Small challenger brands and private brands have further encroached on national brands in overall share of the U.S. consumer goods market, according to new data from IRI.
The Chicago-based market research firm said in 2020 the consumer goods industry as a whole grew 10.3%, with smaller manufacturers (including companies with annual measured channel sales of less than $1 billion) collectively capturing a third of that growth and private brand products accounted for 18% of that growth.
Combined, challenger brands and private brands captured 34.1% of total CPG growth last year, large national brands lost market share in each of the last five years but still account for 46.7% of total U.S. sales in measured channels, per IRI.
“The consumer shift toward smaller manufacturers and private label products is something that IRI has been documenting for several years, and we saw the trend accelerate during the COVID-19 pandemic,” said Dr. Krishnakumar "KK" S. Davey, president of strategic analytics for IRI.
In 2020, among IRI’s measured channels, the CPG as a whole generated $933 billion in total U.S. sales, and large national manufacturers collectively lost 1.3 share points or $12.1 billion to the smaller brands and store brands.
“Many large manufacturers were not able to meet the surge in demand caused by the COVID-19 pandemic in the second quarter when they lost most share to smaller players who seized on this opportunity. Several brands attracted a number of new buyers as in-home consumption surged,” Davey said. “Large manufacturers fared relatively better in the third quarter, but still lost significant share (-1.3 points vs. year ago as compared vs. -1.9 share points vs. year ago in the second quarter). The fourth quarter saw some improvement and reversion to historical trends (-0.8 points vs. year ago). Many extra-small manufacturers are mostly new entrants to the market into supply-constrained categories (e.g., soap, hand sanitizers, home health care kits).”
In 9 out of 10 store departments, IRI said small manufacturers gained market share. Everyone except home care, making gains in beverage alcohol, frozen food and center store food categories, health and beauty, general merchandise, and others.
Due to the pandemic, personal care and health and wellness products saw very high growth, from small brands, as did paper products.
Particularly interesting from IRI, small challenger brands excelled in e-commerce, growing faster in online sales than larger brands in shelf-stable food and beverage products, pet care and personal grooming products.
IRI tracks more than $2 trillion in spending from over 750 retailers globally.