• by Stephen Palacios , Columnist, May 1, 2018

Are you a fan of microbrews? If so, your CPG marketing strategy may be, too.

Large consumer packaged goods companies (CPGs) like P&G have been looking for growth for many years, without the hoped-for results. With the U.S. market slowing down, consulting firm McKinsey points the way to opportunity— micro-markets. In its analysis of the United States growth opportunity for CPGs, it points to strategies that focus on specific geographies where up to three times the average growth is occurring overall. What do these geographies have in common? In the most active cities (and states), there is a preponderance of Hispanic consumers.

Untapped Markets

While the McKinsey analysis does not note this, the example it uses to illustrate its point could not be clearer — Hispanics are driving growth opportunities for CPG companies. Using the beer category as an example, the report, “Three Myths About Consumer Growth in the Consumer Packaged Goods Category,” shows the specific areas of compound annual growth rates (CAGR) above the norm. 

The most active geos? California, Arizona, Texas, Florida lead the list. Of course, top Hispanic markets; and, from previous personal experience in the beer category, we know that their consumption is making or breaking stock prices. The challenge and opportunity for many categories in CPG rest on the ability of brands to understand the degree of contribution that high growth markets have on revenue; discern when and where Hispanic specific or Hispanic inclusive brand strategies are advantageous; and rationalizing distribution to make certain the right products, packaging and pricing are on the right shelves.

The good news for marketers is that Hispanic market acceleration has been made much easier in the past few years with distribution partners like Walmart, Target, Kroger and regional players like HEB, Publix and others executing programs to meet demand. The challenge often lies in the ability to craft a complementary brand strategy that can calibrate “mass market” scale with a “micro market” approach, while retaining margins and consistent brand relevance. In this analysis, understanding the role of Hispanics can make all the difference in the world.

Crafting Localized Efforts

One large beer company is fighting for share in the five must-win beer markets in California, for example, by employing localized marketing efforts at a grass roots level. Red Bull grew its brand this way, understanding which local amateur soccer leagues to sponsor and rolling in mobile trucks sell product to specific neighborhoods.

Yes, scale is wonderful when it works. When it starts to not work, however, it might be time to think small. If not, you might be drowning your sorrows with more than one microbrew.k