The U.S. consumer packaged goods industry's growth picked up moderately last year, to 2.1%, compared with 1.6% growth in 2013, according to the third annual CPG Growth Leader Study from IRI and Boston Consulting Group (BCG).
The study examines more than 400 public and private CPG companies with annual U.S. retail sales of more than $100 million, ranks them based on consumer sales in measured channels (a composite growth index that combines dollar sales, volume sales and dollar market share performance), and analyzes trends driving performance.
One key finding: Small- and midsize companies continue to carve market share from larger competitors. They gained 0.7 share points, worth $4.5 billion, from larger companies last year, and have taken two full share points, worth $18 billion, since 2009.
The study defines large CPG companies as those having more than $5 billion in IRI-measured annual retail sales; midsize ones as $1 billion to $5 billion; and small as $100 million to $1 billion.
Using those parameters, it produces three separate, size-based rankings of top 10 CPG growth performers — companies that performed at the top of their class during the past year and have marketplace growth momentum.
J&J, Mondelez, PepsiCo Lead Large Companies
Johnson & Johnson leads the large-company top 10, with the highest composite score, based on its consumer health care products' growth of 4.7% in dollar sales, 3.2% in volume and 0.3 dollar share points.
Food and beverage CPGs hold five of the top 10 slots, despite being more challenged than ever last year by consumers' increasing shift away from processed foods and traditional carbonated beverages.
Large companies ranked two through four are Mondelez International, PepsiCo and The Hershey Company, which saw sales gains of 1.6%, 2.7% and 3.2%, respectively, and volume gains of 1.3%, 1.6% and 1.2%, respectively. Of the three, only Mondelez realized dollar share growth (+0.3 points).
In fifth through tenth place in the large rankings: Unilever, Campbell Soup Company, Coca-Cola, Procter & Gamble, Lorillard Tobacco Co. and Reynolds American Inc. Their dollar sales gains ranged from 1.9% (Unilever) to 0.8% (P&G).
Among these five, only Campbell saw volume growth (2.2%), and only Campbell saw a decline in market share (-0.1 points). The tobacco companies had the largest volume declines (-1% and -2.2% for Lorillard and Reynolds, respectively) and their shares were flat and -0.1 points, respectively. Coca-Cola and P&G each realized share growth of 0.2 points.
Overall, just six of the 23 large companies analyzed grew market share, and the greatest share growth was 0.3 points.
Mid-Size Leaders: Mead Johnson, Keurig, Monster
All top-10 mid-size companies grew across all of the performance metrics, and in contrast to the large companies, nearly all saw significant share gains.
Mead Johnson Nutrition leads the mid-size rankings, based on a composite score reflecting growth of 11.4%, 8.2% and 3.1 points in dollar sales, volume and dollar share, respectively.
The others in this top 10 ranking are, in order: Keurig Green Mountain, Monster Beverage Corp., Link Snacks Inc., Starbucks Coffee Company, Land O' Lakes Inc., Gruma, Constellation Brands, WH Group and Sanofi- Aventis U.S. LLC.
Among the nine, dollar sales growth ranged from 17.9% (Sanofi-Aventis) to 6% (Gruma), volume growth ranged from 14.3% (Keurig Green Mountain) to negative 14.1% (Sanofi-Aventis), and share growth ranged from 1.2 (Monster) to 0.5 (Link Snacks) points.
Small Company Leaders: Teva, Skinnypop, Kind
Teva Pharmaceutical Industries leads the small company growth leaders, with 88% growth in sales, 101% growth in volume, and a gain of 11.3 share points.
The other small-company growth leaders, in order, are: Skinnypop Popcorn LLC, Kind LLC, EOS Products LLC, Talenti, Schreiber Foods Inc., All Market LLC, Panera Bread Company, Materne and Advanced Beauty Inc.
Among the nine, sales growth ranged from 106% (Skinnypop) to 32% (Advanced Beauty); volume growth ranged from 167% (Skinnypop) to 31% (Advanced Beauty); and share growth ranged from 3.6 (EOS) to 0.3 (Skinnypop and Schreiber).
Growth Drivers and Other Insights
The relative diversity of the companies across the three top-10 rankings in terms of size, product categories and price tiers shows that "growth is possible for all types of CPG manufacturers,” said Krishnakumar Davey, president of strategic analytics at IRI. He notes that PepsiCo, one of the largest CPG companies, grew nearly $1 billion in measured channels last year — three times the rate of any other company, and four to five times more than other comparable-size companies.
Across the size rankings, the growth leaders "capitalized on broad demographic and industry trends,” pointed out Dan Wald, a BCG partner based in Chicago. “They also showed consistent success across the three principal growth levers: velocity, distribution, and price and product mix.”
Key trends affecting CPG growth in 2014 included consumers continuing to trade up and trade down on price in response to "macroeconomic volatility" and inflation in some food and beverage segments — notably, high-protein foods, according to the researchers.
Consumers also displayed increased unwillingness to compromise on any of the three attributes they now expect in food and beverages: health, taste and convenience.
Population and spending growth in three large demographic segments — seniors, Millennials and Hispanics — continue to be major determinants of CPG growth.
A relatively new factor is also in play, report the researchers: The expansion of e-commerce in grocery is creating growth opportunities for early movers that use digital channels.