5 levers to achieve FMCG growth in 2024

2024 offers a fresh start for challenger brands after numerous years of challenges, with headwinds from inflationary pressures leading to cost price increases to labour shortages, at times it has felt relentless.

However, experts are expecting the economy to grow in 2024 and inflation is predicted to return to normal levels, allowing challenger brands to become more competitive in the marketplace and allow their purse strings to loosen.

Not only that, opportunities for challenger brands will present themselves by way of some exciting sporting events to look forward to. The Euro’s, T20 World Cup and the Olympic Games are all taking place in the summer, in which FMCG brands can really take advantage of.

The question on the mind of every founder we speak to is "what levers can my brand pull to supercharge my growth for 2024?" – and fortunately, there are a few.

We're here to lay out these levers, explain why they are important and what they can offer your brand, identify the questions you need to be able to answer to have a chance of success, share the supporting data and insight from North Star, and give you examples of brands doing it well.

And why are we the right people to share this with you?

• Through North Star, we have access to market and category data, plus the insight that adds value to your brand and company.
• Our extensive team has years of experience within the FMCG & retail environments, therefore being able to support brands through numerous barriers they may face.
• We work directly with founders and challenger brands, giving us insight into what is happening across categories in FMCG.
  

So let's get stuck in! Here are the levers your brand can pull to supercharge growth in 2024...

"Can we expand into new channels?" 

How do you extend your brand to be bought by customers beyond your core market? Where else are your target shoppers shopping? Do you understand the changes you may need to make to your core product, and within your core market, to become relevant in new channels?

Ultimately, it’s about having your brand in the right pack formats and at the right price point to fulfil the shopper need based on the outlet they are in.

1. What right does your brand have to win in this new channel? Does it offer a genuine point of difference in brand proposition / new functional benefits / commercials?
2. What channels and customers are you targeting? Is the pack and price format correct? Do your commercials stack up for both the shopper, retailer and wholesaler? How do you engage with all parties through the chain to ensure you are selling? 
3. Do you understand your route-to-market and how to get from your warehouse to shelf?

• Within Sports & Energy, 57% of the category value sits in the convenience channel, V.S. Carbonated Drinks which only has 30% value share.
• 82% of shoppers are actively looking for PMPs.
• 50% of shoppers are more likely to visit a convenience store that stocks a range of PMPs.
• 67% of sales within the convenience channel are from PMPs.

Read More on PMPs

"Do you think we can move our brand into a new category?"

Once you have your core brand working in its core market, is now the time to expand into new categories? What could this look like? What does the landscape look like in terms of brands, packs and price points? Do you take your existing brand and adapt it into something new because your shoppers have an unfilled need in those categories, or does the opportunity require a new brand launch?

For example, if you wanted to launch into Frozen from Chilled, you need to know:

1. Are you aware of consumer demand for your type of proposition within the new category and what does the size of the prize look like for both you and the retailer? Only once this is known are you likely to succeed on launch.
2. Pack execution will be completely different in terms of branding on pack, as the format will have to be different dependent on what part of the freezer the product will sit in. How will you communicate the product cues, nutritional info, etc?
3. Have you thought through the supply chain for both you and the retailer? On some occasions, retailers have a different setup by category and this can impact on service levels and efficiency. Clarity on the format and costs are imperative to ensure you don’t cripple your financials.

Key Insights

• 90% of sales of frozen ready meals are within the grocery channel.
• 2020 saw a 50% increase in sales of home freezers due to the change in shopping habits during the pandemic.
• Brands are driving growth within the category at +17% V.S. 2 years ago, compared to Private Label at +10.4%.

"How can I innovate within my brand to create new shopper missions?"

How do you incentivise your core shoppers to trade up into a new innovative product range that offers them a greater user benefit and ultimately benefits both you and the retailer with increased RoS and margins? This can add incremental sales growth through increased spend by the shopper, but should also re-engage and excite your shoppers with newness to continue to support your brand.

1. Does your core offering have enough loyalty within your current consumer base to be able to create the excitement needed to trade them up into a new product offering at a higher price point?
2. What is your new proposition offering to consumers V.S. your current range and competitive set? Is it an added functional benefit, is it a better value pack or is it simply to meet a seasonal event such as Veganuary? Therefore, how do you communicate that through the on-pack execution, what does the marketing plan look like to ensure these benefits are communicated?
3. Have you considered your pack, price & promotional strategy in line with both your current range and competitors? You will need to ensure that your value offering is not undercutting your current range either on base or promotion, but also that you offer value V.S. your competitive set.

• 700k consumers in the UK took part in Veganuary last year, and over 1m consumers are expected to take part this year – is there an opportunity to launch a pack / range relative to this event?

"Is my promotional activity working, and what should I do differently in 2024?"

Have you evaluated the effectiveness of your 2023 promos, and used this insight to decide on the plan for 2024? What are you trying to achieve when you promote? The most common answers are usually to drive penetration of your brand into more baskets to be tried by more consumers, then to persuade existing shoppers to buy your brand again more frequently by incentivising. Both have the net impact of increasing your rate of sale which is the critical metric to be focussed on and benchmarked against competitors and the category.

For example, if you're looking to launch into the meal deal...

1. Commercially, it takes a lot of investment from the brand to enable the retailer to include you within the meal deal solution. This needs to be thought through effectively around redemption rate, triggers offered on redeemed promotions, and therefore the impact on base sales at other fixtures in stores. However there's an important watch-out around being able to offer the shopper value – it's well-versed that a more expensive drink within a £3.50 meal deal is opted for more as it's seen as better value for money.
2. When launched into the solution, you need to ensure that your product offers a real point of difference V.S. the current offering – i.e. how do you ensure you are in consideration as a drink V.S. a Coke / Pepsi or Red Bull? Is this through function, on-pack information, or do you need to invest in on-shelf execution to get cut-through with shoppers?
3. In terms of the range, it's not just about sandwiches, crisps and drinks. Co-op offer slices, Sainsbury's offer Porridge and Tesco have over 10m combinations, so the opportunity for new occasions to be realised and the benefit for both retailer and supplier are huge if they offer can be launched successfully.

Key Insights

• Buying a meal deal solution offers consumers over 50% discount than if they purchased the products separately – putting pressure on both retailer and supplier margins.
• Pricing remains to be kept at £3 - £4 per deal, even though inflation continued at 4% in Dec 23.
• Tesco favourites are a chicken, bacon and stuffing sandwich, a 500ml bottle of regular Coca-Cola and a bag of McCoy’s flame grilled steak crisps.
  

"I know E-Commerce / D2C is important, but how do I get better at this?"

How could you squeeze more sales out of retail for your current listings? If you don’t already, should you focus more heavily on eCommerce? Are you clear what the key levers are to improve your current performance? From taxonomy of your product, to targeted marketing, through to Amazon expertise of their algorithm, this is an area where being listed alone isn’t enough.

If you want to grow your D2C business, you need to ask yourself...

• Do you have the resource to build and maintain a successful D2C website? 
• Do your product listings on both D2C and Online retailers illustrate social proof for your product and range? Product reviews, user generated content and other forms of social proof play an instrumental role in purchasing decisions, in fact, 82% of consumers* read product reviews before making shopping choices. 
• Is there scope to create a successful subscription offering for your business through Amazon or your website? Once set up, subscription models offer a great source of recurring revenue, plus insight into purchasing habits, discovering how quickly and often your customers use your product.

Key Insights:

• Food & Drink D2C sales grew by 27.5% last year

In Summary 

By working through these points and asking yourself these questions, you'll better understand if that lever is right for you, and if now is the time to pull it.

North Star can help you make informed decisions, by shining a light on how your competition is performing, so you can see how to grow. Get in touch to find out more. 

About North Star:

It’s tough for challenger FMCG brands. When your competitors know your performance, even down to your rate of sale, and you’re in the dark, you’re at a disadvantage in every meeting.  North Star gives you a clear, quick, and affordable understanding of your competitors’ performance, in an intuitive dashboard, with expert advice by your side, so you know how to win. North Star illuminates the way to win over retailers, make effective decisions and dazzle investors.