as forecast and demand planning.

This is a big shift as historically, supply chain discussions were often centered around cost reduction whereas today, the role of the supply chain is expanding.

Leading retailers increasingly treat supply chain collaboration as a shared growth system with suppliers rather than a downstream operational process.

Which is why suppliers working with high-growth retailers consistently report earlier visibility into demand shifts, better forecasting alignment, faster issue resolution, greater transparency, fewer late-stage surprises and more reliable execution.

These capabilities matter commercially because they directly impact on-shelf availability, promotional effectiveness, inventory optimization, waste reduction and shopper satisfaction.

In increasingly volatile retail environments, supply chain collaboration is becoming a competitive advantage rather than simply an operational necessity, and the retailers that execute best increasingly appear to be those that treat suppliers as integrated operating partners rather than external vendors.

Organization Alignment Is A Hidden Driver

Another important finding from the analysis is the importance of organizational alignment, as evidenced by the fact that high-growth retailers significantly outperform lower-growth peers in cross-functional alignment, capability and experience, availability of people and collaborative business planning

Retailers with strong internal alignment also typically make it easier for suppliers.

Easier to access the right decision-makers.

Easier to resolve issues quickly.

Easier to align around shared objectives.

Easier to coordinate across functions.

Easier to translate plans into execution.

This becomes particularly important as retail operating models become more interconnected across different channels and formats.

In complex environments, alignment itself becomes an efficiency advantage.

Trust Matters But It No Longer Differentiates Leaders

It is also notable that traditional relationship-health measures such as trust and fairness show smaller gaps than more execution-oriented capabilities.

This does not mean these factors are unimportant but rather, it suggests they have increasingly become baseline expectations.

High-growth retailers still outperform lower-growth peers on trust, however, the separation is materially smaller than in areas such as retail media, agility, or data actionability.

Trust is necessary, but no longer sufficient in itself.

Instead, retailers increasingly differentiate themselves by combining strong relationships with superior execution, speed, and commercial sophistication.

The Collaboration Equation, Business Leader Interview Series, Q2 2026

What High Growth Retailers Do Differently

Viewed collectively, the analysis suggests that high-growth retailers tend to behave differently in several important ways.

They are more likely to treat suppliers as strategic growth partners rather than purely commercial counterparties, use data collaboratively rather than transactionally, integrate retail media into broader growth strategies, move quickly from insight into execution, build transparent and responsive supply chains, align internal functions around shared priorities and create clearer commercial outcomes for suppliers.

Importantly, these behaviors compound over time and as collaboration improves then supplier trust increases, execution improves and investment confidence grows.

Over time, this creates a widening separation between retailers operating collaborative ecosystems and those operating more transactional models.

Let’s look at three examples of retailers that focus on collaboration as a competitive advantage.

Walmart: Collaboration Governance

Walmart stands out for turning collaboration into a structured operating rhythm, with suppliers consistently describing strong joint business planning, disciplined execution, high operational rigor and advanced supply chain coordination.

Rather than depending on individual relationships, the governance, systems, and cadence create an ecosystem where suppliers can align more quickly and execute more consistently at scale.

Amazon: Systems And Commercial Sophistication

Amazon’s strength lies in its combination of platform scale, retail media sophistication, logistics capability, automation and data infrastructure.

Suppliers consistently view Amazon as one of the most commercially advanced retail ecosystems globally with its retail media capabilities in particular being frequently cited as industry-leading due to sophisticated targeting, closed-loop measurement and rapid optimization.

Transparency and commercial effectiveness are key elements of their collaborative value creation.

Amazon: Systems And Commercial Sophistication

Amazon’s strength lies in its combination of platform scale, retail media sophistication, logistics capability, automation and data infrastructure.

Suppliers consistently view Amazon as one of the most commercially advanced retail ecosystems globally with its retail media capabilities in particular being frequently cited as industry-leading due to sophisticated targeting, closed-loop measurement and rapid optimization.

Transparency and commercial effectiveness are key elements of their collaborative value creation.

Conclusion: The Winning Retailers Are Not Winning Alone

There are two really critical findings from this work.

First, winning retailers are collaborating more openly with their suppliers.

They fundamentally believe it is important, they talk about it, they measure it.

Secondly, collaboration increasingly appears tied to capabilities that directly influence growth. The largest gaps between high- and low-growth retailers are not in traditional relationship measures alone but in areas connected to speed, execution, retail media effectiveness, data actionability, cross-functional alignment and supply chain integration.

In other words, the retailers pulling ahead are increasingly those that have built organizational systems capable of translating collaboration into commercial outcomes.

This matters because suppliers increasingly make strategic choices around investment prioritization, resource allocation, innovation support, data sharing, commercial collaboration and talent deployment.

Retailers that create stronger collaborative environments are therefore increasingly likely to attract disproportionate supplier focus and investment.

This is what we call the Collaboration Dividend.

And it is a winning strategy for retailers.

At Sevendots, we help brands unlock pathways to volume growth, which includes building the right brand and category plans in close collaboration with your retailer partners. Our team has extensive senior sales, strategy and marketing expertise, gained through experience working within many of the largest CPG companies around the world. Reach out to us if you are looking for support to drive out-sized growth in 2026 and beyond.

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^Sources:

<sup>1. Retailer–Supplier Collaboration in the Supply Chain. Boston Consulting Group.
2. Taking Supplier Collaboration to the Next Level. McKinsey & Company.
3. Advantage Group International Voice of Supplier scores and major retailer verbatim dataset.
4. Public retailer financial disclosures and earnings releases.
5. The Collaboration Equation: Unlocking Value in a High-Pressure Market, AGI 2026</sup>

Defined primarily by physical products and manufacturing processes, categories shape everything from supply chains to shelf layouts, performance metrics to product innovation pipelines. For decades, this industrial lens has helped companies align resources, standardize operations, and build deep market knowledge.

However, as consumer expectations evolve and volume growth becomes harder to achieve, this traditional approach is showing its limits.

The Legacy of Industrial Categorization

Most category definitions are still broadly linked to physical units (bottles of shampoo, packs of biscuits, cans of soda). This logic works well for managing production and distribution, and it supports robust market analytics: growth rates, market shares, and distribution gaps are all easy to track within these clear boundaries and reporting can be in terms of units, equivalent volumes and values. Retailers have mirrored this logic, organizing physical and digital shelves accordingly.

Consumers, too, have largely adapted their shopping behavior to this structure.

At the same time most manufacturers are reasoning in terms of need states to navigate these categories, bringing a broader set of associated rational and emotional benefits to the use of the physical products.

A Missed Opportunity: Higher Level Solution Framing

Manufacturers and retailers experiment with different category definitions vs. the industrial one but, when they do, they are often treated as marginal experiments. For example ethnic food sections, party bundles, oral care regimens.

These efforts rarely sit at the center of corporate strategies. In contrast, some start-ups and digital-native brands have embraced the idea of providing higher level solutions to consumers with integrated, service-driven models. This can be the case with meal kits, health regimens, or time-saving solutions.

This lack of a higher framing exercise has two critical drawbacks for major CPG players:

Growth Constraint: When companies define their scope narrowly, they limit their capacity to scale. A brand focused only on energy drinks might miss growth opportunities in adjacent spaces like coffee, supplements, or snackable energy. Red Bull, for instance, commands nearly 40% of the U.S. energy drink market (1, 2). But it understands that its true competitive set includes anything that offers consumers a quick energy boost—coffee, bars, or even functional gum. This broader lens fuels innovation and relevance.

Value Leakage: Consumers increasingly expect more personalized, adaptive, and high-fit solutions. Yet most CPG portfolios are not designed to deliver against this rising bar. While other industries embrace customization and service layers, the CPG industry is often stuck delivering physical goods through a traditional lens, leaving value “on the ground.”

Leading by Example: Expanding the Playing Field

Forward-thinking companies have begun to redefine their frames of reference. The Coca-Cola Company moved from managing carbonated soft drinks to Liquid Refreshment Beverages and now speaks more broadly about “drinks” and “occasions,” enabling a more flexible and expansive innovation agenda.

In snacking, the historical sweet/savory divide is losing relevance. Consumers are increasingly driven by curiosity, craving new taste experiences that blur these boundaries, such as Oreo Pretzel. The Mars acquisition of Kellanova signals a move toward building powerful cross-category snacking portfolios, unconstrained by outdated classifications and definitions.

Rethinking the Model: Two Imperatives

To move beyond traditional categories, CPG companies must embrace two core shifts. They are both rooted in putting the consumer first:

From Categories to Solutions

Reframe your portfolio not by product type, but by consumer jobs-to-be-done. Whether it’s energy, indulgence, hydration, or convenience, define the occasions or the need states and then shape the offer around them.

From Product to Platform

Elevate the offer beyond the physical product. Incorporate services, experiences, or digital layers that deepen relevance and increase perceived value. This requires a new way of thinking about portfolio design, capability building, and business model evolution.

Conclusion

The CPG industry cannot afford to cling on to industrial-era category definitions. Consumers don’t think in terms of supply chains or product lines, they think in terms of needs, occasions, and aspirations intuitively looking for higher level solutions. Companies that reframe their approach around these consumer realities, and make them central to their long term strategies, will be the ones best positioned to unlock new growth, foster loyalty, and create meaningful differentiation in a crowded marketplace.

Contact Sevendots today to discover more.

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^{Sources:
[1] Statista, 2024
[2] Bain & Company, 2012}

Driving category growth is one of the best investments to sustain long term brand success in the CPG industry

A few years ago, we ran a study interviewing 130 marketers from multinational CPG companies, who indicated that driving category growth remains one of the best investments to sustain long term brand success (1). Not only there was a clear indication that category growth was an important activity for supporting long term CPG brands success (with almost 50% of the respondents claiming that category growth contributed significantly to the development of their brands in the previous 5 years), but also that this was becoming more relevant than in the past (with 54% of the respondents saying it was more important than 10 years before).

A 2021 Kantar Worldpanel analysis based on 29,000 brands across 52 countries indicated that brands are five times more likely to grow if their categories are growing (2). So, what does it mean to focus on category growth and how can it impact your business/brand growth for consumer goods companies?

Category growth versus market share

There is a potential ongoing tension between focusing on market share growth versus category growth. Traditionally companies have been almost obsessed with market share. 51% of brand-side marketers still believe growing market share is the most important task for a marketing department (3). The whole information system and performance KPI is mainly centered on your ability to expand market share, with category growth then taken for granted. However, as soon as the organic growth rate of CPG categories started to slow down, some brands experienced unanticipated issues.

For example, we worked for a client with a dominant CPG market share close to 50%, though it was within a category that was progressively declining. The company, in fact, was mainly focusing on winning market share from competition vs. trying to support the overall category and its equity and meaning for consumers. Once they modified their perspective in their approach to decision-making, their sales started to pick up again.

In reality, market share and category growth can work synergistically. In fact, if you focus on category growth using smart approaches you can gain a disproportionate share of the growth that will impact also your market share. This is precisely what happened with the launch of pods in the laundry detergent market. Combining multiple products and benefits in a well dosed pod which boosting the overall performance of your laundry, led to a clear game changer in the category. Ariel 3in1 pods succeeded in driving category growth, share growth and value growth at the same time (4).

Moreover, category growth can also be achieved by winning market share from other categories. For example, in food, growth can be seen as a market share game when winning consumption occasions from other categories. This applies to snacking moments as well as main meals, where a category can target winning a higher share of stomach leveraging, for example, a stronger Better For You/healthier profile or better linking to emerging trends.

It is worth noting how brands can work together to grow the category but compete for market share within it. An example might be the way Beyond Meat and Impossible Foods have both expanded the plant-based meat category, benefiting all players involved. Furthermore, these brands played a role in addressing the challenge of educating consumers and building demand, which is a common hurdle when expanding a category.

Identifying category growth drivers and aligning them with your portfolio

Thinking about category growth means first understanding properly what growth drivers are affecting the category, and then how you can leverage your portfolio accordingly.

The Sevendots Growth Drivers Mapping helps to identify and quantify the contribution of the key drivers of category growth, whether they are offer based (i.e. product innovation) or consumer demand based (i.e. emerging trends and consumer insights). The Sevendots Portfolio Analysis Framework matches the identified category growth drivers with the company portfolio so as to identify where the missed opportunities are. This exercise is becoming very important in informing the innovation pipeline, allowing for an updated offer which is better aligned with the growth drivers. These could be convenience or personalization or on the go consumption.

As an example, Coca-Cola’s Freestyle machines, which allow consumers to customize their drinks, was a disruption and innovation that very likely tapped into the personalization trend, driving both category and brand growth by centering consumer preferences.

Looking at how your current portfolio covers the identified growth drivers remains a fundamental approach to maximizing brand growth potential.

Two additional ways to drive category growth: category equity and territory expansionThere are two additional areas to support category growth. One is category equity – so how the overall category is perceived by consumers and what is the engagement they have in it.

Think about the developing role of coffee for younger generations. This category has become a way to express identity. Your coffee choice is close to who you are. This is linked to the fast rise of specialty coffees that are charging a super-premium. This goes beyond a “branding effort”, contributing to the increasing value of the category by significantly improving coffee/bean quality and consumer understanding and appreciation of these elements. This has been achieved both through consumer education and experience in store. Young people may trade down in other categories that are more remote from their identity, but they are prepared to pay a super-premium when deciding to drink a coffee either in or out of home.

Similarly, in recent years, sales of craft beer have grown by becoming a part of consumer identity, with local breweries fostering strong community ties and customer loyalty, thereby driving category growth.

The second area to consider is how the category can expand the territory it covers. This is related to the ability to answer new need states, cover new occasions and provide additional benefits. An example is related to whisky, which is normally an after-dinner drink, which has begun moving into aperitives. Jack Daniels have done this by latching on to the Spritz trend.

In the same way, Greek yogurt brands like Chobani expanded from the breakfast occasion to being a versatile ingredient used in cooking, snacking, and even desserts, significantly broadening the yogurt category’s territory.

In terms of added benefit, this was what chewing gum did many years ago by starting to associate the category with the personal care category of oral health, so that this new offer helped drive expansion into new product categories.

Both equity and territory expansion are key areas to be considered in driving sustainable category growth.

The advantages of pushing category growth

While market share remains an important measure of brand performance, long-term success is more sustainability-centred when brands also focus on growing the entire category to gain a competitive advantage. In fact, Category Growth brings many advantages such as allowing brands to think more long-term, becoming more appealing for the global consumer base while providing better revenue growth returns to shareholders.

This is achieved through supporting category equity and through expanding the category territory. Innovation is, of course, a main contributor as it also focuses on ensuring the category remains relevant and dynamic in the face of changing consumer behaviors.

It is important for brand owners to reassess their strategies and consider the potential of category growth in their planning. This can be done starting from a good understanding of the category growth drivers and continuously aligning the portfolio to them.

The recent turbulence brought on first by Covid-19 pandemic and then by the sharp increase in cost of goods in the supply chain has distracted brands from nurturing the foundations of long-term sustainable growth. The time has come to refocus on consumer-led innovation that addresses changing customer needs, in order to ensure both category sales growth and brand share within.

Actions for brand owners

By focusing on category growth, not only can you secure a larger share of today’s market, but you will also future proof your brand for the challenges and opportunities of tomorrow.

Start by analyzing the category you play in. Identify and quantify the contribution of its key growth drivers, whether they are offer based (i.e. product innovation for new product delivery) or demand based (i.e. emerging consumer trends).

Map your portfolio against the key drivers to identify the most important opportunities to drive growth with your brands.

Consider the opportunity to engage and partner with key retailers to accelerate and increase impact on growth.

Support can make all the difference in ensuring your brand maximises on growth opportunities. Get in touch with us to discover more about how we can assist you and your brand.

Free readers get our latest thinking on CPG growth. Paid subscribers get the frameworks, case studies, and tools to put that thinking into action.

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^{Sources:
(1) Sevendots Growth Series, Category Growth, 2019
(2) Kantar Worldpanel, 2021
(3) Marketing Week, 2024
(4) Marketing week, 2018}

In this episode of Transforming CPG, Managing Partner of Sevendots, Andrea Bielli, and Senior Partner Colin McAllister discuss what you need to know about the debate around Ultra-Processed Foods. They cover…

• The key studies emerging regarding UPF and health

• Consumer concerns and awareness of the topic

• How the industry is grappling with this emerging debate

• Ways brand owners might better solve the problems UPFs have tried to solve in the past

…and much more.

Read more on UPFs and managing the risks in our latest article here: ⁠Ultra-Processed Food: What’s the debate and risks to health?⁠

Listen here:

Did you enjoy this podcast? Give us a rating and subscribe to receive new episodes as they are published.

This podcast episode is here to showcase our thought leaders, but we’d also love to hear from you. Let us know your thoughts on the discussion and connect with us on ⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠.

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Four boundaries are disappearing. The way CPG companies organize around them needs to change too.

The boundary that blurred: Media → Commerce

Consumer attention is fragmenting while media capabilities are converging. Retailers increasingly act like media platforms, and media platforms increasingly enable discovery, recommendation and transaction.

• Retailer first-party data has become a media asset: Retailers know what consumers actually buy, making their audiences valuable for targeting and closed-loop measurement.

• Media platforms are adding commerce: Social and content platforms increasingly integrate product discovery, affiliate models, shopping and checkout.

• Consumer journeys have fragmented: Discovery can start with creators, retailer search, video, reviews, social trends, marketplaces or AI - and purchase may happen elsewhere.

• AI is compressing the journey further: AI-driven search, recommendation and agentic commerce can combine discovery, evaluation and transaction in a single interface.

What it means?

• Media blurring is the erosion of the traditional boundaries between brand media, shopper media, retail, content, entertainment, search and commerce.

• Consumers can now discover a product, see creator content, research it, receive recommendations and purchase it within the same or closely connected environments.

The challenges

The consumer experiences one connected journey - see -> discover -> investigate -> validate -> shop -> buy -> advocate - while many CPG organizations still manage it through separate functions and budgets, underestimating how the model has changed.

• Budget ownership becomes ambiguous: a retailer CTV campaign may simultaneously be media, e-commerce, shopper and customer marketing.

• Measurement becomes inconsistent: reach, attention, brand lift, ROAS, incrementality, new-to-brand and retailer sales measure different parts of the same journey.

• Creative operating models struggle: one master TV asset is not enough for creators, social, retail PDPs, search, shoppable video, CTV and in-store screens.

How to realign

1. Plan around audiences and journeys, not channels - Start with who needs to change, what behavior is required and where influence can occur; select channels afterwards.

2. Integrate investment governance - Brand, shopper, e-commerce and customer budgets need a common decision process even if accounting ownership remains separate.

3. Create one cross-functional growth planning process - Brand, media, sales/customer, e-commerce and insights should jointly define audience, occasions, growth objective, investment and measurement.

4. Create a common measurement hierarchy: Use business outcomes (incremental sales, penetration, margin), consumer outcomes (trial, repeat, consideration), media outcomes (incremental reach, attention) and commerce diagnostics (conversion, new-to-brand, basket).

The boundary that blurred: Physical → Digital

Consumers increasingly assemble their shopping journey around need, occasion, value, convenience and fulfilment rather than a single retail channel. For CPG companies, the strategic response is not simply “more e-commerce”; it is to manage demand, assortment, price-pack architecture and availability across an increasingly fluid omnichannel ecosystem.

What it means?

• Availability becomes strategic. When shoppers can switch retailer or platform quickly, out-of-stock increasingly risks becoming a competitor purchase rather than a delayed purchase.

• Category and competitive sets expand. A lunch product may compete across supermarket food-to-go, convenience, QSR, cafes, delivery and ready meals.

• Assortment boundaries weaken. “Channel-exclusive” products can surface through marketplaces, delivery intermediaries or resale, while the same store inventory may serve both digital and physical shoppers.

The challenges

• Convenience and time optimization. Consumers increasingly choose the lowest-friction route to fulfil a need: store, pickup, delivery, subscription or rapid commerce.

• Digitization of physical retail. Apps, loyalty programs, digital payments, inventory visibility and in-store technology connect physical stores to digital journeys.

• Changing consumption occasions. Growth in convenience, ready-to-eat and food-to-go erodes the traditional separation between grocery and foodservice.

• Value pressure. Inflation and pressure on disposable income encourage basket splitting, price comparison, discounter/club usage and private-label switching.

How to realign

The strategic question moves from “How do we win in supermarkets / Amazon / discounters?” to “How do we win the consumer occasion wherever discovery, shopping and fulfilment happen?”.

1. Make availability and fulfilment a competitive capability. Improve digital shelf availability, inventory visibility, forecasting and service levels because switching costs for consumers are increasingly low.

2. Move from channel strategy to shopping-mission strategy. Plan around stock-up, replenishment, immediate need, discovery, treat, meal solution and on-the-go missions; then identify which channels compete for each mission.

3. Give channels differentiated roles. Use channel-specific pack, assortment and innovation roles: e.g., bulk/value in club, immediacy in convenience, discovery in social commerce

4. Build genuinely omnichannel consumer measurement. Track the hierarchy from total consumer/category to shopper, mission/occasion, retailer/platform, fulfilment method and SKU - rather than relying on isolated channel shares

The boundary that blurred: Age → Need state

Generations are not becoming identical. What is weakening is the historical link between chronological age, life stage, household structure and predictable consumption. CPG segmentation therefore needs to move beyond age cohorts toward life stage, need state, attitude and occasion.

What it means?

• Needs move across age boundaries. Healthy aging, protein, cognition, sleep, gut health and preventive skincare are increasingly relevant before traditional “mature” life stages. Conversely, digital shopping, social discovery, gaming and experimentation are no longer exclusive to younger consumers.

• Households contain multiple generations and need states. One basket may serve children, young adults, mid-life caregivers and elderly parents. The buyer, user and influencer may be different people, weakening a single “household life stage” label.

• The same benefit has different jobs-to-be-done. For example:

The challenges

Consumers increasingly refuse to behave according to the neat organizational boxes CPG companies used in the past. The strategic shift is from “Who is this consumer by age?” to “What is happening in this consumer’s life, and what job are they trying to accomplish?”

• Household composition, income, attitudes and needs can differentiate same-age consumers more than birth year.

• Marriage, children, home ownership and retirement no longer follow one timetable

• Consumers spend more years working, exercising, travelling and consuming before traditional old age.

• Consumers address sleep, cognition, muscle, skin and longevity before age-triggered problems emerge.

How to realign

1. Segmentation: generation should remain an explanatory variable, not automatically the primary segmentation architecture.

2. Innovation: design around needs and jobs-to-be-done rather than age labels - e.g., longevity, energy, muscle health, sleep or convenience.

3. Branding: build cross-generational brands with a common benefit and different entry points, rather than defaulting to separate age-specific brands.

4. Portfolio: move beyond Baby / Family / Adult / Senior toward need platforms such as Nutrition, Performance, Prevention, Convenience and Healthy Aging.

5. Media & commerce: target behaviors, occasions and needs while avoiding assumptions that a channel or platform belongs to a single generation.

The boundary that blurred: Category → Consumer need

Consumers increasingly organize choices around needs, occasions and desired benefits rather than the category definitions used by manufacturers and retailers.

As a result, products from historically separate categories increasingly compete for the same demand: snacks become meals, foods become supplements, beverages deliver nutrition and wellness, and beauty expands into ingestible wellness.

The strategic shift is from managing only category share toward understanding and winning consumer demand spaces.

What it means?

Consumers don’t think (any more) in terms of “categories” but what drives their product and brand choices are increasingly outcomes that match moods and occasions that can vary throughout a day, week or month

They consider a large range of solutions and options that can be located in diverse parts of a store.

Category blurring expands both the competitive threat and the growth opportunity. Companies that define themselves only by the category they currently sell risk missing where consumer demand is moving; companies that understand the needs they have permission to serve can identify a broader addressable market.

The challenges

Boundaries have come down

As a consequence:

• Benefit-centered shopping: search, social and digital discovery encourage consumers to start with needs rather than with a conventional category.

• Social-media discovery: consumers encounter benefit territories and trends rather than retailer category taxonomies, accelerating cross-category consideration.

• Convenience and flexible eating: less rigid meal structures create demand for portable products that can operate as snacks, mini-meals and meal replacements.

• Changing nutrition patterns, including GLP-1 adoption: demand for smaller, nutrient-dense and protein-rich products can further weaken conventional meal and category boundaries

  

  .

How to realign

1. Move from category to demand-space strategy: Keep categories for reporting and execution, but add a strategic lens based on consumer needs and occasions: morning nutrition, hydration, energy/focus, gut health, healthy snacking, on-the-go meals, indulgence and relaxation.

2. Measure “share of need” alongside category share: Complement traditional value share, volume share, penetration and frequency with share of occasion, benefit, need and consumer expenditure.

3. Build cross-category competitive maps: For each priority need, map occasions, products, categories, brands and price points. For energy, for example, the relevant set can include coffee, energy drinks, functional water, shots, supplements and bars.

4. Organize innovation around platforms: Develop growth platforms such as protein, gut health, hydration, healthy aging, mood/relaxation and indulgence, then select the best product formats rather than limiting innovation to existing category pipelines.

5. Assess brand permission to stretch: Prioritize adjacencies using consumer-need attractiveness, brand permission, capability fit, channel fit and economics. Category adjacency alone is not enough.

Summary

Organizations need to evolve to operate and succeed in an irreversibly blurred CPG competitive context.

How Sevendots can help

Over the last 15 years Sevendots has supported a broad range of CPG companies to FOCUS in addressing the challenges of a rapidly evolving and blurring competitive scenario. This has been achieved through:

• Strategic frameworks

• Organizational alignment

• Growth strategies

• New business KPIs

<sup>Sources:
1. P&G, 2026 Annual Report - Integrated Growth Strategy: https://origprod-eus2-us.pg.com/annualreport2026/pg-integrated-growth-strategy/
2. IAB Europe, Attitudes to Retail Media Report 2025: https://iabeurope.eu/knowledge_hub/iab-europes-attitudes-to-retail-media-report-2025/
3. The Trade Desk, Unilever/WPP retail-data case: https://www.thetradedesk.com/resources/how-unilever-and-wpp-unite-turned-retail-data-into-a-full-funnel-breakthrough
4. Walmart Connect, Chobani case: https://www.walmartconnect.com/resources/case-studies/2024/chobani-customer-insights-omnichannel-ads
5. Sensor Tower, Retail Media Digital Advertising in 2025: https://sensortower.com/blog/retail-media-digital-advertising-in-2025-a-year-in-review
6. NIQ (2025), From insight to innovation: how to act on key omnichannel trends: https://nielseniq.com/global/en/insights/analysis/2025/from-insight-to-innovation-how-to-act-on-key-omnichannel-trends/
7. NIQ (2025), 5 key trends in omnichannel shopping: https://nielseniq.com/global/en/insights/analysis/2025/5-key-trends-in-omnichannel-shopping/
8. Circana (2025), Unlock omnigrowth in times of uncertainty: https://www.circana.com/post/unlock-omnigrowth-in-times-of-uncertainty
9. Circana (2025), Consumers shop at 39 unique retailers a year: https://www.circana.com/post/consumers-shop-at-39-unique-retailers-a-year-focusing-on-convenience-and-value-reports-circana
10. McKinsey (2026), State of Grocery Europe: https://www.mckinsey.com/industries/retail/our-insights/state-of-grocery-europe-report
11. Deloitte, CPG omnichannel marketing strategy and capabilities: https://www2.deloitte.com/us/en/pages/consulting/articles/cpg-omnichannel-marketing-strategy-and-capabilities.html
12. Ipsos, Generations Report 2026 - Modern Milestones: https://ipsos-insight-llc.foleon.com/ipsos-thinks/ipsos-generations-report-2026/modern-milestones
13. McKinsey, Future of Wellness Trends: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/future-of-wellness-trends
14. NIQ, The New Rules of Relevance - 2026 predictions: https://nielseniq.com/global/en/insights/report/2026/the-new-rules-of-relevance-eight-predictions-that-will-redefine-cpg-growth-in-a-rapidly-shifting-marketplace/
15. Circana, US consumer behavior and shopping trends by generation: https://www.circana.com/insights-hub/u-s-consumer-behavior-and-shopping-trends-by-generation
16. NIQ (2025), “Blurring wellness boundaries: when supplements meet food and beverage: https://nielseniq.com/global/en/insights/analysis/2025/blurring-wellness-boundaries-when-supplements-meet-food-and-beverage/
17. Circana, “From Snackification to Indulgence: A Look at the Biggest Trends in Snacking”: https://www.circana.com/post/from-snackification-to-indulgence-a-look-at-the-biggest-trends-in-snacking
18. Circana, “How Selective Consumption Is Shifting the Snackscape”: https://www.circana.com/post/how-selective-consumption-is-shifting-the-snackscape
19. McKinsey, “The Future of Wellness”: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/future-of-wellness-trends</sup>

Low Volume Growth

Based on the low volume growth experienced in 2024, overall organic growth among the eleven leading CPG companies analyzed averaged approximately 4%, but only 0.4% was volume-driven, with three companies experiencing declines. This creates significant tension, pushing companies to rethink and re-balance their growth strategies. Companies like Nestlé are notably prioritizing volume growth, using specific metrics like Real Internal Growth (RIG) to closely track and manage underlying performance.

2024 FY showed close to 4% as average organic growth

But generally struggling in driving volume

Focusing on three areas to boost growth

Three primary growth levers, among others, have emerged as crucial to addressing the challenge analyzing the different announced strategies of the companies:

In the identified growth strategies there is a mix of proactive and reactive approaches

Most companies claim to leverage all three areas but with different levels of priority and intensity

Portfolio Optimization: Focusing on higher growth categories and Effective Innovation

Portfolio optimization has become essential for responding effectively to volume pressures. Companies increasingly leverage innovation and targeted category management to attract consumers and stimulate volume growth.

Coca-Cola is expanding into functional beverages, as well as new categories such as ready-to-drink alcoholic products. P&G emphasizes superior-performing product innovations alongside actively addressing or divesting underperforming brands. PepsiCo is also betting on functional beverages and together with Mondelez innovating with health-oriented and premium snacks.

L’Oreal is investing in technologically supported innovation. Nestlé selectively innovates in high-growth categories such as pet care, coffee, and nutrition, while Kraft Heinz sharpens its portfolio focus around Taste Elevation, Easy Meals, and Snacking.

The ability to address underperforming parts of the portfolio, invest in high growth potential categories and develop more differentiated and transformative innovation become crucial elements to sustain volume increases.

Most of the focus in portfolio optimization is on innovation driving premiumization or leveraging higher potential categories

Geographic & Channel Expansion: Developing Emerging Markets and Away From Home Channels

Geographic and channel expansion are key responses to the volume growth challenge, with emerging markets, digital commerce and Away-From-Home (AFH) prominently featured in growth strategies.

Kraft Heinz aggressively expands in AFH segments through the Taste Elevation category, while PepsiCo, Mondelez, and Coca-Cola emphasize growth in emerging markets and diversified channels like AFH, digital, and convenience stores. Colgate-Palmolive and L’Oréal strongly underline emerging market penetration, particularly in Asia, Africa, and Latin America, with a targeted focus on digital commerce to capture incremental consumer volume.

The right choices on geographies and channels impact directly the ability for companies to increase their portfolio footprint reaching more consumers and fueling penetration.

Most brands still have ample room to increase global penetration and are underperforming in new sales channels, reducing the ability to fuel growth and extract more value from the existing assets.

Large potential is still seen in emerging markets while AFH and digital channels are focus areas for retail expansion

Digital & Productivity Optimization: Unleashing Resources and Increasing Marketing Effectiveness

Digitalization and productivity initiatives are increasingly directed toward reinvestment in marketing, innovation, and strategic market activities that directly drive consumer demand, enhance brand penetration, and stimulate volume growth.

Companies like Coca-Cola and L’Oréal prioritize digital effectiveness, utilizing AI-driven marketing and consumer analytics to improve ROI and enhance brand engagement. Kraft Heinz and PepsiCo heavily focus on productivity-driven efficiency, investing savings into innovation and market growth initiatives.

Nestlé, Mondelez, and P&G balance productivity-driven cost savings with effectiveness-driven consumer insight and marketing investments.

Leveraging AI and reducing the distance between data and their leverage is a key driver for improving marketing effectiveness and consumer engagement. Releasing resources through operations optimization allows for bigger investments in brands support.

Companies are splitting equally between increased marketing effectiveness and supply chain efficiencies

Conclusion: Navigating the Volume Growth Challenge

As volume growth remains subdued for large CPG companies, portfolio strategies, geographic and channel expansion and strategic reinvestments enabled by digitalization and productivity optimization become increasingly critical.

Companies that redefine their portfolio, develop successful differentiating innovation, target new geographies and channels and successfully leverage digital transformation and cost efficiencies will likely achieve sustainable growth and competitive advantage. Bringing back volume at the center of their strategies. Ensuring alignment among these strategic priorities and continuously adapting to evolving consumer expectations and market dynamics remain essential for sustained growth and profitability.

The Sevendots Value Creation Path allows companies to make an objective and deep assessment of their portfolio, identifying optimization opportunities. Based on that Design To Consumer Preference offers the opportunity to increase top and bottom-line growth in the short and long term, releasing resources to be invested in real innovation. Transformative Innovation Path allows companies to leverage internal capabilities with a start up mindset to identify real breakthrough and differentiating new products and offer. This ensures strong long term sustainable growth.

Sevendots also supports CPG companies to identify and implement geographic expansion and channel development, offering direct and implementable solutions that accelerate client business growth.

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^{Source: 2024 FY Corporate Financial Reports
Sources: CAGNY Company Presentations, 2025, Company’s 2024 Full Year Financial Reports, 2024,2025, Shareholders Presentations and Press Releases, 2024,2025.
(1) Like-for-like}

PepsiCo’s recent acquisition of Poppi for approximately USD 2 billion exemplifies this trend. Instead of cultivating transformative innovations internally, PepsiCo opted for the costly yet apparently safer route of external acquisition to expand its presence in the fast-growing global functional beverage market.

M&A as Externalized Innovation: A Cautious Bet

Established CPG companies often find their innovation efforts hampered by structural inertia, complex governance, and a risk-averse culture. Generally, there is an implicit belief that a dollar spent on scaling already available assets provides a better ROI than one spent on innovation. This translates into a CPG industry which is not leveraging enough the power of innovation, as shown by R&D spending as well as new product launches declining substantially in the past years (2).

The Poppi acquisition highlights how large corporations might outsource innovation to circumvent these internal limitations. Poppi, a soda formulated with probiotics and lower sugar content, promises to provide the taste of soda in a better for you formulation linked to a functional benefit. The brand has become one of the fastest-growing beverage products in the USA, rapidly reaching the $100 million sales threshold.

Poppi has a specific social-first, millennial-driven marketing approach and built its brand on authenticity, community, and direct consumer connections. As Jill Smith, CEO Americas of Iris Worldwide, succinctly captures (3), Poppi succeeded through:

• “Social-first storytelling that makes you feel like you discovered it, not that it was marketed to you.”

• “Nostalgia-driven branding that taps into the millennial and Gen Z craving for feel-good aesthetics.”

• “Community culture that extends beyond the can – merch, collabs, and a sense of belonging.”

Looking at this approach, there is a tension emerging: can PepsiCo preserve Poppi’s authenticity within its extensive corporate framework? The crucial challenge isn’t distribution reach; rather, it’s sustaining authenticity amid corporate governance and standardized processes.

The Tension: Startup Agility vs. Corporate Constraints

Startup agility allows quick pivots, bold experimentation, and close consumer connections. Conversely, large corporations typically prioritize scalability, governance, consistency, and risk mitigation. These competing approaches create tensions that acquisitions alone often fail to resolve effectively. Cases like Coca-Cola’s acquisition of Honest Tea and Unilever’s acquisition of Dollar Shave Club underscore how maintaining startup agility and authenticity within corporate frameworks is challenging yet critical. On paper, the opportunity appears clear, yet the day-to-day management and effective integration often prove significantly more challenging.

Rigorous Due Diligence: Hard vs. Soft Elements

PepsiCo undoubtedly performed rigorous due diligence, evaluating “hard” integration factors like consumer demand, scalable supply chain, manufacturing integration, retail channel fit and overall affordability.

However, and this is particularly relevant to the Poppi acquisition, several critical “soft” elements need to come into play to truly leverage the value of a startup acquisition. These include cultural integration, the adaptability of marketing support models, and the capacity to preserve authenticity and agility.

A structured approach combining hard and soft elements is essential to successful M&A integration.

While comprehensive due diligence is undoubtedly essential, it alone does not guarantee the elimination of risks, particularly the risk of unintentionally destroying long-term value instead of creating it.

Transformative Innovation: A New Model

Rather than relying solely on external acquisitions, there is an opportunity to blend the strengths of agile startups and large-scale organizations into a unified model that systematically de-risks innovation and nurtures transformative growth internally.

At Sevendots, our structured innovation framework bridges precisely this gap, leveraging internal capabilities with an external ecosystem able to identify and produce transformative innovation MVPs in a short 6 to 9 months cycle.

The process is based on:

1. Exploration: Identifying Future Growth Spaces: Leveraging insights from emerging trends and technologies and combining those with consumer trends uncovering high-potential opportunities.

2. Internal Discovery: Identifying Capability Gaps: Rigorously evaluating internal competencies against these high-potential opportunities, spotlighting essential gaps like R&D capabilities, scalable sourcing, go-to-market approaches or consumer marketing expertise.

3. Ecosystem Development: Connecting Resources & Capabilities: Connecting companies with cutting-edge startups, specialized research institutions, and manufacturing networks able to cover the identified gaps.

4. MVP Design & Execution: Proving the Business Case Through rapid prototyping and agile testing, enabling companies to validate new products efficiently, ensuring scalable, consumer-ready solutions.

Our senior-only partner model, combined with our extensive industry-specific insights, uniquely equips us to navigate these tensions. Our team’s extensive experience within both multinational corporations and startups enables us to effectively transfer deployable knowledge to internal teams, embedding innovation capability and fostering a lasting, entrepreneurial mindset.

Conclusion: From Acquisition to Internal Empowerment

The Poppi acquisition is symptomatic of deeper structural challenges within large CPG companies. Relying exclusively on external acquisitions may be neither sustainable nor strategically optimal in the long run. By adopting a structured yet agile internal innovation model, corporations can leverage their inherent strengths and significantly enhance their capability for transformative innovation.

It’s time for large CPG companies to evolve beyond mere acquisition-driven growth and truly harness the transformative power of innovation from within. At Sevendots, we are committed to helping companies bridge the gap between startup agility and corporate scalability, converting bold ideas into sustainable, impactful, long-term growth.

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^{Sources
[1] Skuquest, 2022
[2] Sevendots Growth Series, Awakening the Underused Power of Innovation in CPG, 2024
[3] The Drum, “PepsiCo, please let Poppi be Poppi”, Jill Smith, March 2025}

For decades, online product discovery has been dominated by search engines—Google, in particular. Shoppers type in keywords like “best shampoo for dry hair” and are met with pages of SEO-optimized links, sponsored ads, and content designed to manipulate algorithms more than inform consumers.

This model, while powerful for advertisers, is flawed for users. It’s noisy, biased, and ultimately driven by commercial incentives.

We are now standing at the edge of a profound shift—from search to advice, from pages of links to single-point decisions, and from SEO strategies to AI optimization. AI agents—intelligent systems that act on a user’s behalf to filter, recommend, and even transact—are replacing search as the interface of discovery [1].

While ChatGPT is a conversational AI agent, it’s just the beginning. Apple, Amazon, Google, Meta, and independent startups are also investing heavily in agentic technology [2] that will soon be embedded in phones, apps, shopping sites, and smart homes.

From search engines to AI agents: The evolution of online shopping

AI agents vs traditional search: Trust is the new currency

AI agents offer a fundamentally different model from traditional search. Rather than pointing users to pages based on backlinks and ad spend, they can converse, contextualize, and recommend based on:

• Verified reviews and real sentiment

• User-specific data and preferences

• Broader knowledge bases and third-party comparisons

This feels more trusted and efficient to consumers. Instead of being overwhelmed by links, users get a single, contextual suggestion: “This is the moisturizer that matches your skin type, budget, and ethical values.”

But this also disrupts the business model of the web. Google’s dominance comes from advertising. ChatGPT and other conversational AI agents – until now – have leaned toward objectivity. That’s beginning to change.

OpenAI recently announced potentially integrating advertising into ChatGPT [3]. This introduces new complexities: Will AI agents remain unbiased guides, or become smarter ad platforms? Will recommendations be earned or bought?

Search engine vs AI agent: How recommendations are made

CPG strategy: From search optimization to agent readiness

This shift poses a strategic inflection point for CPG companies. Instead of fighting for visibility through SEO and ad spend, brands now need to earn a spot in AI-driven recommendations.

Here’s how:

1. Optimize for AI agents, not just search

Traditional SEO will remain – but it won’t be the priority. Brands must invest in structured, trustworthy product data that AI systems can parse. That means:

• Clear product descriptions and attributes

• Transparent ingredient disclosures

• Verified reviews and ratings

• Sustainability and ethical certifications

A great example of this is Oatly, standing out with transparent product-level sustainability disclosures and public product Q&A sections that mirror Q&A ChatGPT conversations that consumers may have. Moreover, their fact-based educational content makes it easy for AI agents to parse and explain their products accurately [4].

Remember, AI agents scan diverse sources – not just your site. Make your product understandable to machines and credible to consumers.

2. Create a conversational brand presence

Conversational AI agents like ChatGPT draw on broad knowledge bases – including Wikipedia, Reddit, forums, third-party reviews, and published content. Brands should:

• Publish educational, evergreen content (e.g. skincare routines, ingredient benefits).

• Ensure their brand is referenced in credible, structured sources.

• Partner with platforms and data aggregators used to train AI agents.

Glossier is a brand that excels at building a conversational brand presence. Its strong presence on platforms like Reddit and beauty forums – where real customers share authentic experiences – makes it more “discoverable” through conversational AI [5].

If you’re not part of the training data, you’re invisible.

3. Prepare for paid placement – but ethically

If AI platforms include ads (as ChatGPT may begin to), CPGs must rethink how they engage:

• Create native-style, value-adding ads that blend seamlessly into recommendation flows.

• Be transparent, as consumers will reject “stealth” ads.

• Work with platforms to define ethical ad guidelines.

Sephora’s AI-driven product recommendation tools already include a blend of editorial and sponsored content, providing a good model for how native paid placements can work in AI environments.

Paid placement won’t go away – but the rules of trust are different in a conversation than in a banner.

4. Build direct-to-consumer capabilities

AI agents may bypass traditional marketplaces. If a user says “send me the best protein bar,” and an agent can complete the transaction – it matters who fulfils the order.

CPG companies should:

• Invest in frictionless DTC infrastructure

• Build loyalty and reordering experiences

• Ensure integration with agent-enabled commerce APIs

This creates brand independence and better access to consumer data.

For example, Nike’s proprietary apps, exclusive drops, and fulfilment logistics enable owning the customer journey end-to-end, making it ideal for AI-driven commerce integration.

5. Experiment with proprietary agents

Forward-thinking brands shouldn’t wait to be discovered by others’ agents – they should build their own. Examples:

• A personal care brand with a skincare routine coach

• A food company offering meal planning and nutrition advice

• A beverage brand launching a hydration tracker and reminder bot

L’Oréal’s acquisition of Modiface enabled them to develop AI-powered beauty advisors [6] – early prototypes of what branded agents will look like. These proprietary agents deepen brand equity, collect zero-party data, and create defensible channels.

5 strategies for CPG brands to win in an AI agent world

Final thoughts: From visibility to veracity

In the age of AI agents, brand discovery will no longer be about who shouts the loudest – but who offers the most trustworthy, relevant, and personalized answer.

CPG brands that adapt now – by making their data agent-friendly, their presence conversational, and their strategies forward-thinking – will win consumer trust in a world where AI is the first point of contact. The age of SEO isn’t over, but it’s no longer enough. The new race is to be recommended, not just ranked.

Contact Sevendots today to discover more about how to leverage AI in CPG.

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^{Sources:
[1] Forbes: The ‘Ask’ Era: How Generative AI Is Reshaping The Future Of Search
[2] Financial Times: Big Tech lines up over $300bn in AI spending for 2025
[3] Mashable: OpenAI is definitely, maybe thinking about ads for ChatGPT | Mashable
[4] Oatly: Random Answers & FAQ | Oatly
[5] Vogue College: Brand Activation – How Glossier Redefined Beauty Marketing | Vogue College of Fashion
[6] L’Oréal: Beauty Genius AI Virtual Beauty Assistant – L’Oréal Paris}

In today's competitive landscape, a 'power brand' must do more to drive sustainable growth. Enter powerbranding—the strategy of stretching a brand into new categories while reinforcing its core identity. This article explores when and how to implement powerbranding strategies, highlighting examples of brands that have successfully navigated this journey.

From power brand to Powerbranding

‘Power brand’ is a term that is often used to describe a brand that is influential, well-recognized, and has a significant impact on its category or industry. We might think of a power brand as having a clear and compelling identity, a dominant position, delivering consistent quality, and creating emotional connections with buyers. In fact, a quick Google search will provide hundreds of aspirational definitions that conflate a power brand with a paragon of branding perfection. This is not helpful. After all, are these positive attributes the symptoms or the drivers of success? We need a more clear and actionable definition that is measurably tied to growth.

Let’s never forget that in CPG, brand growth is an exercise in building penetration. It is a practice of Reach-Recruit-Remind as every brand is consistently losing buyers and needs to replace them. It follows that a more useful definition of a power brand is the ability to unlock additional penetration or, in other words, expand its territory.

In our previous article, we explored how driving category growth directly fuels brand growth. An alternative strategy for a power brand to expand its territory and grow, is to stretch into different categories.

This brings us to powerbranding. At its core, what we mean by powerbranding is unlocking additional penetration by stretching your brand from one category into another. It’s the hallmark of true brand strength. Power brands that succeed in stretching are those that can not only recruit new buyers but also reinforce their presence across a broader range of occasions and consumer needs touching multiple categories. This is where real brand power lies. Here are some examples of successful marketing strategies that employ powerbranding, for your consideration.

Nutella biscuits

When Nutella, an iconic brand mainly focused and almost owning the spreads category, stretched into biscuits in 2019, the new product was welcomed with so much enthusiasm that it went out of stock shortly after launch. While some consumers enjoy biscuits with spreads on top, the launch of the Nutella-filled biscuit brought convenience alongside the unique distinctive taste of Nutella straight into the biscuits category. Consumers were so eager to try the product that retailers were forced to cap the number of packs that a single customer could purchase.

Reese’s Puffs cereals

Reese’s Peanut Butter Cups entered the cereal market with Reese’s Puffs in 1994. By 2020, over 6 million loyal customers eat 1 to 4 servings of Reese’s Puffs per week according to Statista.

Mars ice-creams

The company first entered the ice cream space in 1986 when Mars bought Dove Bar. Today, it has a wide offer across most of its confectionary brands and an ambition to reach $1.1 billion in sales globally by 2024.

Dove

While Dove is often called out as one of the most successful and inspirational example of brand purpose within CPG, also its extension brand strategy has been instrumental in fuelling its sales growth and brand power. Launched as a bar soap brand in 1955 and known for its moisturizing quality, the brand grew from 200 million dollars sales in the early 1990s into a 6.5 billion dollar brand in 2023 which includes hair care, deodorant, and more. Dove has carried the moisturizing power of its soap into almost every personal care segment it has stretched to, while equipping women with a wide range of products to nurture their real, authentic beauty.

Why does powerbranding matter?

In recent years, CPG brands have faced challenges like never before when it comes to brand-building. From the emergence of direct-to-consumer (DTC) models and new ecommerce models, to the rise of private labels, the strain on supply chains worldwide, and geopolitical turbulence, the playing field has shifted dramatically. These pressures have made it difficult for many brands to meet both top-line and bottom-line targets. While short-term fixes, such as price hikes, provided temporary relief, they often fall short in delivering sustainable growth that best leverage the power of branding.

Now, with traditional growth tactics reaching their limits, many CPG brands are turning to longer term strategies to build a strong brand. This is where powerbranding can come into play. By expanding into new categories, brands can open fresh avenues for growth, driving both revenue, volume and profit. Crucially, powerbranding offers not only immediate returns but also long-term potential, allowing brands to maintain higher volumes over time while strengthening their position in the market.

When executed effectively, powerbranding drives growth for both the top and bottom lines. On the top line, it opens new avenues for expansion and market penetration. On the bottom line, it enhances efficiencies by leveraging synergies, such as the media halo effect, which amplifies marketing efforts across categories. In essence, powerbranding allows brands to extract more value from their existing assets while building greater scale and relevance in the market.

When to consider powerbranding

Deciding when to stretch a brand into a new category involves two critical considerations in your strategic planning. The first is opportunity, namely identifying attractive categories with strong growth potential and healthy profit margins. Expanding into the right category can provide a significant boost to both revenue and market presence. But chasing opportunities alone isn’t enough.

The second, and perhaps more important factor, is brand permission—does your brand have the credibility and equity to stretch into a new category without diluting its core identity? While many loyal customers enjoy seeing trusted brands offer products in new spaces, not all brands have the strength to pull off a successful stretch. Brands that overextend or stretch into areas that don’t align with their values risk eroding their equity, which can outweigh the benefits of short-term gains made with a novel customer experience.

True powerbranding expands revenue while reinforcing the brand’s core equity, ensuring long-term value. So, the key question becomes: Is your brand strong enough to stretch in a way that enhances its equity, rather than undermining it? Here are some examples for consideration.

Nivea

Nivea was able to leverage powerbranding very effectively, starting from the original hand cream and then progressively stretching into new categories. Rather than diluting, this strategic move was executed on brand and actually reinforced its overall brand equity. At the same time, Nivea has progressively targeted higher margin categories and is now developing on their face care range.

The brand now has a range of almost 100 different products, and in 2023 delivered its best performance of the century, surpassing the €5 billion sales threshold for the first time in its history with an organic growth of 16.2%. (2)

How to succeed with powerbranding

Success in powerbranding starts with one essential step: measuring the strength of your brand and its equity. Before you attempt to stretch into new categories, it’s crucial to assess whether your brand has the credibility and emotional connection with consumers to support such a move. Equally important is evaluating the target category’s attractiveness—both in terms of growth potential and profitability. You’ll want to look at whether the market is concentrated or fragmented, how crowded the space is, and where there might be opportunities for differentiation or white space that your brand can fill.

Once you’ve assessed these factors, the next step is identifying the stretching driver suitable for your brand positioning—the unique element that enables your brand to succeed in a new category. This could be a tangible feature, like a signature taste or recipe (for example, Oreo’s distinctive flavor and shape), or an intangible asset, such as a brand’s core values or identity (as seen with Dove’s “Real Beauty” campaign). Stretching drivers often evolve over time, combining distinctive tangible product features with emotional beliefs that connect deeply with consumers. Take Dove, which originally expanded based on its moisturizing properties before adding a more powerful emotional driver around body positivity and self-esteem.

The final key is ensuring that this stretching driver can create meaningful differentiation in the new category, namely by creating additional value in the category. It’s not enough to just enter a new space—you need to stand out. Equally important is executing your brand’s identity consistently in the new category to maintain authentic connections with your target audience, and maintain brand loyalty through consumer trust.

Actions for brand owners to leverage powerbranding

Setting up a brand management methodology to leverage powerbranding can be considered through four key actions:

1. Assess Brand Equity: Is your brand strong enough to stretch into new categories?

2. Identify the Stretching Driver: What unique element will drive success across categories?

3. Evaluate Market Attractiveness: Are there untapped opportunities for growth in the new category?

4. Plan the Execution: How will your brand’s essence translate in this new market?

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^{Sources:
(1) Moment10 Research, 2024
(2) Beiersdorf, 2024}

In today’s consumer market, brands face a crucial decision between two opposing strategies: premiumization and commoditization. Understanding these dynamics is essential for brands to navigate the competitive landscape effectively. This article delves into the cyclical nature of commoditization, the virtuous cycle of premiumization, and offers strategic frameworks to help brands leverage premiumization to create strong consumer connections and sustain growth.

Two Opposite Directions: Premiumization vs. Commoditization

In the dynamic landscape of consumer markets, the tension between premiumization and commoditization is often driven by volume versus margin. Promotions and price cuts play a crucial role in this context, with margin linked to brand equity and volume tied to pricing. To understand these opposing forces, we must recognize that while there are categories more commoditized than others, this doesn’t exclude the space for premiumized brands, and these two components are strongly interconnected.

The Vicious Cycle of Commoditization

Commoditized markets are subject to a relentless negative force, that tends to push them further into commoditization. This force stems from low consumer engagement and a perception of undifferentiated offerings impacting the perceived value of products. When consumers believe “they are all the same,” brand interchangeability rises, leading to price point becoming the primary driver of choice behind consumer spending.

This scenario creates markets with limited price variation among competitors, high promotional intensity, and a significant share held by private labels. For instance, globally, tissue products are more commoditized than beauty products, due to the differing levels of equity and importance for consumers, as well as different, levels of performance and/or intangible traits, whether real or perceived.

Moreover, lack of price differentiation results in increased promotions, progressively eroding margins. This impacts the ability to support brands through marketing and innovation, exacerbating the negative pressure on the category.

Commoditization vs. Premiumization

Understanding the dynamics of commoditization and resisting this trend involves comparing commoditized categories with premiumized brands. The key difference lies in the level of intangible and emotional elements present. Premiumization is characterized by a strong presence of these elements, enhancing the relevance of premium offerings.

Premium brands not only engage consumers but also elevate the entire category’s perception, making it more relevant. In contrast, commoditized categories often result from poor brand management, with little attempt to enhance category equity.

The Virtuous Cycle of Premiumized Brands

Premiumized brands engage consumers through strong brand equity. Purchasing decisions start with the brand, which is perceived as highly differentiated, leading to lower price elasticity. Consumers think, “they are not all the same,” resulting in higher engagement levels.

Premium brands are distinguished by their intangible and emotional elements, starting with a sharp and strong positioning. This clear differentiation translates into an effective brand story, fuelling equity and making the brand stand for something relevant. Effective messaging across multiple touchpoints, from packaging to digital channels, fosters a two-way relationship with consumers, generating substantial user content and maintaining a strong share of voice.

A Strategic Framework for Premiumization

A potential a strategic framework for premiumization is comprising several key steps:

1. Consumer Insights and Data Analytics: Utilize data-driven insights to identify premiumization opportunities and understand consumer preferences.

2. Brand Story and Positioning: Develop a compelling brand story that highlights differentiation and resonates emotionally with consumers.

3. Multi-channel Engagement: Leverage digital channels, e-commerce platforms, and social media to amplify brand presence and engage with consumers.

4. Innovation and Quality: Invest in product innovation and maintain high-quality standards to reinforce the premium positioning.

5. Sustainability and Ethics: Align premium brands with sustainability and ethical practices to meet growing consumer demand for responsible products.
   

How do Brands Premiumize?

1. Channel Approach

Distributing the brand in specific channels can elevate its equity. For example, San Pellegrino, a Nestlé brand, has developed a strong association internationally with high-end restaurants. This strategic positioning is reinforced by sponsoring the Top100 world restaurant list and supporting new chefs when they decide to open a restaurant. As a result, San Pellegrino maintains a premium price (from 3x to 5x versus the category average) (1), it is almost a billion-dollar brand in revenue and has a 5% share of the global market (2) indicating a strong international presence.

2. Portfolio Approach

Managing a diverse portfolio or more affordable and more premium products to cover different price points is another effective strategy. Lavazza, with a 40% coffee market share in Italy (3), exemplifies this approach. Its portfolio ranges from mainstream to premium segments, with products like Lavazza Suerte, Qualità Rossa and Qualità Oro, catering to different consumer needs.

While Suerte plays in the value segment of the market, Lavazza’s Qualità Rossa is a more mainstream offer presented as “the Passionate Italian Spirit”. The value proposition is based on selected sourcing (but no specific origins are mentioned), a smooth, round, fruity & chocolate aroma coming from a blend of Arabica and Robusta. On the other side Lavazza Oro is presented as the “Blend Excellence” focusing much more on the quality of the product. Beans are 100% Arabica from the finest origin qualified as Central & South America. The aroma is presented as perfect symphony, fruity and floral and under the same sub-brand even more premiumized version are available like Mountain Grown or Gran Riserva.

Lavazza never compares the quality of the two products directly and leverages the overall company equity in a balanced way. We can say that Qualità Rossa is providing good value for money in the category, while Oro is supporting the category equity.

3. Performance approach

This is about strongly reiterating product superiority vs. competition. A good example here is represented by Bounty, the successful paper towel from P&G. Bounty has been the market leader in the US for over 40 years even if Private Labels developed strongly in a commoditized market. However, by consistently focusing its communication on product superiority underlining a superior performance and higher quality vs. the competition and keeping a high share of voice and communication pressure, the brand has thrived.

In 2022, Procter & Gamble spent 111 million U.S. dollars on advertising Bounty(4). The increased product performance, through 2x absorbance and longer duration, translates in a better value for money in the overall brand communication. This balanced approach leverages overall company equity while providing affordability and supporting category equity.

Effectively implementing premiumization

A few important areas should be considered in the implementation of premiumization strategies:

1. Global Market Dynamics and Local Adaptations

Balancing global brand consistency with local market adaptations is critical for multinational CPG companies. Successful premiumization strategies consider regional differences in consumer preferences and market dynamics. For instance, Nestlé’s Nespresso has tailored its product offerings and marketing strategies to fit the unique coffee cultures of various countries.

2. Digital Transformation and E-commerce

Digital transformation and e-commerce play pivotal roles in premiumization. Leveraging these channels enables brands to reach a broader audience, offer personalized experiences, and build stronger consumer relationships. Companies like Unilever have effectively utilized digital campaigns and e-commerce platforms to enhance the premium positioning of their Dove brand.

3. Collaborations and Partnerships

Strategic partnerships and collaborations can significantly boost brand equity and premium positioning. For example, Coca-Cola’s partnership with fashion brand Kith has enhanced its premium appeal through exclusive product lines and high-visibility collaborations.

4. Measurement and ROI

Measuring the success of premiumization initiatives is essential. Key performance indicators (KPIs) such as brand equity scores, price elasticity, market share, and consumer engagement metrics provide valuable insights. Tracking ROI helps demonstrate the value of premiumization efforts to stakeholders, ensuring continued investment and support.

Avoiding Commoditization

Breaking free from the cycle of commoditization and embracing premiumization requires ambition and determination. Successful brands:

• Redefine and support the category perception.

• Clearly define and communicate key positioning elements.

• Consistently reinforce their positioning through high share of voice and diverse touchpoints.

In conclusion, navigating the delicate balance between premiumization and commoditization involves strategic brand management, effective communication, and a strong focus on maintaining and enhancing brand equity. For multinational CPG companies, embracing these strategies is crucial to achieving sustainable growth and differentiation in the global marketplace.

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^{Sources:
(1) truenumbers, 2023, GlobalProductPrices, 2023
(2) Zippia, 2023
(3) Lavazza, Wikipedia, 2023
(4) Statista, 2023}

The Challenge with Growth

Large multinational Consumer Packaged Goods (CPG) companies face a challenging landscape. Despite robust overall market growth of nearly 8% in 2024, 11 among the largest CPG multinationals achieved on average less than half that figure.

The discrepancy in performance stems primarily from a significant market share shift towards three distinct types of competitors: emerging brands, local competitors, and private labels.

• Emerging brands leverage innovation and agility, swiftly addressing evolving consumer needs.

• Local competitors capitalize on deep market knowledge, offering tailored solutions closely aligned with regional tastes and preferences and leveraging a higher cultural relevance and a stronger presence in certain geographies.

• Private labels, increasingly managed as genuine brands and positioned across multiple price tiers (including premium and super-premium segments) thrive by combining affordability with strong retailer brand association, offering consumers appealing, value-oriented alternatives.

Each of these competitor types uniquely exploits vulnerabilities in the scale-driven strategies of large multinational brands.

The Challenge with Volume

If we look at 2024 growth dynamics, the primary struggle revolves around driving sustainable volume growth.

In fact, only 15% of the growth of the 11 analyzed companies came from increased volume while the rest was all value linked to premiumization and higher prices. Also in this case, the overall market had a better performance with volume contributing to the overall growth with a 22%.

If we look at the first quarter of 2025 the situation becomes even more critical with 6 of the 11 companies analyzed having either no volume growth or a declining trend.

The problem with volume growth is impacting on the ability of the companies to sustain value production in the long term. In fact, volume growth shows a high correlation to Total Shareholders Return.

Understanding the Volume Challenge

The struggle with volume growth isn’t merely a competitive issue, it’s fundamentally a penetration issue.

Volume and penetration are strictly correlated. To increase volume, you need to increase penetration. Penetration, far from being a legacy KPI, is actually the most reliable and sustainable lever to grow volume. Bringing more buyers into the brand, exposing more HHs to the brand and enlarging the consumer base is what makes the difference.

However, if we look at the average penetration of the Top 50 global brands in 2023 this was just 20.7%, and flat vs. 2022. Most so-called global brands in reality still reach only a small fraction of their potential buyers. This limited penetration underscores an immense, untapped opportunity to drive significant and sustainable volume growth.

The Geography of Growth

Geographic analysis provides valuable insights. Multinational giants maintain strongholds in mature markets and Latin America but significantly lag in high-growth regions such as Asia, Africa, and the Middle East.

These regions promise dual growth engines; a rapidly growing population coupled with expanding middle-class consumers increasingly demanding branded goods. This translates into a much higher growth rate both in value and volume.

The Coca-Cola Company strategic pivot articulated during its 2025 CAGNY presentation exemplifies this trend. The company has explicitly prioritized emerging countries, recognizing their potential for both market share expansion and category development.

Four Strategic Growth Imperatives

To sustainably enhance volume growth and shareholder returns, multinational CPG companies must strategically allocate investments across four critical areas:

1. Growing Market Share in Developed Countries
   Quick-win strategies leveraging targeted marketing, sophisticated pricing, and promotional activities.

2. Developing Categories in Developed Countries
   Innovation and category expansion tailored to evolving consumer preferences, creating durable brand resilience.

3. Growing Market Share in Emerging Countries
   Capitalizing on surging consumer demand through optimized distribution and brand visibility.

4. Developing Categories in Emerging Countries
   Adapting products for affordability, local relevance, and resilient Route-to-Market (RTM) models.

Where is the invested dollar providing the best return? This depends largely on the strategic timeframe. Investing in Area 1 (Growing Market Share in Developed Countries) generally offers rapid returns, satisfying short-term shareholder expectations but sometime providing only temporary performance boosts i.e. through promotional activities. In contrast, investing in Area 4 (Developing Categories in Emerging Countries), while demanding patience and a longer investment horizon, can build a strong, resilient platform that delivers sustained value and substantial long-term returns.

Conclusion

Multinational CPG companies face a pivotal moment. Overcoming stagnant volume growth and ensuring long-term shareholder returns necessitates strategically prioritizing penetration-driven, geographically informed growth initiatives. Companies balancing immediate opportunities with long-term strategic growth will achieve sustained market success and superior shareholder value.

At Sevendots we’re advising CPG companies on how to win in this environment, reach out to us to learn more about how we can help you.

Contact Sevendots today to discover more.

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^{Sources:
• Kantar, 2024
• Euromonitor, 2025
• Bain & Company, 2025
• The Coca-Cola Company, 2025}

In this episode of Transforming CPG, Senior Partners Colin McAllister and Sam Bedi discuss what you need to know about expanding into international markets. They cover…

• The landscape today, creating opportunities and barriers to expansion

• What creates added complexity and how to manage this complexity successfully

• Lesser considered elements to prioritise more broadly

• The role of technology and global connectivity

…and much more.

We’ve had a great episode from Sam about the Asian market more specifically, which you can listen to ⁠here⁠. He’s also behind our ⁠5-Dimensional Framework to drive returns for CPG companies in Asia⁠.

Did you enjoy this podcast? Give us a rating and subscribe to receive new episodes as they are published.

This podcast episode is here to showcase our thought leaders, but we’d also love to hear from you. Let us know your thoughts on the discussion and connect with us on ⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠.

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1. Executive Summary

YoPRO is Danone’s clearest example of growth not through acquisition (Coca-Cola/fairlife) or broad brand stretching (Nivea), but through creating a new, higher-margin sub-segment inside an already-mature category — yogurt. By targeting the functional, high-protein, fitness-oriented end of the market with sharp, consistent positioning, Danone’s high-protein platform grew from a standing start into a business reported to have surpassed €500 million in sales by 2022 and $1 billion by 2025 — just a few years after its core launch.

In doing so, it didn’t just win share inside yogurt; it helped premiumize the entire category, creating a “high-protein yogurt” segment that didn’t meaningfully exist before and that commands higher price points than standard yogurt.

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1. Executive Summary

Nivea (owned by German consumer goods group Beiersdorf) is the textbook example of growth-through-stretching: a single 1911 skin cream extended, category by category, into a portfolio spanning face care, body care, deodorants, sun care, men’s grooming, lip care, and more. By 2024, Nivea alone generated roughly €5.6 billion ($6.4 billion) in sales — Beiersdorf’s best-performing brand and a key driver of the group’s record €9.9 billion in total revenue — across a portfolio that today spans close to 100 core products globally, alongside sibling brands (Eucerin, Aquaphor, Labello, La Prairie) that let the group stretch further still, into medical-grade dermatology and prestige beauty.

When Nivea’s own growth slowed sharply in 2025 amid a softer global mass-market skincare environment, Beiersdorf didn’t retreat from the stretching strategy — it recalibrated it, rebalancing investment across categories within Nivea itself while continuing to invest aggressively in the higher-margin Derma tier. This is a live example of “different strategies for different tiers within one house of brands.”

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1. Executive Summary

fairlife is the clearest proof point in Coca-Cola’s post-2015 pivot from a “soda company” to a “total beverage company.” What began as a minority stake in a small ultra-filtered milk startup has become — on a cumulative basis — Coca-Cola’s largest brand bet ever, with a current evaluation of $7.4 billion, and one of its fastest-growing, most profitable U.S. brands.

Unlike several of Coca-Cola’s other diversification bets (Costa Coffee, Odwalla, Zico), fairlife has delivered outsized returns, growing retail sales from about $10 million in 2014 to more than $4 billion in 2025. It is now used internally as the benchmark case for “adjacency M&A done right.”

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From complexity to competitive advantage

A point of view on how leading consumer goods companies are redesigning portfolios to accelerate growth, improve margins and manage increasing complexity. The analysis distills brand and category portfolio management initiatives for a number of leading CPG companies over the past 3 years.

It traces how portfolio complexity has evolved, how leading companies are responding, and how growth strategies, governance and metrics need to adapt as portfolios become more articulated across categories, brands and SKUs.

Why it matters

Consumer expectations for personalization, e-commerce expansion and faster innovation cycles have dramatically increased portfolio complexity. Companies that actively optimize categories, brands and SKUs consistently outperform those relying on periodic rationalization alone.

Key insights

• Portfolio complexity is inevitable—but not all complexity creates value.

• Winning companies combine proactive growth (M&A, brand stretching, premiumization) with disciplined SKU rationalization.

• Portfolio decisions should be managed across three levels: categories, brands and SKUs.

• Small brands increasingly drive growth; large brands remain the primary profit engine.

• New governance and portfolio-level metrics are required to balance growth, profitability and authenticity.
  

A reference framework

Combining 4 growth levers and 3 portfolio levels, with recent company/brand examples.

Three detailed case studies are provided as examples of M&A Expansion (Coca Cola-fairlife), Premiumization (Danone YoPRO) and Brand Stretching (Nivea)

Takeaway

Leading CPG companies are no longer choosing between growth and simplification—they are doing both simultaneously. The most effective portfolio strategies continuously prune low-value complexity while reinvesting in the categories, brands and innovations that create long-term competitive advantage.

Free readers get our latest thinking on CPG growth. Paid subscribers get the frameworks, case studies, and tools to put that thinking into action.

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This summary distills brand and category portfolio management initiatives for CPG companies. It traces how portfolio complexity has evolved, how leading companies are responding, and how growth strategies, governance and metrics need to adapt as portfolios become more articulated across categories, brands and SKUs.

The report is organized around five themes: the structural forces making portfolios more complex; the historical swing from passive to reactive portfolio management; how portfolio decisions connect to specific growth strategies; the case for “productive” complexity rather than blanket simplification; and the new governance models and metrics that a more complex portfolio requires.

It closes with a set of opportunities for portfolio optimization. Throughout, recent (2023–2026) examples from Unilever, Coca-Cola, Beiersdorf, AB InBev, Nestlé and P&G illustrate the framework in action.

1. Complexity Remains the Name of the Game

Portfolios grow more complex to keep pace with three accelerating forces: consumer demand for personalization, the expansion of the “virtual shelf” through e-commerce, and faster speed to market enabled by digital tools and AI.

Left unmanaged, this complexity lets small, agile brands take share from large incumbents.

“Complexity is the name of the game and companies have to adapt their organization to be able to manage it. This is probably one of the main challenges we face.”
— Regional Spirits Sales Director

Fragmentation is visible across categories: the number of microbreweries in Europe has doubled over the last nine years, and 54% of consumers say personalization lets them buy products that better fit their own taste and needs. Retail assortments have swelled in parallel — French hypermarkets now stock 25,000–40,000 products — while e-commerce has removed physical shelf-space constraints altogether.

Executives feel the strain: 53% of US CPG/retail executives struggle to keep pace with shifting consumer behavior, and CPG’s innovation cycle (~5 years concept-to-launch) is among the slowest of any industry, behind automotive, smartphones and fashion.

Smaller brands are capitalizing on this fragmentation. A 10-year analysis of 22,670 global CPG companies (Accenture) found small brands (<$3B turnover) driving disproportionate growth through variety, direct-to-consumer routes and faster trend capture, and this shows up in e-commerce sales mix as well, where small brands over-index.

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The booming protein market

Based on Grand View Research analysis, the overall global high-protein food market is projected to reach USD 117 billion by 2034, with a compound annual growth rate of 8.4%.

Main segments include:

• Protein-Fortified Food: estimated at USD 67 billion in 2023 and projected to reach USD 102 billion by 2030, with a CAGR of 6.2%

• Protein Snacks: expected to be worth USD 42 billion by 2034, up from USD 21billion in 2024 and growing at a CAGR of 7.0%

And growth isn’t just being reflected in retail sales: also in the service sector mentions of protein on menus have jumped by 10% over the past year, with one in five restaurants now highlighting protein in their dishes.

The challenge of sourcing and carriers in the protein-enriched landscape

Two critical factors are shaping the development of the protein-enriched food and beverage market: protein sourcing and carrier selection.

1. Sourcing: Balancing Performance, Cost, and Sustainability

Food manufacturers are navigating a complex landscape in their search for protein sources that are nutritionally effective, cost-efficient, and scalable. Traditional animal-based proteins such as whey have seen a remarkable transformation in market value. Once considered a byproduct with limited applications—often discarded or used as livestock feed—whey is now a hot commodity. As consumer demand for protein surges, especially for high-performance and clean-label sources, the U.S. whey protein market is estimated at between $5 and $10 billion, with forecasts suggesting it could double in size over the next decade.

The price of high-quality whey protein concentrate reflects this surge: a pound that cost roughly $3 in 2020 can now fetch up to $10, driven by both consumer demand and supply chain constraints.

Plant-based proteins, such as pea, soy, fava bean, and chickpea, are also widely used, but often come with trade-offs in terms of taste, digestibility, and amino acid completeness. As such, the protein sourcing puzzle remains open and competitive, with no single clear winner on the horizon.

In parallel, new protein technologies are gaining traction. Precision fermentation, for example, promises to produce high-quality, animal-free proteins with a lower environmental footprint. Companies like Perfect Day and Remilk are leading this frontier, offering dairy-identical proteins without the cow. However, these technologies are still in the early stages of scale and affordability, limiting their current ability to meet mass-market demand.

2. Carriers: Embedding Protein into Everyday Consumption

Beyond sourcing, a key question is: How do we deliver these proteins in a form that consumers will regularly use? In other words, what are the best carriers for protein enrichment?

The most promising opportunities lie in high-frequency consumption categories. If consumers are already using a product daily, enriching it with protein creates a habitual intake mechanism, increasing the likelihood of adoption and sustained usage. For example:

• Dairy has long been a go-to carrier, with Greek yogurts, protein milks, and cottage cheese leading the charge.

• Coffee is now entering the protein space. Brands like Dunkin’ in the UK have launched “Strong Brew” with 20 grams of protein per bottle, signaling a trend where even morning rituals are being reimagined through a protein lens. Starbucks is also piloting similar ideas in select markets.

• Snacking formats such as bars and shakes have seen strong growth, but are often perceived as functional add-ons rather than part of the core diet. This makes integration into meal-like occasions, such as breakfast foods, spreads, or even pasta, more attractive for sustained volume.

Meanwhile, some companies are experimenting with protein-enriched versions of bread, cereals, and even ice cream, trying to blend indulgence with functionality. The goal is to meet consumers where they already are, rather than asking them to add yet another product to their routine.

The drivers of growth

The protein trend in food and beverages is driven primarily by increasing consumer focus on health, wellness, and active lifestyles. Key factors fueling this trend include:

• Rising health awareness: Consumers are intentionally seeking foods that support fitness, muscle growth, weight management, and overall wellness. Protein is recognized for helping with satiety, muscle maintenance, recovery from exercise, and weight control.

• Mainstream adoption beyond sports nutrition: Protein-enriched products have shifted from niche sports nutrition to mainstream markets, making protein a desirable ingredient in everyday foods and beverages, including snacks, bakery items, and indulgent treats.

• Convenience and functionality: Protein beverages and snacks offer quick, accessible nutrition that fits modern, busy lifestyles, with growing demand for ready-to-drink options that are natural and free from artificial additives.

• Innovation and ingredient diversity: New protein sources such as whey, plant-based proteins (pea, oat, rice), canola, yeast, and precision fermentation-derived proteins have expanded possibilities for product developers. Advances in processing improve taste, solubility, and functionality, helping to overcome manufacturing challenges and meet consumer taste expectations.

• Social media and lifestyle influence: The trend is amplified by social media engagement, with protein-related content increasing significantly on platforms like Instagram and TikTok. Consumers are motivated by diet trends and lifestyle needs, driving higher protein mentions on menus and supermarket shelves.

• Protein and current diets: 45% of US consumers claim that they are now aiming to consume more proteins in the future, compared to 35% for Vitamins & Supplements. A similar number of consumers make the same claim in China while the figure for increased protein consumption drops to 35% in UK and around 15% in Italy and France, indicating that current diets and eating habits play a key role.

The generational divide

While older consumers would be the first to benefit from additional protein intake it’s actually the cohort of younger adults that is leading the way in terms of demand in their daily food and beverage consumption.

Infants and children need proportionally more protein for growth, while older adults need more to combat age-related muscle loss but USDA data shows that almost 50% of women and 30% of men 71 and older fall short of protein recommendations. Older adults often don’t regularly meet their protein requirements due to taste changes, a decrease in appetite and dentition issues with chewing.

Perhaps there could be an opportunity for brands to boost protein consumption among older consumers by a) targeting them and b) overcoming their concerns.

A few watchouts

There are, however, risks of overconsumption to be monitored carefully.

For long-term safe protein consumption, current evidence and guidelines for healthy adults indicate:

• Recommended Dietary Allowance (RDA): 0.8 grams of protein per kilogram of body weight per day is sufficient to meet the needs of most sedentary adults.

• Higher requirements: People who are older, physically active, or looking to build muscle may need more—generally up to about 1.2–1.7 g/kg per day depending on age and activity level.

• Safe upper limit: Consuming up to 2 grams per kilogram (g/kg) of body weight per day is widely recognized as safe for most healthy adults.

More than the recommended amount offers no proven benefit and may increase health risks, particularly with long-term excessive intake and poor protein source choices

While protein is essential for muscle growth, repair, and overall health, consuming it in excess of recommended dietary allowances can cause health problems rather than benefits.

Key risks associated with excessive protein intake include:

• Weight gain: Excess protein calories not used for energy or muscle repair tend to be stored as fat, potentially causing weight gain if overall calorie intake is not controlled.

• Digestive issues: Too much protein can cause nausea, diarrhea, fatigue, dehydration, and uncomfortable digestive symptoms.

• And in some cases, Cardiovascular issues, Kidney strain and stones and Bone health problems.

Therefore, while adequate protein is vital, moderation and balance with other nutrients are crucial to avoid the potential harms of overconsumption.

Tapping into the growing demand

These regions promise dual growth engines; a rapidly growing population coupled with expanding middle-class consumers increasingly demanding branded goods. This translates into a much higher growth rate both in value and volume.

An industry wave is underway: more retailers and brands are introducing “high‑protein” across dozens of categories—from ice cream to chips to pasta—as consumers seek added nutrition and satiety.

A few notable examples include:

1. Barilla Protein+ Rigatoni

Barilla has expanded its Protein+ line with a new rigatoni shape made of lentil, chickpea and pea protein. Each serving delivers 17 g of protein, joining earlier shapes like penne and angel hair. 

2. Starbucks — Protein‑infused latte

Starbucks is piloting a sugar‑free vanilla latte topped with banana‑flavored cold foam, incorporating unsweetened protein powder for 15 g of protein, tested at select locations.  Coffee is a high-frequency ritual and is increasingly becoming a functional delivery platform.

This is no longer just coffee, it’s a higher-level solution delivery for consumers.

3. Nestlé — Vital Pursuit meals & Maggi products

Under its Vital Pursuit brand, Nestlé released 14 frozen meals (bowls/pizzas/etc.) rich in plant and whole‑food proteins. Example: Vermont White Cheddar Mac & Broccoli Bowl with pea‑protein pasta. In India and Latin America, it launched Maggi Besan noodles and Maggi Rindecarne, both fortified with chickpea‑ or soy‑based protein. 

4. Myprotein × Müller yogurts & drinks

A collaboration between Myprotein and Müller created a line of protein-rich yogurts (49 g per 500 g pot) and protein puddings and mousses (~20 g each). These launched in UK retail from September 2024. 

5. Confectionery meets protein

• Snickers Hi Protein bars and matching protein powders offer 20 g protein per bar, with dessert‑flavored powders in Europe.

• Mondelez’s Grenade Protein Flapjacks in the UK provide ~11 g protein with low sugar

• Ferrero acquired Fulfil Nutrition to expand its presence in the protein bar category.

6. Jams — Protein‑rich peanut butter & jelly sandwich

A new frozen PB&J sandwich brand, launched with 10 g of protein per serving, free from seed oils and artificial sugar. It’s marketed as a health‑forward snack supported by athletes such as C.J. Stroud, Micah Parsons, and Alex Morgan.

7. Kroger – Private Selection and Simple Truth range

Also, retailers are getting into the game: Kroger has announced the imminent launch of 80 new products under its Private Selection and Simple Truth labels, with many of them revolving around protein.

“Earlier this year, we identified protein as a major customer trend. These products are everything from bars and powders to shakes, all from a natural and organic brand that customers trust” (Ron Sargent, President)

Making the right moves

As often happens when a trend starts picking up many brands jump onto the band wagon and not all get it right.

In fact, nutrition experts warn of “protein washing”—where products carry “high‑protein” labels but don’t deliver real nutritional value and may be heavily processed or overpriced.

And articles in specialist publications don’t help clear the air when headlines imply that proteins are being “pumped” into products to solve more fundamental issues.

So, what are some of the Do’s and DON’T’s to carefully consider?

✅ Do’s

1. Match protein to product use case

• Use whey, casein, or soy for performance and fitness products.

• Use pea, rice, chickpea, or oat protein for plant-based or allergen-friendly lines, considering also sustainability: Pea, rice, and fava bean proteins have lower environmental footprints.

• Choose proteins that complement the product’s flavor and texture (e.g. dairy proteins in creamy products, collagen in clear beverages).

2. Ensure functional taste and texture

• Test for grittiness, chalkiness, and off-flavors, especially with plant proteins.

• Consider using protein isolates for a cleaner taste and better solubility.

• Use masking agents or flavor pairings (e.g., cocoa, vanilla, banana) where needed.

3. Provide meaningful protein content

• Target 10+ grams per serving to meet consumer expectations for “high protein.”

• Use claims only when they meet regulatory standards (e.g., FDA requires at least 10% DV to be labeled “Good Source of Protein”).

4. Maintain clean labels and transparency

• Highlight source and quantity of protein clearly.

• Explain why protein is added (e.g. satiety, muscle support, plant-based diet support).

• Keep ingredient lists as short and natural-sounding as possible.
  

❌ DON’T’s

1. Sacrifice core product quality

• Protein should enhance, not undermine, the product’s original appeal (flavor, texture, enjoyment).

2. Make misleading health claims

• Don’t imply that added protein alone makes a product “healthy.”

• Avoid overpromising benefits like weight loss, muscle gain, or energy unless scientifically supported.

3. Overlook allergen labeling

• Ingredients like whey, casein, soy, or egg are major allergens.

• Label clearly and offer alternatives for allergen-sensitive consumers.

4. Fall into the protein-washing trap

• Avoid adding token amounts of protein (e.g., 2–3 g) just for marketing.

• Consumers are increasingly savvy and will see through weak claims.

• Consider sustainability: Pea, rice, and fava bean proteins have lower environmental footprints.
  

How Sevendots can help – Turn Protein Potential into Portfolio Impact

Protein isn’t just a nutrient, it’s becoming a key battleground for relevance, differentiation, and value in the modern food and beverage landscape. But getting it right requires more than just adding grams to a label.

At Sevendots, we help Food companies unlock the full strategic potential of protein-enriched offerings, from concept to shelf, and from global to local relevance.

Our approach is grounded in a deep and ongoing review of the food industry, giving us a clear perspective on emerging trends, best practices, and the pitfalls to avoid.

Thanks to our unique blend of capabilities, including partners with deep R&D experience in food formulation and protein science, operations experts with a strong grasp of supply chains and manufacturing feasibility, and commercial strategists who understand consumers, channels, and global nuances, we are able to guide clients through:

• Matching the right protein to the right use case

• Delivering taste and texture consumers will return to

• Ensuring regulatory soundness and clean label transparency

• Avoiding common pitfalls like protein-washing or misleading claims.

Whether you’re considering protein for performance, satiety, or plant-based positioning, we help you translate nutritional trends into sustainable growth, ensuring every move adds value to your brand and your business

Contact Sevendots today to explore how we can work together to define your next winning move.

Free readers get our latest thinking on CPG growth. Paid subscribers get the frameworks, case studies, and tools to put that thinking into action.

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^{Sources:
• Grand View Research, Protein-fortified Food Products Market Report, 2025
• Fortune Business Insights, Protein Snacks Market Size, July 2025
• Bain, Peak Protein? Not Even Close, June 2025
• The NYT, America’s Protein Obsession Is Transforming the Dairy Industry, July 2025
• Foodstuffs, Three key trends in 2025 protein consumption and beyond, April 2025
• Cargill, The Protein Profile, 2025
• Houston Methodist, How Protein Needs Change With Age, February 2025
• Food Navigator, High-protein craze continues but can industry keep up?, May 2025
• FSR, Protein a Major Driver for Consumer Health and Wellness, Report 2025
• Mintel, From Steaks to Shakes: Understanding the US Protein Market, May 2025
• Allrecipes, July 2025
• Houston Chronicle, July 2025
• The Telegraph, What is protein washing and are you falling for it?, July 2025
• Starbucks, 2025
• Tastewise, High protein trends – consumption analysis and statistics 2025 report}