Purpose is at a crossroads, in fact, and AI may be one the forces that redefines it. Read on to explore why staying human might just be your brand’s smartest move yet…

What is Brand Purpose and why does it matter in the age of AI

In the words of Peter Field, purpose is a brand’s “commitment to goals other than improved profits or products”focused on contributing to positive social impact — whether in health, sustainability, human development or ethical business practices. (1)

In Consumer Packaged Goods purpose is often defined as the deeper reason a brand exists beyond making a profit: a guiding belief or mission that shapes what the brand stands for, how it behaves and the value it brings to people and society.

This latter framing widens the lens. Purpose isn’t just about social causes, it’s fundamentally about how a brand shows up in people’s everyday lives. Sometimes it’s about fighting climate change; other times it’s just about making someone feel seen, included or understood.

Both perspectives are valid and often work best together. The strongest brands take a clear internal purpose, deeply anchored to their proposition, and translate it into visible, meaningful action.

Nowadays purpose faces a new challenge: as AI pervades brand marketing, there is a risk of losing human touch. Automated content, chatbots and algorithmic decisions can easily drift into tone-deaf territory without something deeper anchoring them.

Over time, purpose has gone from strategic imperative to buzzword. But we believe that it now matters more than ever: it can, in fact, guide how AI is used, helping brands stay human, intentional and aligned with their values.

The evolution of Brand Purpose

Few topics have stirred as much debate in branding as purpose. Once a niche ethical concept, it has become a core part of brand and growth strategy.

It began in the 1970s with calls for businesses to serve society, not just shareholders. Over time, Corporate Social Responsibility became the norm and in 2011, Porter and Kramer repositioned purpose as a driver of business value, not just goodwill. (2)

Since then, and up until today, purpose has helped brands stand out, guiding not only messaging, but culture, innovation and customer experience. “Activist” brands like Patagonia and Ben & Jerry’s have shown how a strong purpose can shape identity and drive loyalty.

^{Source: Raising the stakes, Sevendots Growth Series, 2021}

Consumers have played their part in accelerating this evolution in the early 2020s In 2019, in fact, over half of global consumers expected brands to take a stand on social issues, with 72% of Gen Z stating that this influences their purchasing decisions. (3)

Since then, this trend has only strengthened as revealed by several reports, including a Deloitte global survey in 2023 (4) which highlights that over 80% of Gen Z declare to have either boycotted or supported a brand based on its stance on an issue — social, political or environmental — in the previous 12 months.

More recently, purpose has been facing a reality check. While assumed as a powerful driver of long-term growth, thought-leaders like Peter Field have shown that it only works when it’s tightly connected to what the brand stands for and what matters to customers (1).

Post global pandemic, the conversation has so shifted, as investors have asked tougher questions on its impact on distinctiveness, pricing power and, ultimately, growth. It’s no longer enough for brands to say they have a purpose. They need to prove that it delivers real value, both culturally and commercially.

In our view, purpose isn’t disappearing, it’s again evolving. When it’s authentic, measurable, strategically aligned and well executed, it humanizes brands and becomes a powerful driver of meaningful growth.

The Future: Brand Purpose as a compass in the AI era

So where is purpose heading in the era of AI? Is AI making brands less human?

It can but it doesn’t have to.

AI is reshaping how brands operate, communicate and serve consumers. But without clear intent and thoughtful application, it can end up stripping away the very qualities that make a brand feel human: empathy, authenticity and distinct personality.

Where AI can undermine humanity:

• It can sound fake
  When AI is used to mass-generate marketing copy, visuals or customer interactions without human oversight, it often produces generic, out-of-touch content. Consumers quickly pick up on messaging that feels scripted or emotionally flat.

• Everything starts to sound the same
  Many generative AI tools are built on the same language models and training data. Without distinct inputs or editing, brands risk losing their voice and becoming indistinguishable from competitors.

• Empathy can get lost
  AI can replicate empathy, but it doesn’t understand it. When dealing with sensitive topics — like social justice, mental health or personal hardship — a slight misstep in tone or timing can cause backlash. Machines can help, but humans must lead.

• Brand culture fades
  Culture is built through shared values, stories and experiences. When AI takes over too many touchpoints — especially in areas like storytelling or social engagement — the human essence of the brand may erode over time.

But when used thoughtfully, AI can enhance humanity:

So where does this leave industries built on scale and speed, like CPG?

Fast-moving consumer goods companies face unique challenges: huge audiences, tight margins and constant pressure to keep up with shifting trends. AI can help manage that complexity, but only if it’s grounded in clear purpose. For CPG brands, staying human isn’t just about tone, it’s about how values show up in everyday decisions, from product design to supply chain choices. That’s where AI can either help brands stand out or make them feel even more distant.

In the CPG space, purpose can’t just be a slogan. It must guide how the brand behaves: unlocking not just the “why”, but it’s “how”

Let’s see a few examples of how CPG brands are putting this into action.

✅ When AI amplifies humanity & purpose

Dove pledged never to use AI-generated or AI-edited images to represent real women in its ads. The brand argues that AI often reinforces narrow beauty standards, the opposite of what Dove stands for. Instead, launched “The Code” campaign and shared Real Beauty Prompt Guidelines to help creators use AI more inclusively, promoting real, diverse representations, not idealized ones. (5)

Unilever uses groundbreaking solutions like satellite imaging and artificial intelligence to understand areas at risk of deforestation and those that have high potential for regeneration. It also employs machine learning for sustainable ingredient formulation and packaging redesign as part of its mission to slash emissions and water usage across processes. (6,7)

Nestlé launched AI-powered platforms that offer personalised nutrition plans and advice, aligned with its purpose of helping people lead healthier lives. These tools combine science, data and empathy, giving users something genuinely useful and creating more meaningful individual relationships. (8,9)

Coca-Cola created the “Create Real Magic” campaign using AI tools that let consumers co-create art and stories with the brand. This wasn’t just about automation: it was about inviting fans into the creative process. (10)

⚠️ When AI risks dehumanising a Brand

L’Oréal AI tools for skincare advice are innovative, yet they risk reinforcing narrow beauty ideals or making recommendations feel clinical. To prevent this, L’Oréal integrates dermatologists and inclusive design teams into its AI product development. (11,12)

Coca-Cola released last year fully AI-generated holiday ads recreating its iconic “Holidays Are Coming”campaign. The ads were widely criticized for feeling “dystopian,” unrealistic, and emotionally empty, prompting backlash from consumers and creative communities. (13)

Conclusions

1. Let purpose lead
   Before deploying AI, define what the brand stands for. Purpose should guide how AI is used, not the other way around.

2. Keep it human
   AI should support human creativity, insight and storytelling, not replace it. People connect with emotion, not automation.

3. Make it personal, not just personalised
   Go beyond “you might like this” and offer value that shows the brand understands people’s needs and values.

4. Watch your tone
   Always review AI-generated content for nuance and cultural context. If you wouldn’t say it face-to-face, don’t let a bot say it online.

5. Stay accountable
   Use AI to track the real impact of purpose-driven initiatives and share that progress transparently.

AI can make brands colder or closer. The difference lies in how purpose is used to anchor the technology in humanity. Brands that strike this balance won’t just survive the AI wave, they’ll connect in deeper, smarter and more human ways.

At Sevendots, we partner with CPG brands to identify and shape purpose strategies that fuel growth and build lasting relevance. Connect with us to explore how purpose can guide your brand forward.

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

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<sup>Sources:
1. Peter Field makes strong case for potential power of brand purpose campaigns
2. Creating Shared Value, HBR, 2011
3. Raising the stakes, Sevendots Growth Series, 2021
4. 2023 Gen Z and Millennial Surve
5. https://www.marketing-interactive.com/dove-pledges-to-never-use-ai-to-distort-women-s-images
6. https://www.unilever.com/news/news-search/2022/how-were-using-tech-for-more-transparent-traceable-supply-chains/
7. https://techinformed.com/how-unilever-is-using-ai-to-make-its-products-more-sustainable/
8. https://digitaldefynd.com/IQ/nestle-using-ai/
9. https://www.ingredientsnetwork.com/nestle-launches-glp-1-nutrition-initiative-news124815.html
10. https://www.coca-colacompany.com/media-center/coca-cola-invites-digital-artists-to-create-real-magic-using-new-ai-platform
11. https://www.loreal.com/en/articles/science-and-technology/2020/05/06/14/09/skin-genius-loreal-paris/
12. https://www.loreal.com/en/articles/science-and-technology/loreal-paris-beauty-genius/
13. https://www.marketing-interactive.com/coca-cola-ai-remake-holiday-ad-mixed-sentiments</sup>

Retail Media is here to stay

In this article we review what have been the underlying drivers behind the rapid development of Retail Media as a communication and engagement platform, offering unique brand-building benefits to CPG companies.

Projections are for the share of Retail Media to continue to increase as well as its expansion beyond US and China that currently account for ¾ of the global market.

By leveraging the retail data assets brands can benefit from more precise targeting, as well as a more immediate measurement of results.

An opportunity not to be missed.

What Retail Media involves

Retail media is the practice of selling digital and in-store advertising space on a retailer’s platforms, utilizing their first-party data to offer targeted ads to brands and drive sales directly at the point of purchase. It involves brands buying ad space on a retailer’s websites, apps, or in their physical stores to reach consumers, leveraging rich customer data to deliver personalized campaigns and measure results against sales.

Global interest and ad spending in retail media continue to grow, mainly because of its unique advantages:

• Brands can access to first-party data containing customers preferences and shopping tendencies

• Retailers generate new revenue streams by selling ad space on their digital properties

• Ads are shown to customers when they are already close to making a purchase decision
  

Retail Media Ad Spend: Trends and Future Outlook

With an anticipated global CAGR up to 2029 of 11%, China and the US lead the way but other, smaller countries are set to claim a larger portion of retail media spending.

^{*Total digital accounts for more than 3/4 of overall media spend in these countries.}

Who Leads the Way in Retail Media?

Given their inherent retail-oriented nature, Retail Media Networks often have a built-in advantage over traditional digital media when it comes to capitalizing on organic purchase behavior, delivering the right ad to the right consumer at the right moment.

Within the most advanced country, China, four main types of RMNs can be found:

E-Commerce RMNs: digital retail marketplaces that offer advertising spaces

• Ads typically feature promotions or discounts to encourage purchase
  

Social media RMNs: digital marketplaces within social media platforms

• Ads entertain and complement user-generated content to work on building awareness
  

  

Large retailer RMNs: a physical retail space

• Ads typically feature messages that induce consideration or purchase; useful to promote trials of new products
  

Superapp RMNs: ecosystem of services

• Allow curated ads to be served at different purchase stages and types of services; also providing an integrated payment system that captures offline and online transactions
  

Within the US, accounting for more than a third of the global market, there are two dominant players within the CPG RMN space:

Walmart in particular stands out as the trailblazer, having identified that retail media profit margins are typically much higher (70-90%) compared to traditional retail, which has much slimmer margin.

Walmart’s retail media network, Walmart Connect, contributes significantly to its profits, with advertising and membership revenue accounting for a little over a quarter of the company’s operating income in Q4 2024 and still growing at a rate close to 20%/year.

Leading retailers, like Walmart, have for some time moved beyond traditional retail revenue streams (capitalizing on physical assets and engagement to win with shoppers) to new digital revenues streams (leveraging data and digital assets to drive value creation).

Why is retail media important to brands?

• More precise targeting: Retail Media offers brands the ability to precisely target a vast range of audiences. The retailers’ first party data enables a precise attribution, to ensure brands can target their ads to the right audience. This will be even more crucial when third-party cookies are phased out leaving marketers unable to target two-thirds of the world’s internet users.

• A more diverse range of outcomes: Trade marketing is effective at delivering short-term sales lift, but it is narrow in terms of reach and frequency. Retail Media expands the advertising reach of brands across a vast range of touchpoints, at various points of the customer decision journey, in a brand-safe way. Broader retail audiences can also be targeted (e.g. new parents or tech enthusiasts) to drive awareness of an advertiser’s product.

• Volume potential: The rapid growth of e-commerce means Retail Media has reached critical mass – riding a third wave of digital advertising. From 2012 to 2022 the online share of retail trade more than doubled in the UK and more than tripled in Germany, with a 26.5% and 19.6% share respectively according to the Centre for Retail Research.

• Closed-loop measurement: Most Retail Media solutions can directly attribute sales to advertising activity within their reporting. This makes it extremely attractive to marketers, and commercial and finance teams alike.

• Visibility and credibility: Access to large audiences leveraging data from retailers helps establish a brand in a crowded marketplace.

As a result of all these features Retail Media has surfaced to the top in terms of attentiveness when shoppers search for a product.

Measuring success of Retail Media campaigns

Wild Planet US, a seafood brand committed to environmental sustainability, needed to find a way to convey its important brand purpose and justify its relative cost compared to competitors. They decided to invest in retail media networks to drive sales and attract new-to-brand customers with a refined positioning strategy. In particular a combination of online and in-store advertising was used, leveraging the Walmart Connect platform.

Results: +46% new to brand sales during the defined period.

1UP US, co-founded with YouTube creator FaZe Rug, launched in May 2022 with a traditional DTC website and then pivoted to Walmart as its primary retail channel just a year later. The creator uses his social media platform to showcase Walmart, integrating the retailer into the brand’s narrative, regularly featuring Walmart store visits and employee interactions in his social content, turning the typical Walmart run into a fun and shareable event.

Results: The brand has broken through with younger generations while contributing also to the image and equity of the retailer.

Nestlé Purina Germany, focused on existing cat product buyers with a cross-media campaign combining programmatic out-of-home (OOH) and online audio advertising, leveraging purchase data provided by a leading German retailer. The impact was directly measured through subsequent in-store redemptions of the coupon via a conversion in the retailer’s app.

Results: -38% cost per acquisition when targeting loyal cat-product purchasers.

Mondelēz UK, providing a better shopper experience and greater personalisation.

• An Easter campaign for Cadbury in Tesco stores made use of stores’ ‘Scan As You Shop’ option and the link to users’ Club Card data to deliver relevant, personalised communications.

• “This delivers in terms of return on investment much more sizably for us – so there’s a big commercial upside as well.” (Hayley Hough, Category Director)
  

How Brands Structure Their Retail Media Management

As retail media is still a relatively new field, there is no single ‘right way’ to manage it. Management approaches and roles can differ significantly from brand to brand:

• Some organizations have dedicated positions—such as Head of Retail Media or Retail Media Campaign Manager—supported by specialized teams focused exclusively on this area of marketing and investment.

• Others adopt a more integrated approach, assembling cross-functional teams with representatives from key departments involved in retail media campaigns, including Sales, Marketing, Trade, and Media.

Roles and responsibilities can involve:

• Sales: managing overall customer relationships and coordinating the planning calendar and managing trade spending.

• Marketing: managing the overall brand message, consumer messaging, and product focus areas, as well as long-term brand planning.

• Shopper Marketing: developing and executing the strategy of retailer marketing and media programs in coordination with the trade and brand calendars.

However, the challenge remains that, when it comes to who manages the investment, in most cases there is still a tension among marketing, media, sales and commerce teams over which oversees RMN budgets and strategy – and this impacts both speed of adoption and overall effectiveness.

The bottom line

Retail media can no longer be seen as just an “add-on” for placing ads. It’s about creating meaningful connections with consumers and as such it’s becoming central to the marketing mix.

Long-term success depends on:

• Getting the fundamentals right (scale, transparency, measurement).

• Balancing on-site efficiency with off-site reach.
  

At Sevendots we continually monitor developments in the CPG space and identify growth opportunities for CPG companies.

Retail Media represents one of the opportunity areas being actively explored with and for our clients as a means of addressing rising consumer expectations for personalized solutions, as summarized here “Personalization at Scale: Providing increased value to your consumers”.

Contact Sevendots to learn more.

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^{Sources:
• Nielsen, The future of retail media. 2025
• Emarketer, Worldwide Retail Media Ad Spending, Retail Media Forecast H1 2025
• The Business Research Company, Retail Media Networks Global Market Report 2025
• BCG, New revenue streams transforming traditional retail, June 2025
• Tinuiti, Devising a New Retail Media Strategy to Increase Sales Upstream
• Retail Media Breakfast Club, Why Creator Brands Are Flocking To Walmart, 2024
• Digiday, Marketers and agencies grapple with divisions over who controls retail media spend. 2025
• IAB Europe, 2023
• WARC, 2024
• Cap Gemini, 2025
• Business Insider, 2025
• Path to Purchase Institute, 2025}

In this episode of Transforming CPG, Stephen Factor and Managing Partner of Sevendots, Andrea Bielli, discuss the latest research on innovation in the CPG industry. Featuring insights from our latest Growth Series report which distills insights from over 100 global brand owners, this report is all about tapping into the underestimated power of innovation to drive business growth.

Stephen and Andrea cover…

• The key insights and takeaways for brand owners hoping to better leverage innovation for their business

• They typical obstacles and issues with delivering good returns from innovation

• Practical examples and tips for ensuring innovation pays back as it should

…and much more.

Download the key takeaways of our report ⁠here⁠ to awaken the power of innovation today. Or ⁠contact us ⁠to schedule a presentation, where we can provide deeper insights into how innovation could change your business for the better.

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.

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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Why is longevity emerging now? The shift in demand is driven by several macro forces, most notably an increasing global senior population and a rise in global life expectancy. Coupled with unparalleled advancements in (health) tech, consumer interest in holistic, proactive well-being is peaking, demanding solutions that are not only anti-ageing or curing but prevent decline before the onset.

For CPG, the opportunity is stark and ranges from nutrition, food and beverage to personal care and supplements. Yet, CPG’s answer should not be as simple as providing a lone vitamin to more senior consumers. Truly unlocking consumers’ demand for longevity should compel brands to develop higher-level value propositions for consumers of all ages.

1. The longevity economy

Numbers from the United Nations reveal that the proportion of senior citizens is growing on a global scale and by 2050, people aged 65+ will outnumber those younger than 12. The percentage of the 65+ population is increasing faster than any other age group, particularly in Asia where it is expected to reach 1.2bn people by 2060. (1, 2) Global ageing, however, is not the only force driving the demographic shift that primes longevity as one of the central trends over the coming years. Indeed, the UN has deemed this a “longevity revolution” considering also the substantial rise in average life expectancy (3).

Global senior populations do not only come in greater numbers of people and years but also hold significant economic power and they are willing to spend it on products that are designed for their age, health and benefit. In Japan for example, a country where one in three consumers is expected to be 65+ already by 2040, 64% of 65+ consumers agree that a food product with health benefits is good value for money, compared to just 30% of consumers aged 18-24 (4). An example of such a product is Yukijirushi Megmilk Mainichi Honebuto Milk with MBP which is high in protein, enriched with calcium and contains vitamins B6 and D, designed for those over 50 (4).

However, it would be remiss not to carefully consider the implications of longevity from the perspective of younger generations as well. Generation Z and Millennials are generations at the forefront of holistic wellness, notably where mental and spiritual well-being are concerned. Spearheading a more open discussion around mental health stigmas, they are equally drawn to healthy food science and nutrition, addressing different dietary concerns, preferences and restrictions. This leaves the field wide open for CPG brands to consider longevity solutions for teens, adults and seniors across different life stages. For example, brands could design products targeted at adolescents who have very specific nutritional needs as they are growing, supporting their overall well-being, and “form a basis for lifelong healthy habits and lasting health” (4). An example of a brand that embodies longevity as a lifestyle across generations is Blue Zones Kitchen, offering ready-to-heat meals inspired by the principles of the so-called blue zones – parts of the world where population lives longer than anywhere else (14).

2. Lifespan vs. health span: A new consumer mindset

While the idea of longevity might have previously been associated with anti-ageing (or delaying the inevitable), today’s focus appears to be much more proactive in nature. Consumers are no longer looking to merely treat ageing concerns, but prevent issues before they arise, suggesting that they do not just want to live longer (lifespan); they want to “live healthier for longer” (health span; 5) – and a shift from anti-ageing to well-ageing. Data from Mintel GNPD reveals that brands increasingly follow suit, launching more and more products in North America that promote well-ageing (6).

This proactive approach is accompanied by rising awareness, as longevity is linked to optimistic values, such as health empowerment and self-reliance (8). Global data from Ipsos and Euromonitor suggests that 80% of consumers want more control over their health, 69% say they seek health information on their own, and 54% of consumer knew which vitamins or supplements to take for their specific health goals and concerns in 2024 (5, 8).

Likewise, consumers are increasingly adopting health tech, such as smart devices or apps to track wellness goals, with usage consistently rising across all generations on a global scale: As indicated above, and perhaps unsurprisingly, younger generations, that is Gen Z and Millennials are at the forefront of adoption (close to 35%, compared to 25% of Gen X and 15% baby boomers; 5), further underlining that they present as much of a target for longevity solutions as older generations. On top of that, health tech represents one of the fastest growing sectors for VC funding – in the UK, health tech start-ups raised more than $2.3bn in 2024 (9).

Consumers are certainly ready to be presented with longevity solutions, and so is the market. Categories that align that with longevity demands and concerns, such as supplements, functional foods or fermented beverages are growing steadily – global retails sales of vitamins and supplements, for example, are expected to surpass $139.9bn in 2024 (5). So, what are you waiting for?

3. Key trends in longevity-driven CPG innovation

At the forefront of longevity innovation is science-backed functional nutrition, food and beverages, including product ingredients that have clinically supported benefits, such as adaptogens, nootropics, probiotics, collagen, and NAD+ boosters.

Euromonitor data on global snack sales by health benefits show that products aiding brain, joint and vision are the three fastest-growing categories between 2024-2026: the number of products enhanced with the aforementioned NAD+ (which is a coenzyme involved in energy production, DNA repair and cellular metabolism) has tripled across consumer health categories from 2023 to 2024 (5). Elysium Health is the brand that offers “the product that started the NAD+ movement” and a wide range of cellular supplements targeting brain, metabolic, immune, skin and eye ageing. The company’s mission is to “translate critical scientific advancements in aging research into accessible health products and technologies”. (10)

Where nutrition and food could focus on protein-rich, gut-friendly solutions, beverages could provide mood, sleep and stress support. An example of a brand offering just that is Rootine, which has built a supplement system rooted in circadian health and emphasises personalisation through its ‘Smart Multivitamin’ (currently on hold in microbead format). (11)

Another pillar of innovation is preventative personal care where beauty and health are blended, for example in the form of collagen or hyaluronic acid enhanced products. The Nue Co. is offering supplements that aim to strengthen skin barrier by repopulating the skin microbiome – “formulated for long term skin health”. (12)

Where personal care is concerned, it is not only the products themselves, but marketing that can play an important role in empowering consumers and emphasise a well-ageing rather than anti-ageing narrative. A great example of this is L’Oréal’s mature influencers campaign to promote their ‘Age Perfect’ line that takes a “pro-ageing” angle (13).

Last but certainly not least, longevity has emotional drivers that are as relevant as the physical health outcomes, including mental health and “joyful” eating. The interconnectedness of mind and body and the need to reduce stress factors provide an opportunity for longevity solutions to promote balanced lifestyles – and not promising a single supplement as the solution. Indeed, Mintel data tells us that 50% of Thai consumers try to maintain positive mental wellness to minimise ageing, while 35% of German consumers agree that life is too short to worry about the food and drink they consume. (4)

4. The future of longevity in CPG

Start by acknowledging that there is a shift happening in CPG product design, innovation and marketing that is no longer geared towards surviving ageing or treating associated illness but to living your best (and healthiest) life in a proactive and empowered way. In other words, consumers are interested in higher-level solutions that improve their health in the long run, rather than accepting merely short-term benefits. Moreover, it is consumers of all generations that want solutions targeted at their specific health goals and concerns.

To this end, CPG brands should consider a consumer-centric ecosystem approach to longevity, rather than offering niche and separate products. This requires, for example, collaborating with health tech start-ups to benefit from a growth in wellness tracking, and considering the role of AI and diagnostics in tailoring and personalising solutions to the individual consumer, no matter their age. Likewise, the product design and data should be transparent and backed by science to help the consumer make an educated decision about their well-being and their longevity journey.

Contact Sevendots today to discover more.

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<sup>Sources:
1. UN, Ageing, na
2. US Census, Aging Asia, 2023
3. Mintel, Consumer interest in longevity to drive proactive health solutions from food and drink brands, 2024
4. Mintel, APAC 2024 Food and Drink Landscape
5. Euromonitor, Top global consumer trends 2025
6. Mintel, Promoting ‘well-ageing’ vs ‘anti-ageing’ for consumers aged 55 and over, 2024
7. Food Business News, Consumers looking to CPG to enhance their ‘healthspan’, 2024
8. Ipsos Global Trends 10 year anniversary edition, 2024
9. tech eu, Health tech and life sciences lead the way for UK VC investment in Q3, 2024
10. Elysium Health, 2025
11. Rootine, 2025
12. The Nue Co., 2025
13. PBL Magazine, In Beauty, It’s Pro-Ageing Not Anti-Ageing, 2023
14. Blue Zones Kitchen, 2025</sup>

There has been a resurgence of the debate around ultra-processed foods (UPFs). Global consumption of UPFs is expanding. UPFs now make up more than half the average diet in the UK and US, and a recent review of studies from 36 different countries found that ultra-processed food addiction is estimated to occur in 14% of adults and 12% of children. This leads to intense cravings, symptoms of withdrawal, less control over intake, and continued use, despite such consequences as obesity, binge eating disorder, poorer physical and mental health, and lower quality of life (1).

The challenge we face is that people rely on UPFs for a wide number of reasons including affordability and availability, and so removing them from our diets would require a huge change in the food supply system, which remains unachievable for most people. This potentially results in further guilt among those who rely on processed foods, promoting further inequalities in disadvantaged groups. (2)

The definition of Ultra Processed Foods

UPFs are defined as industrially manufactured products comprising deconstructed and modified food components which are recombined with a variety of additives (including emulsifiers, and other added ingredients) as part of food processing. The Nova classification, developed by researchers in Brazil more than a decade ago, groups foods according to how much they are processed. The levels within the classification system are defined as follows:

• Group one foods are minimally processed or unprocessed foods such as whole fresh fruit and vegetables, legumes, fresh meat and fish.

• Group two foods are processed culinary ingredients such as salt, sugar, and oils.

• Group three covers processed foods such as tinned fruit and vegetables.

• Group four are the ultra-processed foods: sweet and savoury snacks, ready meals, soft drinks, and other items that often have little if any intact food from group one. (3,4)

The mapping below provides a high-level summary of the food classification system:

What is the debate around UPFs?

The classification is coming under question as being oversimplified, and the associated press coverage linked to the release of two major scientific studies in 2023 has raised the level of concern as well as confusion in the minds of consumers. (5)

Several tensions are building up:

1. Convenience vs. Health: Ultra-processed foods are often chosen for their convenience and long shelf life. The debate centers on whether the convenience of these foods justifies their potential negative impact on health. Advocates for healthier eating emphasize the importance of choosing whole, minimally processed foods.

2. Marketing and Accessibility: Critics argue that aggressive marketing of ultra-processed foods, especially to children, contributes to unhealthy dietary habits. Additionally, the widespread availability and affordability of these foods may contribute to overconsumption.

3. Global Health Concerns: The rise of ultra-processed foods is not limited to specific regions; it’s a global phenomenon. This has led to concerns about the potential impact on public health worldwide, especially in countries where traditional diets are being replaced by more processed and Westernized food choices. This drives the move back towards whole foods in favour of processed alternatives.

4. Research and Scientific Evidence: Ongoing research into the health effects of ultra-processed foods continues to inform the debate. Some studies suggest correlations between high consumption of ultra-processed foods and negative health outcomes, but the scientific community is still exploring the causative factors.
   

The arguments for raising the level of alert

There is extensive data linking ultra-processed food with physical ill health, such as strokes, heart disease and heart attacks, as well as raised blood pressure. There is now evidence that consuming large amounts of ultra-processed food, especially drinks containing artificial sweeteners, is also associated with a higher risk of depression. (6) A study which tracked 10,000 women for 15 years, found that those with the highest proportion of UPF in their diet were 39% more likely to develop high blood pressure than those with the lowest. A subsequent study, involving a gold-standard meta-analysis of more than 325,000 men and women, showed those who ate the most UPF were 24% more likely to have cardiovascular events including heart attacks, strokes and angina. (7) The variety of negative health impacts because of overconsumption of UPFs is still being explored and therefore appears as a risk to consumers who are without all the information they may require when making choices at checkout.

However, UPFs still dominate shelf space, mind share and wallet share, and this needs to change.

The arguments for lowering the level of alert

The recommendation to avoid all ultra-processed foods may lead consumers to remove some nutritionally balanced foods from their diets as well. Some items that fall into the UPF bracket are foods such as whole meal bread, wholegrain breakfast cereals and yoghurts – all of which should be encouraged as part of a balanced diet. Processing technologies can also actually help to preserve nutrients and increase both safety and affordability of foods, while also reducing food loss and waste thanks to a longer shelf life.

The resulting uncertainty

As a result, Americans are split on whether all ultra-processed foods are bad for your health: 57% say yes, 43% say no. Overall, 74% would be willing to try an ultra-processed food if it included one of the following health benefits: better cardiovascular function; improved brain function; better sleep; better immunity; or increased energy. Additionally, 67% of adults would be willing to pay more for an ultra-processed food that contained more nutritious ingredients delivering better health benefits, regardless of household income. (8)

The confusion in the minds of consumers is not surprising given the fact that the industry hasn’t done a good job in the past: ultra processing has been often used to expand profits, extending shelf life by stripping out nutrients and reducing nutritional diversity and density, even though in reality processing can deliver unprecedented benefits such as providing fiber without compromising taste. (9)

As a result, a recent US study (10) revealed that:

• 50% of consumers claimed to have heard of the term UPF, but were unable to explain what it means

• 30% claimed they were able to explain (but with a very broad range of definitions)

• 20% were not aware of the term
  

How should companies be responding?

There has been a shift around the definition of healthy foods as those produced using organic growing methods or non-GMO – which has been the case for decades – to defining healthy foods as those that are processed the least. Trying to swim against the tide is likely to be a losing battle. Damning scientific evidence that ultra-processed foods are a major contributor to weight gain, obesity and cardiovascular disease, amongst a variety of other health woes, has eroded consumer faith and trust in the packaged food companies behind them. Companies have a role to play in maximizing transparency when it comes to ingredient lists and processes in formulations, but also to support concerted efforts to help consumers make the right choices according to dietary guidelines at the grocery store.

The time has come to reinvent processed foods in terms of ingredient and sourcing choices and to provide much needed clarity to confused consumers who even suspect that all UPFs are not only unhealthy but are also bad for the environment due to the presence of chemicals and the hidden costs of industrial production – what 60% of European consumers seem to think (11).

The simplistic approach that the media is frequently adopting of classifying foods based only on the level of processing is running the risk of demonizing a broad range of foods as junk food, when many actually provide high levels of nutrients and contribute to a balanced diet.

The business case for creating healthier packaged foods, including healthier ultra-processed foods, is there. Those companies that take the lead will be the winners while those who will not adapt will find it increasingly hard to remain within the consideration set of consumers.

There happens to be another debate heating up at the moment around the positive or negative implications of AI. AI efforts could be directed to cracking the challenge of making healthier food more broadly accessible, irrespective of “the processing” that could become simply a red herring.

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^Sources:

^{(1) British Medical Journal, October 2023
(2) The Guardian, September 2023
(3) Sustain
(4) Washington Post Institute of Food Technologists, June 2023
(5) Google Search
(6) European Society of Cardiology
(7) Justfood/WHO study (266,000 participants in 7 European countries, November 2023
(8) Cision/Ayana Bio (survey of 2,000 Americans >18), October 2023
(9) Food Navigator/Olipop, April 2024
(10)Food Navigator/Vypr Study of 75000 consumers, April 2024)
(11) EIT Food Consumer Observatory, March 2024}

In this episode of Transforming CPG, Stephen Factor and Eugenio Perrier discuss the Alternative Proteins market. They then unpack the challenges the market faces, and what the future might look like (and require) for brands to succeed.

In this episode of Transforming CPG, Stephen Factor and Eugenio Perrier discuss the current landscape of the Alternative Proteins market. They then unpack the challenges the market faces, and what the future might look like (and require) for brands to succeed.

Stephen and Eugenio cover…

• The current maturity of the market and the period of reassessment that is already underway

• The importance and opportunities presented by the alternative protein market to serve the wider sustainability goals of the CPG industry

• How alternative proteins should be positioned and marketed to consumers, unpacking the impact of sustainability as a message, as well as health and wellbeing

• The barriers and obstacles impacting the growth of the market, including communication and targeting

• Innovations in the space, from big vs small companies

• Political and other regulatory factors impacting the market

…and much more.

Read more of our work on Alternative Proteins. We have a wealth of resources to discover, as well as our detailed report on sustainable growth models to inspire the industry. Including: What do consumers want from Alternative Proteins?

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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Brands are built, and broken, through thousands of small, often invisible interactions that shape trust, habit, and memory over time.

Leaders who understand, protect, and measure these moments create durable growth that scales.

The Experience Economy: Why Growth Is Increasingly Driven by Experience

We are living in an experience economy! Post-COVID, this is no longer a cultural talking point but a structural shift. Younger generations, and increasingly everyone else, value how life feels as much as what they buy. Value no longer resides only in the physical product; it emerges from the product plus the lived experience around it: discovering it, buying it, using it, servicing it, returning it, talking about it.

Brands are no longer “brick-and-mortar” or “digital”. They must be both at the same time, and customers expect coherence across environments. A great product with a broken experience is not a premium brand. It is a fragile one.

The scale of this shift is visible in where attention and investment are flowing. Immersive entertainment, a market that epitomizes value experiences, is rapidly growing with a CAGR of 23% annually. The global experience economy is expected to reach $8.2T market size by 2028.

Concerts and live events have exploded in parallel. Artists like Taylor Swift, Karol G, and Bad Bunny are not simply touring; they are creating global, emotionally charged experiences that people plan their lives around.

Yet here is the paradox: while spectacular experiences raise the ceiling, most businesses are built, and broken, by much smaller moments.

To manage growth in the experience economy, leaders need a clearer way to think about experiences.

A Framework for Experiences That Actually Drives Brand Growth

Not all experiences play the same role in memory, behavior, or brand equity. In practice, they fall into four distinct types.

There are four types of brand experiences that drive brand growth: Background, Contextual, Transformative, and Negative Micro-Experiences.

Type 1: Background Experiences
Unconscious, System-1 reinforcement that builds mental availability

These experiences operate below conscious awareness. They do not ask to be evaluated; they quietly shape associations through repetition, familiarity, and ease. This is System 1 at work, the fast, intuitive layer of decision-making described by Daniel Kahneman.

People are not thinking, “This brand is doing a great job” instead their brains are simply learning in auto-mode: “this feels easy, familiar, safe”.

This is why Byron Sharp’s How Brands Grow remains so relevant. Brands grow by increasing penetration, reinforced by mental and physical availability, being easy to think of and easy to buy. Background experiences are the repetition engine that builds those associations without conscious effort. Associations create familiarity, and those brands that are related to the task become the category norm. Sevendots Growth Series on Penetration is great material to learn on this.

CPG example: Coca-Cola’s strength lies in its consistency, evident in its packaging, taste, rituals, and visual cues. The brand’s iconic assets, such as the curved bottle, the red color, and even Santa during the holiday season, evoke the brand and reinforce the same mental structure. Over time, this consistency makes Coca-Cola an effortless choice, especially when evoking the brand unconsciously during drinking occasions, and it is “within arm’s reach of desire” thanks to its distribution strategy that ensures physical availability.

Coca-Cola is among the perennial penetration growth brands that have consistently maintained their market positions by reinvesting to remain culturally relevant and evolving their offerings to reach diverse audiences while retaining loyal customers. In essence, they focus on expanding penetration by attracting and delighting new consumers across various occasions and locations.

Non-CPG example: Amazon’s dominance is built on unconscious fluency: defaults, stored preferences, predictable delivery, and the quiet removal of friction at every step. Over time, these small, repeated, unconscious experiences train behavior and compress decision-making until choice all but disappear. Brands become habits not when they are loved, but when they no longer require thought.

Type 2: Contextual Experiences
Small in size, disproportionately memorable because context amplifies emotion

Some experiences are still small, but they occur when people are emotionally exposed: socially visible moments, transitions, vulnerability, stress, or identity formation. Context amplifies meaning, and memory formation spikes.

These experiences are critical to brands, they create long-lasting associations. However, most brands fail to develop effective strategies to find this Venn diagram of the memorable occasion and the right benefit to offer in that moment. Traditional research methods also fail to learn, a limitation we will touch on in an upcoming chapter.

CPG example: The Always School Program is a powerful illustration, as it is done at the point-of-market-entry, when associations and the category prototypes are being formed. Also, puberty is a moment of deep emotional sensitivity, identity formation, and long-term memory. Remembering the first period is like remembering the first fill-the-blank important moment. Because this life stage is universal and recurring across generations, the experience creates durable brand associations. By combining education, support, and product sampling directly in schools, Always shows up at a moment that matters, at a formative stage of life. The product itself is not the story; the context is. You want your brand to be there when consumers are initiating in the category, and even coffee is doing this, with Nescafe in Japan having a program to get young consumers initiated into the category.

Non-CPG example: Uber’s most meaningful experiences aren’t just average rides. They’re late-night trips, unfamiliar cities, and moments of vulnerability. Imagine standing in a foreign third-world country, where nothing feels familiar. But then, the Uber arrives as expected, and it directs you by your name. A smooth pickup creates a sense of relief and trust, while a failure creates a sharp aversion. The interaction is small, but the context makes it memorable. Context transforms micro-experiences into anchors.

Brands that develop the ability to effectively leverage these brief, yet impactful experiences will undoubtedly gain a competitive advantage.

Type 3: Transformative Experiences
Rare moments that reset expectations for everyone

Transformative experiences do not happen often, but when they do, they redefine what people believe is possible.

At the beginning of this article we touched on the immersive experiences market that is booming. As I go back and self reflect on what were those experience moments that made me WOW, they are not that frequent, and certainly they were not cheap.

My parents took me to the 1992 World Expo, where I experienced the first time a 3D IMAX movie with glasses and a multi-sensory water drops and shaken seats, like a “fourth D” experience. It was an awe-inspiring experience. However, for many decades, everything felt repetitive, with Disney Park rides and theaters featuring the same “4D trick” over and over.

Then, the Sphere in Las Vegas arrived. It took over 30 years of my life to experience another awe-inspiring experience of the same caliber. Those who have been to the Sphere know what I mean. Venues like this represent a new threshold, scale, immersion, and presence, combining them in a way that transforms the experience itself into the destination.

The live entertainment is also booming. Global tours by artists like Taylor Swift, Karol G, and Bad Bunny have become cultural phenomena and massive economic engines. People travel, plan, and save for these experiences. Brands want to be part of it. Cities get their economy boosted when these artists are in town. They are no longer ancillary to life; they are central to it.

CPG example: Pet care shows how CPG brands respond when expectations rise. Companies like Mars have expanded beyond food into veterinary care, diagnostics, monitoring, and wellness ecosystems. The brand is no longer confined to a purchase moment; it participates in the lived experience of care, health, and companionship. It is part of the crucial life moments of your pet, and that goes way beyond the nutrition.

Still in CPG but more on the emotional WOW side, the “Thank You Mom” campaign from P&G Olympics sponsorship keeps the top-ranked position among the best sports advertising ever (at least in my own scoreboard!). The effort of being a parent of an athlete is humongous, and what a huge peak moment with your kid at the Olympics. Dream comes true.

Transformative experiences don’t directly drive daily sales, but they fundamentally alter the criteria for evaluating all other experiences. However, most brands can’t afford to participate in these experiences, as these big iconic events are typically beyond their financial reach. Even when they can afford to participate, it is often after making significant financial sacrifices to do so, and very unlikely to yield a better return.

Type 4: Negative Micro-Experiences
Small failure moments that can unravel trust instantly

Negative micro-experiences are the most underestimated force in brand erosion. They are brief, but emotionally sharp, because they represent promise breaches. The asymmetry is brutal: years of positive reinforcement can be questioned in seconds.

CPG example: Everyday household accidents illustrate this perfectly. A diaper that leaks at night. Toilet paper that is not strong enough to avoid poke-through, these are not dramatic failures, but they occur in moments of discomfort, embarrassment, or stress. The decision to switch or to try something new is rarely analytical, it is immediate and protective.

Non-CPG example: Airline disruptions remain the canonical case. One missed connection handled poorly can outweigh dozens of smooth flights. The negative moment dominates memory because it occurs under loss of control and time pressure.

Negative micro-experiences do not accumulate slowly. They strike hard. And the leaky bucket of losing consumers becomes inevitable. But in this case is not because of lack of mental or physical availability, this consumer will be harder to recuperate.

Visa: One Brand, All Four Experience Types Illustrated

Visa is a ubiquitous brand in our world; its logo is everywhere you need to pay. It is also rich on experiences and occasions, as in any given day there are several mini experiences where there is the choice to use it. This makes it perfect to illustrate how all four experience types coexist within one ecosystem, from invisible everyday reliability to emotionally charged travel moments, to global events like the FIFA World Cup.

Visa demonstrates a central truth: brands are built, and broken, by how all four experience types interact over time. Mainstream brands should find inspiration from this ecosystem approach.

Measuring Experience When Experience Is Human – Ethnography at scale, end-to-end, while life is happening

If experiences are now central to value creation, measurement should be one of the most advanced capabilities inside organizations. Instead, it is often the most misaligned. The issue is not lack of data. It is a disconnect between how experiences are lived and how they are measured.

Daniel Kahneman’s work in Thinking, Fast and Slow explains the structural problem. Human experience is lived largely through System 1: fast, intuitive, emotional, and deeply contextual. Most research tools, however, capture System 2 rationalization: what people can explain after the fact. By the time we ask, the experience has already been edited by memory. Peaks dominate. Endings distort. Context collapses.

What remains is a coherent story, but not necessarily the truth of what shaped behavior. This makes many traditional surveys and CX trackers fundamentally misaligned. They are recall-based, directed, and episodic, designed to collect opinions rather than observe lived experience.

The solution is not better questions.

It is ethnography at scale, designed to capture experience in context, as it unfolds, across the full end-to-end journey.

This means following people, not touchpoints. Experiences cascade: discovery shapes expectation; checkout shapes trust; service shapes identity; failure shapes memory.

Measurement must move with the human across these moments, not audit isolated stations.

It also means more system 1 experiences and beliefs to predict future behavior, while removing the System 2 biases that have plagued traditional Qual and quant methods for decades. Better capturing signals close to the moment of truth and better predicting capabilities are critical.

Two people can go through the same designed journey and live entirely different experiences depending on stress, time pressure, social visibility, or vulnerability. Ethically “ear-dropping” while life is happening, when emotion and decision pressure are real, not reconstructed.

This approach is how the most valuable insights emerge. The strongest signals rarely sit in the average. They surface at the edges: unexpected uses, improvised workarounds, fringe behaviors that spread because they solve a real problem, and breakdown moments that reveal the true promise the brand is being held to.

In an experience economy, insight cannot be periodic or abstract. It must be continuous, end-to-end, and human-centered. And they must influence our foresight vs. being backward looking.

The research industry needs new ways to listen to life in motion.

Wrap Up: A Strategic Imperative

The experience economy has raised the stakes. Transformative moments, from immersive venues to global concerts, are redefining what “great” feels like. But the brands that endure are not only those that create spectacle. They are the ones that understand, protect, and refine the small human moments that happen every day.

Small positive experiences still build big businesses.

But only if leaders take them seriously enough to observe them, test them, and measure them in ways that reflect how people actually live.

This requires humility. It requires letting go of some comfortable metrics, keeping just the most critical ones. But above all, it requires the courage to pay attention to moments that do not fit neatly into existing models.

Because growth does not happen in dashboards. It happens in lived experience, one moment at a time.

At Sevendots, we help brands win by mastering the small touchpoints that shape experience and behavior every day. Using our Moment10 research ecosystem, we are able to observe real moments in context to uncover how brands are built, or broken, one interaction at a time. Our senior team partners closely with leadership to turn these insights into clear, actionable strategies that drive sustainable 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 & Inspiration:
This article draws on behavioral science (Daniel Kahneman), brand growth theory (Byron Sharp, Ehrenberg-Bass), and industry research from McKinsey, PwC, WARC, and leading global brands including Procter & Gamble, Mars, Nestlé, Amazon, and Visa. For further reading and sources support, see the following recommended list:

• Kahneman, Daniel. Thinking, Fast and Slow. Experience vs memory distinction.
• Kahneman, Daniel et al. When More Pain Is Preferred to Less: Adding a Better End. Psychological Science.
• Sharp, Byron. How Brands Grow and How Brands Grow: Part 2
• Ehrenberg-Bass Institute. Various Articles and publications.
• Sevendots Growth Series on Penetration
• Thaler, Richard & Sunstein, Cass. Nudge.
• Romaniuk, Jenni. Building Distinctive Brand Assets.
• Zaltman, Gerald. How Customers Think
• IDEO. Human-Centered Design field guides. Ethnography as a business tool.
• Pine, B. Joseph II & Gilmore, James H. The Experience Economy. Harvard Business School Press.
• Harvard Business Review. The Truth About Customer Experience and Why surveys fail to predict behavior
• Bain & Company. Loyalty & NPS research. How negative moments outweigh accumulated positives.
• McKinsey & Company. The Experience Economy: How Gen Z Is Reshaping Consumption
• World Economic Forum. The Future of Consumption: How Technology Is Changing Experiences
• WARC Case studies on: P&G “Thank You, Mom” Olympic campaigns and Always brand equity impact
• Mastercard Economics Institute. Experience Economy Reports (annual)
• Statista. Immersive Entertainment Market Size & CAGR
• Financial Times and Brookings Institution. The Economic Impact of Live Entertainment on Cities
• Mars, Incorporated. Public strategy materials on Veterinary services (Banfield, VCA, AniCura)
• Nikkei Asia / Japan Times. Coverage of Nescafé Japan youth initiation programs
• Federal Reserve / ECB. Research on payment friction, declines and consumer trust.NIQ, Total CPG across 54
global markets – Volume and Value Growth by Region and Category, Year Ending June 2025</sup>

Private Labels follow a consistent global pattern; markets are simply at different stages. Growth accelerates where penetration is low and now spans both affordability and premium tiers.

Consumer perception of Private Labels has fundamentally changed: they are now chosen for both value and quality.

What does the future of Private Label look like?

There is no shortage of talk around Private Labels right now, and for good reason.

They have become the elephant in the room for the entire CPG industry.

When Private Labels first started to appear in a more structured way on supermarket shelves, their impact was clearly disruptive. Over time, many brand owners assumed they would eventually reach a natural ceiling (much like discounters did) within specific geographies and categories and settle into a defined but stable role in the market.

The reality is proving very different.

Private Labels have recently regained growth momentum, expanding across geographies and new categories. In several markets, they already command well over half of category sales, and their trajectory suggests they are not done yet in further expanding. While a few categories in specific countries show signs of Private Label penetration plateauing, allowing major brands to regain momentum, Private Labels are increasingly moving from the margins to the very center of the market.

This shift has fueled a wave of provocations.

One recent example is a LinkedIn post by Juan Viñas featuring a fake Financial Times cover titled “Procter splits from Gamble”, mocking a scenario in which the company separates into two entities: one continuing to sell branded products, the other focusing exclusively on producing Private Labels for retailers. Another provocation projects Private Label share reaching 100% of the market by 2040.

These scenarios are intentionally exaggerated, but they resonate because they tap into a real underlying anxiety.

What the data clearly shows is this:

Private Labels are here to stay, and they are hungry to expand their space. For branded manufacturers, the question is no longer whether Private Labels matter, but how to compete, differentiate, and remain relevant in categories where they are structurally embedded.

This is the context in which the following analysis should be read.

Private Label growth follows a consistent global pattern

At a global level, Private Labels account for roughly 23% of CPG value, but their penetration varies widely by geography. What is striking, however, is not the disparity itself, but the consistency of the trajectory.

Where Private Label share is still low, growth is rapid.

Where share is already high, growth is naturally moderating, but penetration remains structurally strong.

Regions are not following different models; it looks like they are simply at different stages of the same journey, driven by the development both within grocery channels and discounters such as Aldi and Lidl.

Europe signals the structural end point of Private Label penetration

The speed of Private Label expansion is highest in markets that are still catching up. The United States is a clear example in recent years (with Asia and Latin America likely to follow in coming years).

In the United States, Private Label growth is fueled by consumer polarisation:

• consumers under pressure turn to Private Labels for affordability,

• while more affluent consumers increasingly adopt premiumised Private Label offers.

Today, close to 40% of U.S. Private Label sales already come from premium tiers, highlighting that Private Labels are expanding across the entire value spectrum.

Walmart is just one of the many retailers which stretched their Private Label portfolio to cover the whole spectrum from value tier to real premium products.

Private Labels don’t just take share, they grow categories

Another critical shift is how Private Labels contribute to category growth. Increasingly, their role goes beyond price competition.

Retailers are using Private Labels to strengthen their own equity by:

• move faster on trends,

• introduce innovation at scale,

• and expand consumption occasions.

A clear example is the UK, where Lidl was among the first to launch a Dubai Chocolate snack bar, ahead of traditional branded manufacturers. This ability to combine speed, relevance and accessibility allows Private Labels to stimulate category growth, not just redistribute share.

In March 2025 Lidl launched its own-label Dubai Style chocolate bar through an extremely successful social media shopping initiative on TikTok. This built the foundation for the roll out of the bars in all Lidl stores.

Consumer perception has structurally shifted

Ultimately, Private Label momentum is underpinned by a profound change in consumer attitudes.

Globally:

• nearly 70% of consumers see Private Labels as good value for money,

• two thirds consider them good alternatives to branded products,

• over half believe their quality is equal or superior versus branded products,

• and a growing share is willing to pay the same, or even more, than branded products for
  Private Labels.

Private Labels are no longer chosen despite being Private Labels, but increasingly because they are.

What happens next? Two structural scenarios

As stated, Private Label share continues to expand across markets. Portfolios now span from entry price to premium and super-premium. Household penetration is rising and consumer trust has structurally improved.

From here, two structural forward-looking dynamics are most likely:

• Portfolio Expansion – Premium Private Label accelerates

The most dynamic expansion is no longer at the entry tier but at the top.

Retailers are successfully building premium and experience-led Private Label ranges, capturing higher-margin segments once dominated by branded manufacturers. If this continues, value growth will increasingly be co-driven by retailer-owned brands, compressing the mid-tier and intensifying competition around differentiation.

• Structural Integration – Retailers integrate further

As Private Labels scale, retailers gain margin, data, and negotiation power. The next logical step is deeper integration based on tighter supplier partnerships, greater control over innovation pipelines, and stronger direct sourcing capabilities.

In this scenario, retailers evolve from distributors into orchestrators of the value chain.
Competition shifts from shelf space to structural control of the value chain.

What does this mean for branded players?

The rise of Private Labels reflects structural changes in value perception, retail power, and consumer behavior.

For branded manufacturers, the strategic question is no longer whether Private Labels will continue to grow, but which strategic posture to adopt in response.

There are three main strategic options for Brand Manufacturers:

• Compete on differentiation

Brands must win where Private Labels cannot easily replicate value. This requires radical clarity in positioning, stronger emotional equity, distinctive innovation, and visible superiority that justifies a price gap. Incremental improvements are not enough. The brand must stand for something unmistakable, and deliver it consistently.

• Redefine category role

Brands must move beyond product competition and elevate their strategic relevance. This means driving incremental category growth, shaping consumption occasions, and proving their contribution to total value creation. The objective is not just to hold share, but to become indispensable in the category architecture.

• Collaborate selectively

Brands must adopt a portfolio mindset. Competing where they have structural
advantage, while selectively partnering where scale, capabilities, or economics justify it. Collaboration is not a retreat, it is a strategic choice that must einforce long-term value, protect core equity, and strengthen overall competitive positioning.

There is already early evidence that strategy makes a difference.

In Europe, branded manufacturers are managing to regain share in categories where the perceived value gap remains meaningful and packaging differentiation is clear.

Between 2021 and 2024, Private Labels grew from 29% to 33% in categories where they were underpenetrated. However, in categories where they already held 36% share, penetration slightly declined to 34%.

This suggests a potential ceiling effect in highly saturated segments and reinforces that differentiation still matters. Private Label growth may be structural, but it is not automatic in every category configuration.

Strategic imperatives going forward

The evolution of the market will depend on how these forces interact.

If Private Label accelerates across premium tiers, differentiation becomes decisive. If retailers deepen structural integration, brands must either elevate their category role or integrate selectively into retailer ecosystems.

Most manufacturers will not choose a single posture. They will operate across all three, depending on category dynamics, retailer concentration, and competitive intensity.

The winning approach will be deliberate, portfolio-based, and retailer-specific.
What is no longer viable is passive defense. Private Label is now part of the structural architecture of CPG.

Strategic clarity, not reaction, will determine who continues to create disproportionate value and benefit from it in the long term.

Sevendots helps brand owners move beyond defensive responses, redefining where and how their brands can win in categories reshaped by retailer power and consumer expectations.

We support manufacturers in:

• sharpening brand and portfolio differentiation where Private Labels are strongest,

• identifying the growth pockets that still matter to consumers,

• and reinforcing their role as credible category partners, capable of sustaining category captainship and creating value in retailer interactions.

If you’re reassessing how your brands compete, and lead, in categories where Private Labels are structurally embedded, we’d be happy to exchange.

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:
• Sevendots, Private Labels Growth: What CPG Brand Owners Need to Know, 2024
• LinkedIn, 2025
• NIQ, Finding Harmony on the Shelf Report, 2025
• Europanel, Private Labels on the rise during most inflationary period, 2025
• Numerator, Price Gap Growing Between Private Label and National Brands, 2025
• Axios, Walmart launches biggest store brand in 20 years, 2024
ª Aldi Press Center, 2025}

E-commerce growth within the CPG industry presents a huge opportunity to brands. However, it comes with distinct challenges. Sam Bedi unpacks the opportunities, taking inspiration from Asia.

CPG companies around the world are acutely aware of the growth in E-commerce. Following rapid expansion of E-commerce in recent years, particularly post-pandemic, more moderate growth rates are anticipated in the next 5 years. However, online channels are still predicted to grow 3x faster than in-store (1). Given E-commerce is still set to grow at a faster rate than traditional offline, this raises the need for CPG companies and CPG brands to ensure their marketing strategies are appropriately positioned. They must be aware of factors to incorporate this channel into their business strategies, execution, and messaging, in order to drive online sales success.

Recently, Sevendots was asked by a leading CPG player to examine and understand how they could exponentially grow their revenue from E-commerce in Europe from their current level, to a targeted 20% of revenue (or 4X the current online performance). In particular, smaller brands in the US account for 54% of sales within E-commerce compared to 22% in physical stores (2). Big companies are therefore trailing behind E-commerce sales versus smaller brands. Additionally, it can be observed that lower shopping frequency online leads to higher brand loyalty rates, as there are fewer opportunities to switch – the use of favourites/list creation on online shopping sites supports this. As brands and product listings online can be sorted alphabetically, and many brands and product pages can fit simultaneously on a screen, this reduces the impact of limited facings and less ideal shelf placements that smaller brands tend to suffer from in physical stores (3).

While tackling the specific challenges facing the client within their E-commerce marketing approach, it became evident how similar factors apply to various other consumer goods companies headquartered in Europe, across both brands and retailers. Whilst most leading providers do emerge from the USA and Europe, there is a growing understanding of the importance and role that Asia (specifically E-commerce Platforms in Asia), can play in inspiring the development of E-commerce and broader digital evolution worldwide across the CPG market.

Drawing inspiration from Asia

In identifying future trends emerging across the E-commerce and digital landscape, we could identify clear sources of inspiration from Asia. Specifically, the evolution and development of digital and E-commerce platforms and solutions across various markets, particularly China, provide examples and case studies for CPG companies across Europe and North America, as well as developing markets outside of Asia. As the analysis delved deeper, it becomes clear that there is a need to identify trends underpinned by consumer behaviour which can travel across regions and help companies focus on those specific platforms and services that expand the opportunity set for E-commerce across developed markets such as Europe and North America. What can we learn or draw inspiration on from Asia?

Social Commerce

A landscape view of E-commerce operating across regions shows increasingly defined forms of E-commerce. A notable difference can be found in social commerce, with Asia accounting for 50% of global sales in this form compared to just 15% in Europe (4).

Worth noting is how companies in Europe tend to play in a limited segment versus those in markets in Asia. A strong prevalence of players in Europe remain principally focused in E-commerce segments defined as Traditional Retailers (i.e., Tesco.com, Carrefour.com) and Online Retailers (i.e., Amazon).

However, the perspective from companies operating in Asia, particularly more recently formed local or regional CPG companies, shows a willingness to operate across several segments, finding strategies – including portfolio management and content strategies – as part of their wider channel growth strategy. These include indigenous, or locally created or developed platforms, such as TikTok (or Doyen as it is known in China).

Social Commerce in China is estimated to already account for 16% of E-commerce retail sales last year (2023), with 84% of Chinese consumers purchasing at least one product via Chinese social media platforms (5). However, within Social Commerce, the sub-division of platforms does not just include TikTok, one of the most recognised platforms around the world, but also other forms more centered on things like content sharing, or knowledge centers such as Pinduoduo.

The Digital Shelf

What also emerged from the increasing time people are spending on digital devices for shopping needs is the increasing importance of the ‘Digital Shelf.’ This is a space where an ever-increasing number of brands and products want to reside. Noteworthy is the accelerating advancement over the past decade of the Digital Shelf in its increasing importance relating to maximising visibility and the customer experience.

Brands need to win at the ‘Digital Shelf’ to drive omnichannel acceleration, including ensuring availability of CPG products at the supply chain level and in accordance with consumer demand (including delivering product personalisation at scale based on customer data), driving increased traffic (through AI ready search), and conversion (including AI powered generative content creation, for maximum and immersive consumer experience). The experience of the online store therefore offers opportunities for significant conversations based on real-time data and interactive consumer experiences.

The Challenges of E-Commerce Growth

From a company point of view, the opportunity for revenue growth around based on successful online marketplaces is clear despite previous scepticism towards DTC and similar channels. Equally, there are challenges within the ecosystem when it comes to implementing successful E-Commerce businesses, starting with the need for optimization within a portfolio to suit the omnichannel world. The idea of Optimise ‘versus’ Duplicate is about selection. This not only includes clarifying metrics behind digital marketing, but also determining how to target consumers by selecting the right items within the portfolio for greater online versus offline success, factoring in tactics such as up-selling and cross-selling, for maximum ROI.

Additionally, Consumer Goods companies have experienced significant market disruption to CPG sales due to the rise of Discounters, which continue to gain market share across various regions. More recently, the surge in online purchases has added a new challenge for major CPG companies, with online market shares stabilizing at approximately 20% in Asia, 12% in the US, and 8% in Europe (6).

Tackling these challenges must be considered within three key areas: Fulfilment, Replenishment, and Forecasting & Inventory. These should be considered in addition to the sales and marketing challenges. These are key areas where companies will need to evolve both technology and capability to ensure the rising consumer demand and expectation is met by the CPG industry.

And with the increasing adoption of ‘community digital trends’ such as Gamification and AI, there is a growing need to consider how content and engagement strategies for companies will be developed for maximum consumer appeal within the Digital Shelf and surrounding social media channels, ensuring brand and product discovery going forward.

Contact Sevendots today to discover more.

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^{Sources:
(1) BBriekcmeetsclick, Europnale April 2024
(2) IRI , 2021, Strategies to Start and Keep Winning in CPG E-Commerce
(3) Europanel 2024
(4) Fortune Business Insights, 2023
(5) GMA, China
(6) NIQ, McKinsey, Europanel}

Q1 2026 may mark the beginning of a fundamental shift in how growth is created.

The winners are making deliberate choices around portfolio, geography and penetration, not simply lowering prices.

The question is no longer whether volume matters, but how to build it sustainably.

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.

Other CPG leaders are reaching similar conclusions

Although each company follows its own strategy, remarkably similar patterns emerge across the quarter.

Unilever continues demonstrating the value of disciplined focus. Its strategic decisions to separate Ice Cream and progressively simplify its Foods portfolio are creating a more concentrated business centered on higher-growth, higher-margin categories. At the same time, increased investment behind Power Brands and the company’s strong exposure to emerging markets continue to support balanced value and volume growth. Emerging markets are currently delivering almost six times the growth of developed markets, highlighting the importance of deliberate geographic prioritization.

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.

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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>

The first definition of value chain was created in 1985 by Michael Porter. Back then, the definition of primary activities and secondary activities have been the key drivers for building an understanding of each company’s value chain.

‘Value chain’ vs ‘supply chain’

Let’s start with a simple comparison between supply chain and value chain: A supply chain delivers products and services, a value chain delivers value! So understanding your value chain, namely where the value is created and added is key. That understanding forms the basis for building a solid company strategy, improving products for better consumer appreciation and can offer savings programs for GM improvements or funds for growth.

While the basics have remained the same, the last 40 years have added some additional elements to be taken into account. The biggest change is the focus on environmental targets in addition to financial ones. With this comes the extension of the value chain framework to include the pre- and post-processes of a company’s business activities. The other one is digitisation with technology developments like blockchain, AI or the integration of physical and virtual experiences. Today’s value chain analysis demands a more sophisticated perspective:

The benefits of broader value chain management

Most companies focus their savings programs within supply chain management, focused on procurement, manufacturing and logistics. This more siloed approach limits the savings potential and does not capture inter functional savings potential, as well as failing to take the customer/consumer and the competition into account as part of the business strategy. This means losing out on an opportunity to optimize value chain activities, and missing out on developing a competitive advantage: creating and sustaining superior performance.

In the current environment of increased competition, a deep understanding of the value chain in comparison with the competition and consumer preferences is key to driving differentiation in the market. In a reality where both financial and environmental ambitions have to be met, it’s vital to have a deep understanding of where investments are paying off across the entire lifecycle, and where cost efficiencies are more important. Understanding the value chain is the key to this.

So what are the key benefits of knowing the value chain? In short: Identification of the sources of both positive and negative cost efficiency. A deep understanding of the value chain helps to identify core competencies and areas of potential improvement. This forms the basis of the virtual circle of growth: Smart savings delivery to create the funds for growth and investment into those areas where growth and differentiation can be driven – that drives further cost efficiencies.

The increased focus on environmental targets is a great example, showing how value chain has become increasingly important. It’s the only way to create an integrated strategy, realising growth ambition and savings programs while fully understanding the interdependencies – it’s the basis to achieve all targets at the same time. Done in the right way it includes an understanding of consumer preferences and the competition, which is vital for the success.

Support activities for maximizing the value chain

To understand your value chain we can guide you in the following steps:

1. Define and understand each of the primary and secondary activities in your (extended) business

2. Analyse the cost and value of each activity

3. Identify competitive advantage opportunities

4. Take strategic choices to achieve cost savings or competitive advantage in each the activities

Contact Sevendots today to discover more.

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In 2024 the overall CPG market grew by 7.6% while 11 among the top global CPG companies advanced only 3.9%. This widening gap is more than a short-term divergence as it points to a structural shift in consumer preference and retailer strategy. In this scenario, Private Labels (PL), along with local and insurgent brands, are increasingly gaining ground, reshaping competitive dynamics across regions and categories. So, after a period where their momentum seemed to plateau, private labels made a notable comeback on the global stage.

From European stronghold to global force

Private Labels have long had a stronghold in Europe, but they are now scaling globally and now account for more than 20% of global Consumer Packaged Goods (CPG) value sales, with a 1.4 percentage point increase in 2024 alone.

In Europe the PL value share has reached 38%, according to IRI, maintaining its status as the most mature PL market. In the United States the share has climbed to 21%, supported by rising consumer acceptance and retailer focus.

However, while growth surged in the immediate post-COVID period, it has begun to normalize, particularly in Europe, where it decelerated from 12% in 2023 to just under 4% in 2024.

Yet the global outlook remains positive, driven by deeper consumer shifts and more sophisticated PL strategies.

Recent consumer research highlights that this isn’t just a cyclical or price-led adjustment: 53% of global consumers say they are increasingly buying more PL products and 60% claim they would purchase even more if retailers broadened the variety available.

Not all categories are equal

Private Label performance is highly category dependent. Generally Private Labels have been gaining share in Household Products, where perceived differentiation is lower, and in the more commoditized Food and Personal Care Products where brand equity is weak or losing ground (e.g. canned food, everyday bakery and snacks).

Conversely, categories more connected to consumer identity, emotional engagement or ritual (like coffee, pet care, and personal care) tend to favor brands. Yet even these are no longer immune. Premium and functional PL ranges are eroding the boundaries, especially as consumers redefine quality through perceived value rather than heritage branding.

Price, quality and equity

The historic trade-off between price and quality is still relevant but less intense than in the past.

On one side 69 % of global consumers (75 % in the U.S.) believe PL offers good value. Moreover, many consumers think that the quality of PL is the same or even better than the one of branded products. This has been supported also by the introduction of premium ranges of PL and by high-end supermarkets like i.e. Waitrose and Mark&Spencer in the UK, La Grande Epicerie in France or Eataly in a few countries around the world, which were established as premium food and beverage retailers offering superior quality from the start, often leveraging local sourcing.

On the other side NIQ finds that branded products carry, on average, a 26% price premium over PL alternatives across global categories.

While brands can absorb recent cost-of-goods (COGS) pressures through margins, PLs, often operating on thinner margins, have had to pass cost increases onto consumers.

Also, the growing trust in retailer brands allows PLs to ride on the retailers’ broader value perception, transferring equity across categories and products.

As consumers grow more confident in the quality and value of private label products, they are more likely to associate positive attributes with the retailer itself. This can lead to increased brand loyalty, higher store traffic, and ultimately, improved sales.

A generational shift

The generational divide adds another layer of momentum: 46% of Gen Z respondents globally are willing to spend more on PL products, twice the share of Boomers (23%).

Younger shoppers, less loyal to legacy brands, increasingly seek value, transparency, and experimentation, all areas where modern PLs can compete effectively.

In the US, a Numerator study indicated that GenZ are more likely to diverge from other generations on different dimensions where PL play an active role. These include discovery through social media platforms, packaging design, transparent labelling, trendy and innovative perception and sustainability and BFY claims. All areas where PL have become much more active and dynamic.

For GenZ in the US store labels like Ulta Beauty, Wild Fable, Cat & Jack, Costco’s Kirkland Signature, and Trader Joe’s are purposeful choices that blend style, value, and identity covering the role traditional brands had for other generations.

Retailers are no longer just distributors—they are brand owners

The biggest internal driver of PL resurgence is a strategic shift by retailers as they progressively see them no longer as just a margin enhancement vehicle but as a loyalty building lever.

As a consequence, they are no longer treating private labels as low-cost alternatives, they now manage them as brands in their own right. This includes:

1. Tiered portfolio architecture

Entry-level value options sit alongside premium and even super-premium lines. Retailers like Carrefour, Target, and Tesco offer well-segmented PL architectures that span the full price-value spectrum.

North American retailers are moving fast and bold on premium and super-premium

Private labels are no longer just about value. Across the U.S. and Canada, retailers are aggressively expanding into the premium and super-premium tiers of their private label portfolios, leveraging attributes like health & wellness, sustainability, and carefully selected premium ingredients to elevate their offer.

This shift is not subtle. Programs like Bettergoods by Walmart are designed specifically to appeal to more affluent and quality-conscious consumers, repositioning Walmart’s image and creating credible alternatives to manufacturers premium brands. Similarly, President’s Choice from Loblaws, remains a long-standing benchmark in elevating private label perception through innovation, storytelling, and quality. The implications for branded players are profound: they now risk being squeezed from both ends with value-tier PL eroding entry-level share and premium PL attacking from above. In this context, the “safe middle” is shrinking fast, making it imperative for brands to sharpen their positioning and reassert their relevance with renewed clarity and innovation.

2. Increased choice

The depth of PL portfolios has sensibly increased, meeting the consumer desire for broader choice and supporting the need to continually attracting more buyers.

Coop Italia expanded the beer offer

Introducing 8 different types of special premium beer on top of the 7 representing the base range.

3. Design and branding

Certain retailers, such as Aldi, have mirrored leading brands so closely that it has triggered legal pushbacks, like the recent lawsuit filed by Mondelez. But the blurred lines are also a sign of PL’s increasing equity and consumer recognition.

Also, in a recent survey in the US from First Insight, 71% of consumers said they knew when they were buying a private-label item - but when shown the PL and name-brand products side by side, 72% could not correctly recognize which was which. This highlights how differences of the past have now blurred thanks also to better retailer executions on their Private Labels.

4. Communication

Retailers have become more active in specifically supporting their PL offer. They are no longer just putting the product on the shelf, they are supporting it proactively. Besides the main retailer brand halo effect and media optimization, in many cases retailers use different touchpoints and sophisticated activations to support their specific products. Leading retailers are now developing brand language on their packaging that not only draws shoppers’ attention but also conveys the functional benefits of the brand. Grocery retailers worldwide are significantly increasing their spending on media communication, particularly within Retail Media Networks (RMNs), which are transforming how they interact with consumers.

^{Target owned PL in premium food offer.}

Innovation & differentiation

Traditionally the paradigm for PL was to follow what manufacturers were doing. So, maintaining differentiation through innovation was a main lever for brands to hold on to the gap in value perception in the minds of consumers.

However, retailers are becoming quicker at spotting and executing on trends, building meaningful innovation and differentiation and in many cases leading rather than following.

Consider M&S’s “Big Daddy Pistachio” chocolate bar—a fast move to ride the viral wave of Dubai-style chocolate. It went viral on TikTok and Instagram and sold out in record time. This is something a traditional large manufacturers would have had difficulties in doing.

Similarly, the Strawberry Cream Sandwich became a sensation, effectively creating a new snack subsegment almost overnight.

What brands must do to respond

The pressure on branded manufacturers is clear: they are being squeezed from both ends. On one side retailers who copy and scale fast, on the other retailers that innovate with agility and speed.

To sustain differentiation and long-term value, brands must respond in five key areas:

• Reassert meaningful differentiation
  Functional parity is no longer enough. Brands need to reinforce emotional connection and further tap into aspirations, provenance, and cultural relevance, especially in categories vulnerable to PL erosion. Linking to heritage and ownable deep human truths can help maintain the differentiation towards more recent PL offers.

• Accelerate innovation cycles
  Brands can no longer afford 18-month development timelines. Retailers are testing and launching in months, not years. Speed and agility have become essential. Also, activating brands in meaningful and impactful ways across consumer touchpoints builds a relationship that extends to both in-store and out of store.

• Working on disruptive innovation
  The need for long term sustainable differentiation is becoming critical, identifying disruptive innovations that can redefine traditional categories.

• Win on value, while managing price
  Optimizing price-pack architecture based on consumer needs and occasions (e.g., trial sizes, family formats) and communicating visible value (e.g., enhanced functionality, sustainability) is key to competing beyond price points.

• Partner smarter with retailers
  Where possible, co-develop exclusive SKUs, bundles, or in-store activations and digital shelf execution that give brands a distinct role in the retailer’s ecosystem.

• Protect IP and distinctiveness
  Design, trademarks, and packaging cues must be distinctive, ownable and defensible, both legally and perceptually.

Looking ahead: from plateau to platform

The PL resurgence is not a passing trend, it’s a strategic reconfiguration of the retail-brand dynamic. As retailers gain confidence and capabilities, and as consumers become more open-minded and value-conscious, the private label universe will only expand.

For branded CPG companies, the challenge is clear: how to remain essential in a world where your biggest customer is also your most credible competitor. The brands that win will not be the ones shouting louder, but the ones that move faster, connect deeper, and differentiate smarter.

At Sevendots we help manufacturers shape their strategies and optimize their portfolio.

Contact Sevendots today to learn how we can help.

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In our latest Growth Series report, we investigated the state of innovation in the consumer packaged goods industry. What becomes clear when analyzing data, cases and listening to the opinions of many brand owners is that innovation is seriously under-leveraged in the CPG industry when compared to other industries. The question is: Why is this the case? How significant is this lag behind other sectors? And what will it take for CPGs to catch up and ensure that any investment is paid back?

In this article:

• Understanding the innovation landscape in the CPG industry

• Current investment in innovation

• The risks of not investing in innovation

• The opportunities presented by innovation

• Key steps forward for the CPG industry

1. The innovation landscape: Diagnosing the dilemma in CPG innovation

Innovation in the CPG realm is misaligned with return on investment, as companies disproportionately bank on returns from other avenues instead of from new CPG products or product innovation. Echoing a 2018 Harvard

Business Review insight (1):

“Among CPG firms, R&D spending has not driven sales; marketing spending seems to have been the primary driver.”

When it comes to innovation initiatives, there is the pervasive sentiment of high risk and governance disillusionment which seems embedded in CPG firms. In our surveys, it was significant to discover that 40% of brand owners dismiss the notion of setting innovation-driven revenue growth targets. This skepticism fosters a preference for scaling existing operations deemed less risky for immediate returns.

We believe this represents a lost opportunity. In fact, the undeniable link between innovation and revenue expansion underscores:

• Innovation’s role as a growth accelerator, enabling companies to surpass competitors.

• Evident long-term value and shareholder returns derived from innovation, ensuring brand vitality and market distinction.

• Opportunity for resilience and consumer base broadening through innovation, aiding companies in navigating economic challenges by tapping into new demographics.

Innovation in the CPG industry is highly necessary to expand market share. Macro forces like sustainability, consumer behavior and consumer trends, or tech advancements (like artificial intelligence) are heavily impacting consumption models and companies will need to adapt. Innovation is the key tool for this adaptation and could also become a way to proactively drive required change, ensuring improved consumption models and long term sustainable value generation.

2. Current investment in innovation: A comparative perspective

At the recent CAGNY conference, P&G unveiled data showing its R&D spending nears 2.5% of revenue, overshadowing its peers who linger below the 2% mark. This, however, highlights a declining investment trend, underscoring a gradual contraction in R&D allocations.

Benchmarking the CPG sector’s R&D expenditure against other industries reveals a stark underinvestment in innovation. It’s telling that amongst the top 50 most innovative firms (as ranked by BCG from a pool of over 1,000 global innovation executives), only four CPG companies are listed, and none above the 26th rank (2).

^{Source: BCG, May 2023 based on a survey of 1,023 global innovation executives}

CPG brands and brand owners recognize that innovation is managed in only a somewhat effective way by CPG companies and that it is rarely considered as the most important growth driver for the industry. Therefore, it should not be a surprise that the number of new product launches has contracted in the past years along with the success rate of innovation. All of this represents a vicious cycle that is limiting and slows down the benefit that innovation could bring both to industry and consumers.

3. The risks of denying the role of innovation in the CPG industry

Innovation guarantees a solid connection with consumers and the trade, it refreshes the brand, it provides newness. But today, companies don’t have a real focus on it.”

^{Corporate and Business Development Director, Beverage Multinational (3)}

A prevailing view of innovation’s uncertain ROI and high risk has led to dwindling R&D investments, eroding CPG companies’ capacity to deliver groundbreaking consumer products. While a billion-dollar R&D investment might boost a pharma company’s stock, a similar move by a CPG firm could deflate its share value. As a result, the CPG industry tends towards innovation acquisition – many companies have preferred putting money into acquiring innovative businesses than in developing something new internally. The idea of incorporating existing innovative capabilities was perceived as less risky than investing in internal development. However, acquisitions are not risk free and the number of inherent failures indicates that this may not be a better way to pursue innovation.

4. Seizing opportunities presented by innovation

^{Source: Sevendots Quantitative Survey, 2023 based on 82 respondents}

Maximizing innovation efficacy begins with a clear methodology, which is based on an unwavering focus on consumer needs and consumer insights to inspire every innovation endeavor. Essential principles include:

• Embracing holistic innovation: Look beyond products to solutions that span and transcend existing categories, offering meaningful differentiation.

• Setting clear targets: Despite potential discomfort, establishing innovation metrics is crucial for evaluating effectiveness, including capital expenditure, profit expectations, and the balance between short-term and long-term innovation impacts.

• Cultivating an open ecosystem: An inclusive approach that embraces external cues and partnerships enhances innovation scope, necessitating a flexible strategy that encompasses evolving business models and ventures.

• Fostering collective involvement: Encouraging stakeholder engagement in the innovation process promotes a culture of shared ownership and insight.

This can revive and instil a stronger focus and related payback from innovation, allowing companies to build effective and sustainable differentiation that is able to generate value in the long term. Also, innovation helps expanding the brand territory recruiting new consumers and converting more occasions.

5. Key steps forward for CPG growth

To fully unlock innovation’s potential, a strategic blueprint is essential, starting with a clear vision and defined objectives for innovation’s role. This involves identifying opportunities within a structured framework, delineating the innovation territory, and crafting the opportunity with specific considerations for the requisite value chain and business model adjustments.

Only through a disciplined, even if still creative, effort is it possible to activate an ongoing effective innovation pipeline that can structurally contribute to growth and sustained value generation.

Restoring faith in the competitive advantage provided by innovation requires its reintegration at the heart of strategic planning. This requires business leaders to define a vision and objectives, bolstering governance structures, innovation teams, ramping up investment, and emphasizing the pivotal role of internal capabilities in driving the innovation agenda forward. In doing so, CPG companies can not only catch up with but potentially lead in the relentless march towards sustainable growth and industry leadership.

The path forward is fraught with uncertainty, with significant forces reshaping the value creation landscape in the CPG industry. Only through pioneering and effective innovation can companies sustain growth and prosperity.

Contact Sevendots today to discover more.

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Sources:

1. “Newton Versus Lorenz: Which Is the Better Model for Successful Innovation in Consumer Goods Companies?” by Marcel Corstjens, Gregory S.Carpenter, and Tushmit M. Hasan (MIT Sloan Management Review, forthcoming), 2018, Analysis conducted on world’s top 2500 companies.

2. BCG, May 2023 based on a survey of 1,023 global innovation executives

3. Sevendots qualitative interviews with brand owners, 2023

Value chains are shifting from linear, siloed models to real-time, data-driven networks.

The next frontier is clear: autonomous, intelligent, and customer-centric ecosystems.

Efficiency is no longer enough: resilience becomes the new performance driver

The Consumer-Packaged Goods (CPG) and grocery retail sectors have faced unprecedented challenges over the past few years, including supply chain disruptions, changing consumer behaviors, and the impacts of global events such as the COVID-19 pandemic and the geopolitical crisis.

In today’s competitive and demand-driven markets, the interconnection between producers and distributors is no longer optional; it is a strategic necessity. The traditional linear supply chain model has evolved into a dynamic, data-driven value network where information flows in real time across stakeholders. This transformation is enabled by digital technologies such as cloud platforms, IoT, advanced analytics, and integrated ERP systems.

The result is a more responsive, efficient, and resilient value chain capable of reducing costs, improving service levels, and driving revenue growth.

The need for resilient interconnected value chains has never been more critical. This article explores the importance of resilience in CPG and grocery retail value chains, the factors influencing that resilience, and strategies companies can adopt to enhance it.

^{Source: Representation of the Value Chain by the Sevendots Value Chain Team}

From linear chains to real-time value networks

Interconnected value chains represent a fundamental departure from traditional models. Instead of sequential, siloed processes, they operate as coordinated ecosystems where multiple actors collaborate to deliver value to the end consumer. In the CPG sector, these actors often include manufacturers, suppliers, distributors, and retailers.

The complexity of this new coordinated ecosystem is amplified by demand volatility and fast-changing consumer preferences but also by high SKU proliferation, omnichannel distribution and increasing pressure on service levels.

Digital technologies, including cloud platforms, IoT, advanced analytics, AI, and integrated ERP systems, enable this transformation by creating real-time visibility and coordination across the entire value chain.

The result is not simply a more efficient system, but a fundamentally different one: a network that can sense, decide, and respond dynamically.

Volatility, fragmentation, and the end of predictability

Three structural forces are reshaping value chains:

1. Systemic Supply Chain Disruptions: Global events, natural disasters, and geopolitical tensions can disrupt supply chains, affecting the availability of goods. For instance, the current geopolitical tension highlighted vulnerabilities in sourcing and logistics, leading to stock shortages and increased prices.

2. Evolving Consumer Preferences and Fragmentation: The rise of e-commerce, demand for immediacy, and increasing expectations around sustainability have made demand patterns less predictable and more complex to serve. Grocery retailers must adapt by improving their online offerings and sourcing from sustainable suppliers.

3. Market Volatility Intensification: Fluctuations in raw material prices, changing regulatory environments, and shifting economic conditions can create instability within value chains.

Together, these forces are redefining the operating environment: stability is no longer the baseline assumption.

Resilience is not protection; it is competitive advantage

In this context, resilience must be redefined.

It is not simply the ability to withstand shocks, but the capability to adapt quickly while maintaining performance.

In the CPG and grocery retail sectors, resilience can lead to several advantages:

• Sustained Operations: Companies with resilient value chains can continue to meet customer demands despite disruptions.

• Competitive Advantage: Businesses that adapt quickly to changes in consumer behavior and market conditions can outperform competitors.

• Customer Loyalty: Brands that consistently deliver quality products and reliable service foster trust and loyalty among consumers, which is especially important during challenging times.

Ultimately, resilience translates into tangible business outcomes: higher service levels, improved margins, and stronger customer loyalty.

Resilience is engineered: the capabilities that matter

Resilience does not emerge organically; it is built through a set of deliberate capabilities.

At its core, four levers define a resilient value chain:

1. Diversification of Suppliers: Relying on a single supplier can create vulnerabilities. By diversifying suppliers and sourcing from different regions, companies can mitigate risks associated with supply chain disruptions.

2. Investing in Technology: Embracing technologies such as artificial intelligence (AI), data analytics, and the Internet of Things (IoT) can provide better visibility into the supply chain. These tools help companies anticipate disruptions and make data-driven decisions.

3. Collaboration and Partnerships: Forming strategic partnerships with suppliers, distributors, and retailers can enhance collaboration and communication. Joint initiatives can lead to shared insights, better forecasting, and more efficient operations.

4. Operational flexibility and agility: Developing flexible operations allows companies to respond swiftly to market changes. This may include adjusting product offerings, altering distribution strategies, or implementing dynamic pricing models.

5. Sustainability and Climate Change Management Practices: Incorporating sustainability into the value chain not only meets consumer demands but also enhances resilience by reducing dependency on finite resources. Sustainable practices can lead to improved efficiency and reduction in waste, contributing to overall resilience. Climate change management practices help companies in the sector address raw material challenges in categories such as chocolate (e.g., hazelnuts) and coffee (cultivation).

These capabilities are not independent; they reinforce each other, creating a self-improving system.

Integration is no longer optional; it is the operating model

In today’s competitive and demand-driven markets, the interconnection between producers and distributors is no longer optional, it has become a core requirement for competitiveness.

Modern value chains operate as integrated systems, where planning, production, and distribution are continuously aligned through shared data and collaborative processes.

This transformation is enabled by:

1. Data Integration Platforms: Cloud-based integration platforms allow seamless data exchange between producers and distributors, eliminating silos.

2. Demand Forecasting and AI: Advanced analytics and AI improve forecast accuracy by incorporating real-time sales and external data.

3. Collaborative Planning Systems: Joint planning tools enable producers and distributors to align on forecasts, promotions, and replenishment strategies.

4. IoT and Real-Time Tracking: Sensors and tracking technologies provide visibility into inventory movement and condition across the supply chain.

The value chain is no longer a cost center; it becomes a core engine of growth and differentiation. The result is a more responsive, efficient, and resilient value chain capable of reducing costs, improving service levels, and driving revenue growth.

Platform vs orchestration: two paths to value chain leadership

Amazon and Nestlé represent two distinct, but converging, approaches:

• Amazon turns the value chain into a platform and revenue engine

• Nestlé turns the value chain into a capability that manages complexity, drives efficiency and provides competitive advantage.
  

Amazon vs Nestlé: Comparative Insights

Despite these differences, both models share common principles:

• data-centric decision-making

• end-to-end integration

• value creation (through monetization or optimization)

• growing importance of sustainability

The direction is clear: value chains are evolving into intelligent, interconnected systems.

The rise of intelligent networks

Across industries, a new paradigm is emerging. Value chains are no longer defined by physical flows alone, but by their ability to capture, process, and act on data in real time.

This transformation is driven by:

• digitalization of consumption

• increasing demand volatility

• sustained pressure on margins

As a result, companies are shifting toward:

• omnichannel integration

• AI-driven decision-making

• platform-based ecosystems

• regionalized and resilient supply networks

The value chain is becoming a value network—dynamic, intelligent, and continuously evolving.

Looking ahead, value chains will increasingly move toward autonomy.

Artificial intelligence will not only support decisions but actively manage end-to-end processes. Digital twins will enable real-time simulation and scenario planning. Logistics will become progressively automated, reducing manual intervention.

At the same time, the human role will evolve. Organizations will redesign workflows to enable effective human–machine collaboration, focusing human effort on strategic and creative activities.

Finally, relationships across the value chain will become more digitally integrated. Routine interactions will be automated, while human engagement will concentrate on innovation, trust, and long-term partnerships.

From managing flows to orchestrating customer-centric ecosystems

The transformation of the CPG and grocery retail value chain is no longer optional, it is strategic.

Industry analyses show that only 23% of CPG companies and 28% of Retailers consider their supply chains truly agile, highlighting a structural gap that is accelerating the need to redesign the Value Chain.

The evidence is clear:

• inefficiencies destroy value at scale

• data-driven companies outperform peers

• collaboration across the value chain is the primary value multiplier

The fundamental shift is:

A value chain designed around the concept of customer centricity places the customer at the core of every activity, decision, and process within the organization. Instead of focusing primarily on internal efficiency or product-driven logic, each stage of the value chain, from sourcing and production to marketing, sales, and after-sales service, is aligned to create and deliver maximum value for the customer. This approach requires a deep understanding of customer needs, preferences, and behaviors, supported by continuous feedback and data analysis.

As a result, the company can enhance customer satisfaction, build stronger relationships, and generate sustainable competitive advantage by consistently delivering experiences that meet or exceed expectations.

In an increasingly volatile environment, resilience is not just about surviving disruption, it is about building the capabilities to continuously adapt and win.

How can Sevendots help?

From strategy to execution, resilience must be engineered. At Sevendots, we help CPG companies strengthen their value chains through a combination of strategic design and targeted operational interventions, leveraging senior expertise and a fully integrated perspective across operations, commercial, and financial dimensions.

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Sources:

• Amazon and Nestlé official corporate documents, different years

• Gartner Supply Chain Study, 2026

• Sevendots Value Chain Team analysis, 2026

How CPG companies can navigate uncertainty through cross-industry and segment expertise

CPG companies of all sizes are facing a new generation of complex challenges that are impacting their foundational capability to create value.

Trade barriers, macroeconomic downturns, and structural instability are dampening consumer confidence and increasing execution risk for CPG brands worldwide.

While globalization is no longer the dominant force shaping growth, the ability to operate effectively at both global and regional levels has become even more critical. This is due to huge uncertainties driven by tariffs, macroeconomics downturn and a structural instability, which are all dampening consumers’ confidence.

Companies are confronted with increasingly complex problems. Despite access to new tools that boost productivity and capabilities, the idea that their challenges are unique to them is holding back the possibility to learn from other industries and segments. Potential solutions are sought within a predefined frame, limiting the chances of identifying effective ways to manage the business in such turbulent times.

Support in managing these new challenges can be found from many external sources but very few are equipped with multi-industry and multi-segment experiences that can be applied within a specific business landscape and able to go beyond defined boundaries and ensure effective execution and tangible results.

Innovation is lacking in CPG and has not sustained business growth

As a driver of sustainable competitive growth over time, innovation continues to be perceived as too risky, even moreso given the pressure for short term results. In fact, within the CPG industry it now accounts for only one third of new launches.

True innovation has been gradually declining for a long time across all CPG sectors, particularly for Food & Beverage, increasing its level of exposure to forces that are draining growth and profitability.

A New Recipe for CPG Growth: Accessing “Enablers Capabilities”

To succeed, CPG companies must master three types of capabilities:

• Mainstream Capabilities - The company-specific assets, processes, and know-how that sustain today’s core business.

• Tools Capabilities - The technologies, platforms, and methodologies (including the most recent AI) that enhance efficiency, insight, and scale.

• Enablers Capabilities - Experience-driven ways of working developed through direct, hands-on exposure to multiple industries, markets, and operating models.

In a context where markets shift faster than organizations, Enablers Capabilities determine whether companies can turn ambition into sustainable growth.

The most important Enablers Capabilities for the future are:

• Operating with speed and judgement

  The ability to leapfrog from a defined execution environment, made up of process and standardized models, to an instinctive behavior where gut feeling and speed are more important than ever. If a company does not have it internally, it should learn from those who have lived and delivered in diverse cultural contexts, both corporates and startups.

• Building and orchestrating value-creating ecosystems

  The ability to build up networks which are instrumental for the achievement of the company’s objectives and the management of them. It is about shareholders, suppliers, instrumental lateral industries, universities and more. Asking people to sit together for a meeting is easy, managing an ecosystem with the aim to extract value to accelerate the company growth is completely different, particularly when the dimension of such an ecosystem is global and biased by cultural differences.

• Executing seamlessly across regions and markets

  The ability to operate in a streamlined way regionally and globally. This requires specific knowledge of the business dynamics of different countries, gained through direct experience. This implies having negotiated, managed resources, connected with consumers and shared views and learnings across multiple countries.

• Leveraging multi-industry expertise

  The practice of identifying patterns and opportunity levers by applying insights from multiple industries and segments. Everybody thinks they have a unique project with unique problems, but it is rarely the case. Having exchanges with resources experienced in multiple industries and segments is crucial as together with them opportunity levers can be identified and implemented.

This is all enhanced by gaining support from people with the capability to de-risk innovation and bringing it to life will be key to guarantee healthy future growth.

A strong example of enablers’ capabilities in action is Novozymes A/S and the launch of its Alternative Protein Solutions (APS) team.

Designed to disrupt the protein landscape through biotechnology and precision fermentation, APS leveraged best practices from multiple industries, including CPG, Food & Beverage, and Appliances, to operate as an internal startup.

This model preserved agility while maintaining strategic alignment with the corporate organization.

Sevendots’ execution playbook

Sevendots has developed an execution playbook that enables CPG companies to compete more effectively in today’s volatile environment. By combining company-specific knowledge with cross-industry experience, the playbook supports organizations across the full growth journey— from innovation and partnerships to execution and profitability.

In today’s environment, success in CPG depends on a deep understanding of how businesses truly operate and on the ability to adapt quickly to changing market conditions. This is no longer achieved through internal capabilities alone, but by intentionally accessing experience that combines company-specific insight with proven, multi-industry and multi-segment execution.

Contact Sevendots to enhance the Enablers Capabilities of your organization and accelerate growth through more effective innovation.

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Introduction

In the consumer-packaged goods (CPG), also commonly referred to as fast-moving consumer goods (FMCG), many companies fixate on pricing and cost-cutting as the primary levers to boost profitability. While trimming costs or raising prices can improve margins in the short term, sustainable profit growth ultimately depends on growing sales volume in a healthy way.

Without volume, price increases eventually hit a ceiling, especially when consumers are feeling financially strapped and retailers are under increasing pressure to deliver value and efficiency.

The challenge is that many traditional volume-driving strategies are expensive or complex.

Expanding into new markets, launching new brands, or opening direct-to-consumer channels can certainly drive growth, but they often require heavy investment and carry significant risk.

One often-overlooked avenue for growth is strengthening the business you already have, more specifically, building deeper supplier-retailer engagement and collaboration with the retailers who already stock your brands.

These existing retail partners are the gateway to your consumers, and maximizing those relationships can unlock incremental sales more efficiently than many flashy new initiatives. Instead of solely pouring funds into new channels or costly price promotions, leading CPG firms are finding that investing in retailer relationships yields resilient volume growth and improved profitability.

New research supports this idea: supplier companies that make customer-centricity – in this context, treating retail customers as true partners – a centerpiece of their strategy are outperforming their peers on both the top and bottom line.

In the sections below, we explore the evidence behind this claim and how some of the world’s biggest CPG multinationals have embraced retailer-centric strategies to drive success.

New Research: How Retailer Engagement Drives Superior Growth in CPG

A recent analysis by Sevendots of 11 top CPG companies over the past 3 years reveals a compelling pattern: the companies that excelled at volume growth whilst still improving margins tended to be the ones most focused on strengthening relationships with their existing retailers.

As the chart shows, out of the 11 companies studied, 6 were able to grow both sales volume and profit margins above industry norms in this period – a clear sign of healthy, sustainable growth.

When we examined what set these 6 outperformers apart from the others, 3 striking differences emerged:

1. Higher retailer relationship ratings: The 6 winners had an average Advantage Group International (AGI) relationship score across all measured dimensions of 40 points, 6 points higher than the rest of the pack. A company’s Advantage Group score is derived from anonymous retailer feedback, providing a benchmark of how suppliers are viewed by their customers in areas like collaboration, service, and value creation. In other words, the best-performing suppliers were rated significantly better to do business with by their retailers.
   
   This isn’t a trivial gap – in Advantage surveys, a few points can separate the top-tier from the middle of the road. The data suggests that being more collaborative pays off with real commercial results.
   

2. Greater commitment to understanding customer needs: The six winning companies on average only spend a tiny fraction (< 0.1%) of their annual turnover on services from Advantage Group; however that percentage is roughly 50% more than the others’ average relative spend.
   
   This metric is a proxy for how much each company invests in formally measuring, benchmarking, and improving retail partner relationships. While the percentage sounds small, for a large CPG firm it can translate into hundreds of thousands of dollars dedicated to listening to structured retailer feedback and engagement measurement. The leaders’ higher spend demonstrates a clear commitment to retailer-centric analytics and continuous improvement.
   

3. Retailer collaboration as a sustainable strategy: Importantly, this investment has been ramping up over time: collectively, these firms increased their spend on retailer feedback and engagement programs by 89% over three years, significantly higher than the 49% increase seen among the other companies. These companies are doubling down on customer-centricity and scaling those principles across markets and channels, while less successful peers have been slower to expand similar efforts.

Excellence in key collaboration capabilities

Digging further into the data, the successful group particularly out-performed others on specific aspects of the manufacturer–retailer relationship. In Advantage Report (and other qualitative assessments), they scored especially high in areas such as “Capability & Experience” of their teams, “Sharing Objective Insights,” “Shopper Marketing Programs,” and “Sustainability Commitments.”

In practice, this means the winning companies have highly competent, experienced account teams and processes; they build trust by sharing data and category insights objectively with their retailers; they co-create effective shopper marketing initiatives in stores and online; and they collaborate with retailers on sustainability goals and ethical commitments. These are all value-adding, partnership-oriented behaviors.

By contrast, the analysis showed less advantage for the winners on dimensions like product innovation, brand differentiation, or even trade spending levels. In other words, what set the top performers apart was how they partnered, not simply what products they sold or how much they spent on trade promotions. They did not win by simply having more blockbuster new products or by outspending rivals on price discounts; they won by being better partners in the eyes of the customer.

The following chart shows the difference in Advantage scores between the companies that drove volume and profit above industry norms, compared to those that did not.

Why Strong Retailer Relationships Drive Volume and Profit

These findings align with a growing body of evidence that strong, collaborative retailer relationships are a leading indicator of business success in CPG. When a manufacturer consistently delights its retail partners, the benefits flow both to the retailer and back to the manufacturer in a virtuous cycle. A recent global study by Advantage Group International quantified this effect: companies ranked in the top tier by their retail customers achieved significantly higher revenue growth than those in the bottom tier. Specifically, top-rated suppliers enjoyed about 26.9% higher annualized revenue growth. This analysis underscores that prioritizing collaborative, mutually beneficial relationships with key retail partners is not just “nice to have”; it is strongly associated with superior financial performance.

We term this “The Collaboration Dividend”, and there are several mechanisms through which strong relationships drive sustainable volume and margin:

• Improved execution at the shelf: Retailer-aligned suppliers secure better availability, shelf placement, and promotional execution. Joint business planning (JBP) enables more effective promotions, fewer stockouts, and higher on-shelf conversion – lifting volume efficiently.

• Higher-impact joint marketing: Trusted partners are invited to co-create shopper marketing programs rather than simply fund promotions. These collaborative initiatives tend to outperform traditional trade spend because they are rooted in shared objectives and retailer insight.

• Credibility as a category partner: Retailers value manufacturers who share objective, data-driven insights rather than brand-biased narratives. Suppliers that play a category leadership role influence assortment, space allocation, and growth strategies – directly impacting volume.

• Alignment on strategic priorities: Collaboration on sustainability, supply chain efficiency, and omnichannel execution builds trust and creates incremental growth opportunities. These initiatives often unlock retailer support that would not be available through transactional relationships.

Notably, the research shows that the outperforming companies did not meaningfully exceed peers on innovation output or trade spend levels. Their advantage came from capability, collaboration, and execution. In short, they earned volume rather than buying it – making profitability more durable over time.

Customer-Centric Strategies in Action: Lessons from Top CPG Players

Leading CPG multinationals have institutionalized retailer-centricity by embedding it into their governance, operating models, and commercial processes. While approaches differ, the underlying principle is consistent: treat retailers as strategic partners, not transactional customers. Across organizations, this shows up not through heavier trade spend or innovation alone, but through stronger commercial capability, deeper collaboration, and disciplined execution at scale.

Procter & Gamble – Partnership built on transparency and execution discipline

Procter & Gamble (P&G) has long positioned customer partnership at the core of its commercial model. Through senior leadership roles dedicated to customer development and a culture of radical transparency, P&G works with retailers to co-design growth strategies rather than simply sell into them. Its emphasis on superior retail execution – from shelf simplification to omnichannel collaboration – reflects a belief that volume growth starts with making retailers more successful.

Unilever — Joint business planning as a growth discipline

Unilever explicitly frames customers as the “gateway to shoppers and consumers.” The company systematically deploys joint business planning with key retailers, aligning on growth objectives, investments, and service levels. Unilever brings discipline and consistency to how it partners with retailers. This approach allows Unilever to strengthen existing channels while selectively expanding into new ones, rather than treating the two as competing priorities.

The Coca-Cola Company — Collaborative business planning as a strategic reset

The Coca-Cola Company has redefined account planning by replacing supplier-led selling with Collaborative Business Planning built around shared strategic agendas. By developing plans jointly with retailers, Coca-Cola improves execution quality, accelerates decision-making, and ensures its brands are embedded in retailer growth strategies rather than positioned alongside them.

Mondelēz International — Sustained investment in partnership quality

Mondelēz International provides a clear example of how sustained investment in customer engagement pays off. Its repeated top rankings in Advantage Report reflect a consistent focus on partnership quality, execution excellence, and long-term vision – particularly in channels like travel retail, where collaboration is critical to growth.

Danone — Customer centricity anchored in shared values

Danone has elevated customer centricity to the executive level through Chief Customer Officer roles and by linking retailer collaboration with its sustainability agenda. Joint initiatives with retailers have demonstrated that aligning on shared values can deliver both societal impact and measurable sales uplift.

Colgate-Palmolive — Operationalizing retailer partnership at scale

Colgate-Palmolive operationalizes retailer partnership through widespread joint business planning, shopper marketing collaboration, and disciplined data sharing. This approach has supported strong shelf velocity and category leadership in highly mature markets.

Across these examples, the common thread is not superior innovation pipelines or heavier trade investment, but stronger commercial capability, deeper collaboration, and a sustained commitment to understanding and serving retailer needs.

Conclusion: Grow Where You Already Play

In an era of fierce competition and rapid channel evolution, from e-commerce to hard discounters, it’s understandable that CPG companies are hunting for the next big growth opportunity. However, this research and the accompanying examples make a persuasive case for not overlooking the growth potential sitting right in front of you: your existing retail channels. Strengthening engagement and collaboration with the retailers who already carry your brands can be one of the most efficient and effective ways to drive incremental volume and improve profitability. It is a classic case of making the most of your current assets before stretching yourself thin in new arenas.

Focusing on volume through existing customers does not mean abandoning innovation or new channels. Rather, it means ensuring a solid foundation on which those other growth initiatives can succeed. Strong retailer partnerships amplify innovation by securing better launches and shelf placement, make pricing strategies more sustainable through joint value creation instead of unilateral increases, and can even facilitate expansion as trusted retailers support entry into new stores or try omnichannel pilots. Just as importantly, collaboration also guards against downside risk – retailers are less likely to drop your products or push for extreme discounts if the relationship is truly win-win.

In summary, the path to sustainable growth in CPG seems to run through the customer. By investing in retailer relationships – measuring them, prioritizing them, and innovating within them – manufacturers can unlock growth in places they might have assumed were mature or maxed out.

The data shows and executives confirm that this approach works: suppliers who are rated highly by their retailers tend to grow faster, and the initiatives that improve those ratings, including capability-building, joint planning, and insight sharing, are within any company’s reach.

As leaders plan for the next quarter or fiscal year, customer engagement should be considered as a strategic objective alongside your sales and profit targets. Relationship metrics, such as 11

those captured through Advantage Group International or your own customer satisfaction surveys, should be viewed as key performance indicators, just as important as market share or innovation pipeline. Teams should be encouraged to approach retailers not just as negotiators, but as collaborators who bring solutions to the table. Resources – people, time, and budget – should be intentionally allocated to initiatives that strengthen partnerships, whether through joint business planning sessions, retailer-specific insights research, or collaborative training programs.

The takeaway from our research is clear: CPG companies that strengthen where they already play are winning the game. By building on the base of trust and cooperation with existing retailers, organizations create a launchpad for volume growth that is profitable and enduring.

In a business environment that often fixates on the next new technology, market, or trend, there is real competitive advantage in doubling down on the fundamentals of partnership. The proof is in the numbers – and on the shelves.

At Sevendots, we help brands unlock pathways to margin enhancing volume growth by developing and assessing alternative growth plays. A key component includes advising on the optimal channel and retailer plays that will deliver the greatest return. Reach out to us if you’re looking for support to drive out-sized growth in 2026.

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:

• Sevendots – Top 11 and 35 CPG companies quarterly financial analysis (2025).

• Advantage Group International – Advantage Report Insights (2024), plus Advantage score trends and financial records.

• Unilever plc – Annual Report and Accounts (2024). Discussion on customer relationships and joint business planning with key customers.

• Incenteev blog – Masterclass with Ayla Ziz, Danone Chief Customer Officer (July 2025). Insights on Danone’s customer-centric approach and results of retailer collaboration.

• Advantage Group International – Advantage Awards press release (Oct 2023). Mondelēz WTR ranked #1 by retail partners, citing proactive engagement and vision “Delighting Travellers.”

• PortersFiveForce.com – Colgate-Palmolive Business Model Canvas (2024). Description of Colgate’s joint business planning and retailer collaboration to drive shelf velocity and margin.

• Positive Business Conference (University of Michigan) – Session abstract (2015). P&G Chief Customer Officer Bob Fregolle on transforming customer relationships through mutual understanding and transparency.

• Mindy Sherwood (P&G Chief Sales Officer) – LinkedIn post (2024). P&G’s commitment to superior retail execution by partnering with retailers to enhance the shopping experience.

• Sales Management Association – Conference archives (Mar 2024). The Coca-Cola Company’s Collaborative Business Planning initiative (Mark Rajewski, “Collaborator-in-Chief”) driving shared value with global retailers.

In 2025, leading CPG firms are pursuing contract manufacturing partnerships as well as strategic brand collaborations as viable alternatives to traditional M&A.

This article examines why these approaches are gaining momentum, explores three distinct execution pathways for innovation, and provides guidance on aligning tactical choices with long-term brand strategy.

The Innovation Imperative

A major beverage company recently spent 18 months and substantial capital building capacity for a new product line, only to watch consumer preferences shift before launch. Meanwhile, a competitor tested a similar concept through contract manufacturing, adjusted based on market response, and captured the opportunity in half the time.

This scenario plays out repeatedly across the CPG industry. Innovation remains the fundamental driver of sustainable growth, yet the path to bringing new products to market has grown more complex. Consumer expectations evolve rapidly, commodity costs fluctuate, and supply chain constraints persist across global markets.

Standing still is not an option. However, the traditional playbook for innovation through internal development or acquisitions carries significant trade-offs that many organizations are reassessing.

One type of innovation which CPG companies are Increasingly embracing is strategic brand collaborations as a deliberate mechanism to unlock growth, differentiation, and consumer engagement.

Brand collaborations represent strategic agility in a marketplace where consumer loyalty is fluid, innovation cycles are accelerating and controlled experimentation has become a competitive necessity.

When done well, co-branded experiences help companies break through saturated markets while delivering fresh relevance in categories that struggle with commoditization.

This trend has sparked broader industry activity: Trolli with Mountain Dew, Miller Lite with Pringles, and Reese’s with Oreo in 2025. Each pairing illustrates a shift from transactional marketing to strategic symbiosis, combining distinct brand equities to co-create value.

When Coca-Cola and Oreo joined forces in 2024 to launch a limited-edition product, both brands leveraged borrowed equity, cross-pollinating audiences without the capital investment or uncertainty of launching entirely new product lines.

Choosing the right pathway for brand collaborations becomes crucial to make sure the approach is executed in the best possible way.

From Strategy to Execution: Choosing Your Manufacturing Path

CPG leaders face a critical question: how to produce innovations efficiently. Supply Chain and Operations teams must choose from three distinct pathways, each with clear advantages and inherent limitations.

Pathway 1: Internal Manufacturing

Developing manufacturing capabilities in-house allows companies to retain full control over production processes, quality standards, and intellectual property. Internal production typically delivers lower unit costs and higher gross margins as the facilities reach optimal capacity. Companies with established manufacturing operations often see unit cost advantages of 15-25% compared to contract manufacturing.

The trade-off is time and capital. Building or retrofitting manufacturing facilities can take 6 to 36 months, delaying market entry and exposing companies to opportunity costs. In fast-moving categories, this delay can prove decisive. Capital requirements range from moderate investments for line extensions to nine-figure commitments for entirely new categories.

This pathway makes strategic sense when innovation aligns with core competencies and when the company anticipates sustained demand sufficient to justify capital deployment. It works best for products expected to become permanent portfolio additions with predictable volume trajectories.

Pathway 2: Mergers and Acquisitions

Acquisitions offer a path to bring new capabilities and product portfolios into the organization rapidly. M&A can deliver inorganic growth and provide immediate access to established brands, distribution networks, and technical expertise.

Yet the CPG industry has experienced a notable decline in M&A activity. Deal volume dropped 30% in 2024, while deal value fell 19% compared to the previous year. This decline reflects multiple factors: economic uncertainty, elevated interest rates, regulatory scrutiny, and the sobering reality that M&A failure rates can reach 70%.

Why do so many deals fail? Poor strategic fit, overvaluation, and integration complexity top the list. The resources required for successful integration are substantial. Cultural alignment, systems integration, and organizational restructuring demand focused leadership attention and can distract from core business operations for 12 to 24 months.

For strategic portfolio expansion where synergies are clear and integration capabilities are proven, M&A remains viable. Companies with strong track records in post-merger integration and clear strategic rationale continue to pursue this path.

Pathway 3: Contract Manufacturing

Contract manufacturing has emerged as a third pathway, offering speed to market and minimal capital requirements. The contract manufacturing market has grown at approximately 10% annually over the past five years, with 67% of CPG brands planning to maintain or increase their use of these partnerships.

External manufacturing allows companies to test innovations, enter new categories, and respond to market opportunities without committing to fixed assets. Speed advantages are substantial: companies can often move from concept to market in 3 to 6 months, compared to 12 to 36 months for internal builds. This approach proves particularly valuable for limited editions, regional pilots, and products where demand remains uncertain.

The trade-offs are equally clear. Contract manufacturing typically results in gross margins 10-20 percentage points lower than internal production due to the manufacturer’s markup. Companies also cede some control over production processes and timing.

Production slots may be limited during peak seasons, and critical expertise remains outside the organization. For products that transition into core portfolio offerings, these factors create long-term margin pressure.

Contract manufacturing delivers maximum value when speed and flexibility outweigh margin considerations, when capital is constrained, or when testing new concepts where long-term demand is uncertain.

A landmark example of successful Contract Manufacturing has been that of P&G’s partnership with HAYCO in 2021.

At the time P&G was facing a critical innovation challenge within its Home Care division.

Consumer research revealed that more than half of households still relied on traditional mops and buckets, believing this was the only method to achieve a deep clean. P&G had developed the Swiffer PowerMop concept, an all-in-one wet cleaning system designed to deliver mop-and-bucket performance in half the time, but the product required specialized manufacturing capabilities that would take 18-24 months to build internally.

To capture the market opportunity quickly, P&G partnered with HAYCO Manufacturing, a Hong Kong-based contract manufacturer with specialized expertise in injection molding, product design, and assembly of fast-moving consumer goods.

The partnership leveraged HAYCO’s vertically integrated capabilities across three manufacturing facilities in China and the Dominican Republic, providing P&G with immediate access to the production capacity and technical expertise needed for the complex product design.

From a strategic standpoint, this partnership exemplified contract manufacturing at its best.

• P&G gained speed to market, launching Swiffer PowerMop in 2023 rather than waiting years for internal capacity development.

• The company avoided substantial capital expenditure on specialized equipment and tooling while accessing HAYCO’s world-class injection molding and assembly capabilities.

This approach proved particularly valuable given the product’s complexity: the PowerMop features a 360-degree swivel head, battery-powered spray mechanism, and sophisticated mop pads with 300+ scrubbing strips, all requiring precise engineering and quality control.

The results validated the partnership strategy decisively. Swiffer PowerMop became the largest product launch in Swiffer’s history, contributing 40% of the brand’s portfolio growth and driving 35% of category growth, making it the number one growth driver in floor cleaning. The product achieved exceptional consumer acceptance and quickly became a permanent fixture in retail channels nationwide.

Beyond immediate sales success, the partnership allowed P&G to test market response and refine the product without committing to fixed assets, demonstrating how contract manufacturing enables CPG leaders to innovate with agility while preserving capital for strategic investments.

A Framework for Decision-Making

The choice among the identified pathways should flow directly from strategic objectives and market realities. Consider this framework:

For rapid deployment and experimentation, contract manufacturing offers the optimal balance of speed, flexibility, and capital efficiency. When brands need to capitalize on consumer trends quickly, test market response to innovations, or deliver limited-edition collaborations, external manufacturing partnerships minimize risk while maximizing responsiveness. This approach allows companies to experiment, learn, and adjust without the burden of stranded assets.

Ask yourself:

• Is this innovation primarily a market test?

• Is time to market critical?

• Can we accept lower margins in exchange for speed and flexibility?

If the answer is yes, contract manufacturing is likely your best path.

For strategic portfolio expansion, the decision between M&A and internal capital investment requires rigorous analysis. Examine expected volume trajectories, competitive positioning, technical complexity, available capital, integration capabilities, and risk tolerance. Neither pathway should be selected by default.

Key questions include:

• Does this innovation represent a core competency we need to own?

• Do we have the capital and patience for internal development?

• (for M&A specifically) Can we identify the right target?

• (for M&A specifically) Do we have proven integration capabilities?

• (for M&A specifically) Are the strategic synergies clear and quantifiable?

If the answer is yes, then internal manufacturing or M&A is likely your best path.

The distinction matters because execution pathways that work well for tactical innovation may prove inadequate for transformational growth, and vice versa. A collaboration that works beautifully as a limited release may fail if forced into permanent production without the right manufacturing infrastructure.

The path forward

CPG companies that navigate these choices successfully share common characteristics. They maintain clarity about which innovations serve tactical purposes and which represent strategic bets. They build relationships with contract manufacturers before urgent needs arise. They develop repeatable processes for evaluating execution pathways. And they recognize that innovation strategy and execution strategy must align.

The proliferation of brand collaborations and the growth in contract manufacturing signal an industry recalibrating its approach to innovation. These trends do not replace internal capabilities or eliminate the role of M&A. Rather; they expand the strategic options available to CPG leaders.

As consumer expectations continue to evolve and market dynamics shift, the companies that thrive will be those that match innovation ambitions with appropriate execution pathways. This requires judgment, analytical rigor, and willingness to challenge conventional assumptions about how growth should be pursued.

Sevendots specializes in helping CPG companies navigate strategic portfolio decisions and innovation management. We bring deep industry expertise and analytical frameworks that capture the full complexity of these choices, from identifying emerging consumer trends to evaluating execution pathways and building innovation strategies aligned with long-term brand objectives.

Contact Sevendots to explore how we can support your strategic innovation initiatives.

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Sources:

• Sevendots (2025), Brand Partnerships, Three Paths for Growth.

• Bain & Company (2025), M&A in consumer products: Carving out to grow.

• Highlight (2024), 17 brand collabs bringing innovation to food & beverage shelves.

• Iconic (2024), CPG M&A trends & data: 2024 insights for your business.

• OEM Magazine (2024), CPGs moving to contract manufacturing and packaging lines.

• Path to Purchase Institute (2024), Winning with CPG brand collaborations*

• SPINS (2025), Trends that shaped the CPG industry in 2024: Newtopia, brand collabs, mushrooms and more.

• Keller (2023), Strategic Brand Management: Building, Measuring, and Managing Brand Equity

• Hayco (2019), P&G recognizes top suppliers powering global supply network.

• Procurement Magazine (2024), P&G honours suppliers driving excellence in supply chains.

Today, public companies are tightening portfolios while private firms are broadening theirs — each driven by different time horizons.

Focus tends to win on performance, diversification on stability, and the great companies learn to balance both.

The future belongs to the “focused diversifiers”: those who know who they are, but aren’t afraid to stretch where it matters.

Making deliberate decisions and leveraging the opportunity to aggregate categories to provide higher-level solutions to consumers is a fundamental driver for long-term value generation.

Every few years, the world’s biggest consumer goods companies seem to change their minds.

One moment they’re narrowing down to “core strengths,” selling anything that doesn’t fit. The next, they’re buying everything in sight, from snacks to supplements, in a rush to catch new growth.

Think of Kraft Heinz splitting up, Unilever spinning off ice cream, Nestlé trimming water, or Ferrero buying W.K. Kellogg’s cereal business. What looks like chaos is, in fact, the rhythm of an industry that has always swung between “focus” and “diversification”, between depth and breadth.

The Eternal Question: How Broad Should You Be?

In consumer goods, success depends not only on what you sell, but on how many things you choose to sell.

A focus strategy means concentrating on the categories where you have real muscle, sharper identity, higher margins, and clearer execution.

A diversification strategy means expanding into new or adjacent spaces capturing growth, spreading risk, and staying relevant as consumer behavior shifts.

Both strategies work. Both fail. The art lies in knowing when to switch.

Why focusing or diversifying?

In principle, companies diversify when they seek new sources of growth, broader revenue stability, or the chance to participate in emerging consumer occasions.

They focus when complexity erodes profitability, or when leadership needs to reaffirm what the business stands for.

While these moves are usually financial or vision-driven, a third trigger remains underleveraged: one that is consumer-centric. Companies can combine categories to deliver higher-level solutions to consumers.

By offering multiple products, and potentially also services, in a consumer “set,” the business can capture more value, raise switching barriers, and deepen engagement. Examples could be combining health drinks, protein bars, supplements and other categories under a unified longevity platform.

When the Market Speaks: Focused Publics, Diversified Privates

Over the past decade, publicly listed giants have mainly chosen focus. Investors reward simplicity and punish complexity.

Unilever, Kraft Heinz, and Nestlé are all slimming down, shedding slow-growth assets, and homing in on profitable cores. Data backs the move: according to a recent BCG analysis, companies that narrowed their portfolios delivered higher annual total shareholder returns over the past decade.

Private and family-owned firms, by contrast, play the long game. Ferrero has bought more than 20 companies in ten years, expanding from chocolate into cookies, cereals, and ice cream, almost doubling its revenue, expanding occasions and categories covered by its portfolio. Mars, now merging with Kellanova, is doing the same: building breadth for resilience, not just short-term returns. Lactalis announced two major acquisitions this year being a bunch of yogurt brands, including Yoplait, in the US from General Mills and, more recently, the Fonterra’s consumer unit. This expands further its geographical footprint.

Private companies being active in major M&A activities

Coke and Pepsi: The Clearest Test Case

Two icons, two models. Coca-Cola is a focused pure play in beverages. PepsiCo runs a dual empire of drinks and snacks.

Over the last decade, Coke’s market capitalization rose by nearly 60%, PepsiCo’s by around 40%. Coke wins on margin and investor love; PepsiCo wins on stability and crisis protection.

^{Source: Bloomberg, Reuters, Companies’ Financial Reports, 2016-2025}

The conclusion? There isn’t one. The right answer depends on what kind of company you are and what kind of world you operate in.

The Risk–Return Pendulum

Focus maximizes returns in calm seas. Diversification keeps you afloat in the storm.

In the 2008 financial crisis, and again during COVID, diversified companies outperformed because their broader portfolios cushioned shocks.

But in stable years, focused firms outperform because clarity, efficiency, and capital discipline command a valuation premium.

This is why the CPG industry never sits still. The pendulum swings back and forth, following the rhythm of the market.

The Emerging Middle Ground: Focused Diversification

The smartest companies today are learning not to choose sides. They are mastering focused diversification, staying disciplined around a strong core, but extending into adjacencies that make strategic sense.

So Where Does This Leave CPG Leaders?

There are two main considerations when speaking about focus or diversification.

• The need to be deliberate: knowing when to pivot, when to double down, and when to let go. This starts with understanding company assets and skills. This is based on making explicit decisions following an ongoing review of the company category portfolio.

• The opportunity to go beyond traditional financial and vision triggers and look at the possibility of combining categories that together can offer higher-level solutions to consumers. This unleashing increased value driving consumer preference and contributing both to top and bottom line development.

At Sevendots, we help CPG companies make deliberate, insight-driven choices, identifying where to focus, where to diversify, and how to build value through consumer-led higher level solutions.

We rapidly assess current and new categories, mapping the most relevant opportunities for growth. Our approach combines an external, unbiased perspective and the latest market dynamics with deep understanding of company assets and culture.

In short, we help our clients shape portfolios that are not just efficient, but meaningful to consumers and built for long-term relevance.

Want the Full Analysis?

If you want to receive the full analysis: “The CPG Pendulum: Focus vs. Diversification in the Age of Portfolio Reinvention” contact Sevendots at growth@sevendots.com.

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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Source:

• Sevendots Growth Series on Portfolio Management, 2024, BCG “For Long-Term Market Performance, 2025, Bloomberg, 2025, Reuters, 2025

We’ve been working on something for the past few months to further enhance the knowledge exchange with key players in the CPG industry and it’s now live.

The Growth Builders is a new weekly publication on CPG strategy — built on the same underlying principles behind the Sevendots Growth Series, and going considerably further.

Practical, grounded, no filler.

What’s already live:

• 10 articles published — covering brand penetration, portfolio management, geographic expansion, the CPG value equation, category growth, and more

• Written by practitioners who have worked across the largest CPG companies in the world

• Free to read — no paywall, no account required

What’s coming:

• 30 articles in total over the next 4 months

• Three structured knowledge tracks launching in June: Penetration, Portfolio Management, and Top CPG Company Benchmarking

• Each track will provide further depth - case studies, frameworks, and diagnostic tools for CPG leaders

• An optional paid tier launching alongside the tracks in June for those who wish to access the full toolkit

Access to the ongoing publication is free for those who subscribe. You’ll get every article directly in your inbox.

→ Read the first articles and subscribe at growth.sevendots.com

We’d love to know what you think.

The Growth Builders — Sevendots

Price-led growth has reached its limits, while volume growth increasingly depends on deliberate penetration strategies.

Capital-intensive industrial assets remain essential but are no longer the primary source of competitive advantage or shareholders’ returns.

CEOs recognize the need to rethink business models. Yet legacy structures and investment footprints complicate the transition.

Sustained value creation will require combining penetration led growth with new business models that rebalance assets, insight, and adaptability.

Why CPG’s growth challenges are structural, not cyclical

The CPG growth model that delivered decades of shareholder value is no longer fit for today’s market. Price-led growth is reaching its limits, volume growth is stalling, and capital markets are signaling that traditional scale is no longer enough.

Large Consumer Packaged Goods (CPG) companies are facing a growing structural challenge. In an environment characterized by accelerating change, fragmented consumer demand, rising competitive intensity, and increasing channel complexity, many CPG leaders are finding it harder to sustain volume growth. This difficulty is now cascading through the value equation: margins are under pressure, price increases are losing effectiveness, and shareholder returns are increasingly disconnected from broader market performance.

This situation is not cyclical. It reflects a misalignment between how value is created in CPG today and how markets and consumers now reward value creation.

Over the last several years, even the best-performing CPG companies have delivered meaningfully lower returns than broader equity markets, a signal that scale, brands, and industrial excellence, while still essential, are no longer sufficient on their own to support long-term value creation.

In recent years, much of CPG growth has been sustained through pricing. This strategy has bought time, but not a solution to the underlying problem that has been simmering for a while.

Private labels, insurgent brands and local players continue to gain share across markets while an increasing number of consumers trade down or fragment their spend across brands, channels, and solutions. At the same time, promotional intensity and marketing efficiency have deteriorated, further eroding the effectiveness of traditional levers.

The implication is clear: price can no longer compensate for weak demand fundamentals.

In 2025 for the top 11 CPG companies volume growth has been negative. In 2024, roughly three-quarters of consumer products sales growth came from price increases.

Over the past 5 years, consumer staples (proxied by XLP) delivered ~8.0% annualized CAGR vs. ~15.0% annualized for the S&P 500 (SPY). In 2025 the top 11 CPG companies’ share price growth was on average at 0% vs. double digit growth of the relative stock exchange indexes.

This creates a new mandate: CPG must reinvent the consumer value equation, while still extracting medium-term value through disciplined penetration-driven volume growth.

CEOs recognize the need for a reset

This reality is now reflected at the highest level of corporate priorities. Recent global CEO surveys show that business model change ranks as the number one priority, ahead of price increases, marketing spend, headcount optimization, or M&A.

Price increases remain high on the agenda, but they are increasingly being viewed as tactical levers, not sustainable engines of value creation.

Similarly, an excessive focus on the premium categories or segments is leading to two consequences for global CPG players:

• Inevitable excess capacity in production plants as a lower number of consumers are being focused on, those who can afford to pay more

• Leaving the bulk of category volumes in the hands of regional/local players in the mid tier price segments

• Allowing smaller brands and private labels to first control the lower price segment and then start to ladder up.

For CPG in particular, this shift is significant. The industrial model that historically underpinned competitive advantage, capital-intensive assets, scale manufacturing, and fixed-cost leverage, is now acting, in many cases, as a constraint on adaptability.

Why industrial scale alone no longer drives CPG value creation

Manufacturing scale, operational excellence, and industrial know-how will remain critical components of any successful CPG model. However, they can no longer sit in isolation at the center of the value equation.

Three structural tensions are emerging:

• Capital intensity limits experimentation and speed

• Traditional category boundaries constrain innovation and relevance

• Indirect routes to market reduce access to consumer insight and learning velocity.

As a result, optimizing the existing system delivers diminishing returns.

Yet this does not mean CPG companies are “out of growth.”

The medium-term opportunity penetration-led volume growth

In the medium term, large CPG companies can still sustain value creation through volume growth, but the nature of that growth is changing. The most credible path forward is penetration-led volume growth, not indiscriminate expansion. This requires deliberate choices involving three dimensions:

Portfolio choices become critical.

Growth increasingly depends on focusing portfolios on consumer jobs to be done and occasions where penetration headroom still exists, on adjacent or redefined spaces where brands have permission to stretch, and on managing explicitly the difference between cash engines and growth engines, each with distinct roles, economics, and expectations.

Channel development is equally decisive.

Penetration today depends on structural advantage in the channels that are gaining relevance like discounters, e-commerce, quick commerce, specialized platforms, Away From Home and digital B2B ecosystems. As pointed out by Justing Sargent in our recently published article “The Collaboration Dividend” growth can come also from existing channels.

Geographic footprint must also be addressed more selectively.

Growth is increasingly uneven across markets, requiring targeted geographic bets, localized propositions, and tailored pack-price and route-to-market architecture rather than uniform global rollouts.

Penetration-led growth, therefore, is not primarily an execution challenge. It is a design problem, requiring a different way of thinking about where and how growth is created.

Disruptive innovation as the bridge between growth and new business models

This is where disruptive innovation becomes essential, provided it is understood in a broader and more holistic sense than traditional product innovation and it is fully consumer centric. At its core, penetration-led growth must be built around a consumer-first engine structured on three elements:

• Jobs & occasions (demand definition)

• Access & interfaces (demand access)

• Portfolio & economics (value capture).

Disruptive innovation, therefore, is not just about new products, but about designing and activating this system end-to-end.

In CPG, innovation has long been associated mainly with new products, formulations, or line extensions. While these remain important, they are no longer sufficient to unlock sustainable penetration growth or to support the emergence of new business models.

Disruptive innovation today operates at the system level. It reshapes how value is conceived, created, delivered, and captured, often without immediately challenging the core product itself. In doing so, it allows companies to explore new growth logics while continuing to leverage existing industrial and brand assets.

In practice, this broader form of innovation spans multiple, interconnected dimensions:

• Consumer innovation, redefining the consumer job to be done and reframing categories around outcomes, occasions, and routines rather than products

• Business model innovation, experimenting with new revenue logics, subscription mechanisms, service layers, and ecosystem participation

• Route-to-market innovation, redesigning channels, partnerships, and digital interfaces to accelerate reach, learning, and penetration

• Operational and capability innovation, embedding data, AI, and automation to increase adaptability and decision speed

• Organizational and governance innovation, enabling faster experimentation, cross-functional collaboration, and different risk profiles.

Crucially, this systemic view of innovation is what makes penetration-led growth sustainable.

By redefining occasions, simplifying access, improving relevance, or lowering adoption barriers, disruptive innovation expands demand rather than merely increasing intensity among existing buyers.

At the same time, it creates protected spaces where new ways of generating value can be developed and tested without destabilizing the core business.

Clearly some of these routes are harder than others and overall ROI can be different.

To manage disruptive innovation properly aligning the right resources and capabilities becomes crucial as well outlined by our Partner Mauro Piloni in his recent article “Unlocking Growth in the CPG Industry in a World of Uncertainty”.

Why business model innovation becomes unavoidable

Even with disciplined penetration-led growth, the limits of the traditional CPG model remain. This is why leading players are exploring new business models, not as experiments at the margin, but as ways to redefine how value is created.

Across the industry, five model directions are emerging:

• Direct-to-Consumer DTC 2.0, not as a volume channel but as a strategic control tower for data, insight, and innovation and to reduce dependency from large retailers.

• Ecosystem and platform models, where value is created across connected products, services, and partners. Think here at how wearables have been able to build a market as a health and data companion.

• Service-led and outcome-oriented propositions, shifting from selling items to delivering results and covering higher level consumer needs. This provides more rounded solutions to consumers.

• Circular and bioeconomy models, where sustainability becomes a core operating logic driven by regulation and economics. I.e. in many markets, refill models already exist at scale, for example, returnable glass bottle systems, and could be reinvented through electrified logistics and digital tracking.

• AI-enabled decision systems, i.e. across dynamic pricing, demand sensing and portfolio optimization.

These models rebalance the mix between tangible assets and intangible value, between scale and adaptability.

These five models are not alternatives. They are different expressions of three underlying transformation pillars being:

• Demand definition – How can I tackle new, or better addressing existing, jobs to be done and occasions through a mix of physical products and services?

• Demand access – How can I reinvent route-to-market leveraging new interfaces?

• Operating adaptability – How can I better leverage data and AI pairing it with new organization models?

The real challenge transitioning without breaking the base

While CEO ambition to redefine business models is clear, the path to get there remains uncertain. Capital investment and industrial footprint, once the primary drivers of value, now act as potential barriers to transformation.

The challenge is not to abandon the existing model, but to transition from it deliberately, funding the future while protecting the present.

This requires:

• Clear transition architectures, not isolated pilots

• New performance metrics beyond volume, margin, and share

• Explicit trade-offs between short-term optimization and long-term optionality

Across all emerging models, three enablers consistently determine success:

• Access to fresh, clean, harmonized internal and external information

• Experience-based, multidisciplinary, future-oriented human judgment

• A seamless combination of the two, where technology ampli es, not replaces, human insight

This is where many transformations fail: not for lack of data or technology, but for lack of meaningful synthesis and direction.

The Sevendots perspective

At Sevendots, we have been consistently advocating for some time that the CPG value equation must evolve, both to secure long-term shareholder returns and to better align with consumers’ rapidly evolving expectations. Not only have we been beating this drum, but we have been working with multiple companies to kick start and manage the required change.

What differentiates our work is not the identification of growth opportunities, but the ability to sequence penetration-led growth and business model evolution without breaking the industrial base.

More recently, we have been promoting our strong belief that large CPG companies can still grow volumes in the medium term, provided growth is driven by penetration rather than short-term intensity.

Supporting this, we have developed a clear and pragmatic penetration-growth framework that helps companies identify where real demand headroom still exists and how to unlock it through the right combination of portfolio choices, channel design, and geographic focus.

In practice, we work with leadership teams to:

• Identify penetration opportunities across consumer jobs, occasions, and adjacent need states

• Redesign portfolios to clearly differentiate between cash engines and growth engines

• Translate strategic intent into concrete channel and route-to-market choices that accelerate reach and learning

• Prioritize geographies where penetration-led growth is structurally achievable rather than assumed.

Beyond penetration, we are actively working with and alongside clients on the broader set of transformations required to redefine value creation in CPG. This includes sharing experience, co-designing solutions, and supporting execution across topics such as:

• Moving beyond traditional category definitions toward consumer- and solution-led growth spaces

• Rebalancing tangible and intangible elements of the value proposition

• Designing higher-level consumer solutions that aggregate products, services, and data

• Rethinking routes-to-market, including DTC, digital B2B, and ecosystem-based models

• Exploring open and collaborative ecosystems where cross-company partnerships improve efficiency and quality of the offer

• Leveraging disruptive innovation and AI-enabled capabilities to accelerate insight, adaptability, and decision-making.

Across these engagements, our focus is not on isolated pilots, but on helping organizations manage the transition from today’s industrial model towards more adaptive, insight-driven business models while protecting the economic engine that funds the journey.

Closing thought

In 2026, the question for CPG leaders is no longer whether they can protect margins in the short term.

It is whether they can reconcile penetration-led volume growth with a fundamental redefinition of how value is created.

Business model evolution is no longer optional. It is the condition for sustainable growth and long-term shareholder returns

For CPG leaders, the real risk is no longer disruption from the outside but clinging too long to a value equation that markets and consumers have already moved beyond.

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

→ Become a Growth Builders subscriber

Sources:

• Sevendots Top 12 CPG Companies Monitor, 2026

• Penetration Under Pressure: Evolving the Core Driver of Brand Growth, Sevendots Growth Series, 2025

• Navigating Effective Complexity: New Insight into Portfolio Management, Sevendots Growth Series, 2025

• Yahoo Finance, 2026

• The C Suite Outlook 2026, The Conference Board, 2026

• M. Piloni, Unlocking Growth in the CPG Industry in a World of Uncertainty, Sevendots, 2026

• Justin Sargent, The Collaboration Dividend: The secret sauce CPG leaders use to drive volume and profitability, Sevendots, 2026