food and beverages

Which Food and Beverage 'Power Brands' Are Really Winners ... And Why?

The CPG industry generally defines food and beverage "power brands" as those generating $1 billion in annual sales. 

But size isn't all that matters. The legacy brands that are most likely to keep thriving in the face of fundamental shifts in consumer consumption preferences are those that have continued to see above-average growth even as those shifts have been gaining momentum, reasons The Hartman Group.

On those terms, very few brands are true power brands.

Just 17, or 8%, of the 213 brands analyzed by Hartman (using Euromonitor 2015 data) met the consultancy's "more future-leaning" definition of power-brands: those that generated $1 billion in U.S. retail sales last year; had conventional retail channel distribution prior to 1980;  showed absolute revenue growth exceeding inflation (more than 21%) for the past 10 years; and outperformed their respective sectors' growth rates during the past four years by at least 1% (7.2% for packaged foods and 6.4% for non-alcoholic cold and hot beverages).



The brands that made the grade by this definition, and their respective percentages of absolute dollar growth between 2011 and 2014: Velveeta (+43.6%); Little Debbie (38.6%); Jack Link's (37%); Entenmann's (+34.8%); Oreo (+26.9%); Jimmy Dean (+23.9%); Doritos (+20.9%); Tyson (+20.7%); Fritos (+14.5%); Haagen-Dazs (+14.5%); Coffee-mate (+14.1%); M&M's (+13.3%); Lay's (+12.7%); Poland Spring (+11.2%): Lipton (+10.7%); Oscar Mayer (+10.3%); and Land O'Lakes (+10.3%).

Winners' Differentiating Factors

Hartman confirms that the legacy brands showing healthy growth have positioned and extended themselves in ways that fit with Americans' changing health goals and/or eating patterns. 

Hartman's power-brand winners are dominated by snack brands, reflecting Americans' increasing tendency to forgo formal meals and instead snack frequently during the day; fresh products sold in grocery stores' "fresh" perimeter areas (as opposed to the processed foods sold in center-store aisles); healthy "alternative" beverages; and highly focused brands that operate in only 1.9 categories, on average (with most selling in the same operating category in which they were launched).

Big legacy brands that do not meet those criteria are ones that are center-store convenience brands and mega-brands that have "extended into multiple, culturally unrelated categories," according to the report. 

Legacy brands that have become "so iconic" as to weather the growing trends against processed food and beverages are ones that are highly focused on one product form or one food, and have built their reputations around that specific food form, say Hartman's analysts. Only two beverage brands met the criteria, and they are differentiated by being oriented to "contemporary notions of health and wellness, due to their categories," per the report.

Hartman advises companies weighted toward products not on their power-brands list to "look beyond mere renovation strategies for their base brands" and consider restructuring their overall portfolios to compensate for the long-term decline or "neutralization" of some of their legacy brands, as opposed to just plowing more investment into trying to turn declining legacy brands around via marketing mix.

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