BCG and IRI analyzed the 2012 performance of more than 400 CPG manufacturers with annual U.S. revenues of at least $100 million. Recognizing that players in different size categories face different opportunities and challenges, the research team generated three distinct top-10 lists of winning companies: small ($100 million to $1 billion in retail sales), midsize ($1 billion to $5 billion in retail sales), and large (more than $5 billion in retail sales).
Among large companies, the top three performers -- ranked on a combination of dollar sales growth, volume sales growth, and market share growth -- were Lorillard, the Hershey Company, and Anheuser-Busch InBev. The top-performing midsize companies were Green Mountain Coffee Roasters, Inc., Chobani, and Starbucks. And the top-ranked small companies were TalkingRain, Idahoan, and Handi-foil.
The analysis is the first result of a new collaboration between BCG and IRI to assess and report on ongoing trends shaping today's CPG industry.
"Our research with IRI shows that there is no single formula for success in the CPG industry," said BCG's Jeff Gell, a Chicago-based senior partner. "Companies are winning in various ways -- through superior execution of their base businesses, innovation, and better management of price-volume tradeoffs. We are excited about working with IRI to bring distinctive analyses and compelling insights to the marketplace."
The findings reveal that most winning companies are successfully growing their base businesses through gains in distribution. Pricing, however, is a key source of dollar sales growth for many of the large-company leaders, with growth in dollar sales outpacing volume sales growth. In contrast, growth in volume sales is a key source of dollar sales gains for small and midsize stars, suggesting that a more sustainable rise in consumer demand is powering performance.
These drivers of growth underscore a significant trend in the CPG industry: small and midsize companies are increasingly taking market share from large competitors. All top 10 small and midsize companies gained market share in 2012, with eight of the small-company winners grabbing at least 1.0 percentage points. Since 2009, large companies as a group have ceded 1.4 percentage points in market share, a drop that amounts to more than $10 billion in lost sales.
"From this joint research, we've uncovered that small and midsize manufacturers' growth at the expense of large manufacturers is significant," said Dr. Krishnakumar (KK) Davey, managing director at IRI Consulting. "Small and midsize manufacturers are in a unique position to strengthen relationships with their retail customers as they drive growth in many categories. They are expected to garner greater attention from retailers through increased shelf space and merchandising activity."
"We believe that our collaboration with BCG will continue to deliver great insight and, most importantly, foresight for our clients and the industry at large," Davey added.
Other findings from the research:
• Among large-company winners, only three are growing from both their base businesses and innovation. Steps such as launching innovations that are incremental and do not detract from the existing portfolio can help balance growth from both parts of the business.
• Small- and midsize-company winners are generally concentrating on a few product categories in which they have a competitive advantage and experience strong consumer demand. They are also driving trends in the marketplace and developing first-mover advantage.
• Small and midsize companies are gaining significant share from larger players, suggesting that there are advantages to focused portfolios and small-company agility. There is an opportunity for larger companies to drive growth through more effective portfolio-mix management -- by expanding into categories with high growth potential (through acquisition or new product development) or by reevaluating existing categories to prioritize focus where opportunity is greatest.