"For the better part of the last century, America's largest consumer packaged goods companies ran an undefeated business playbook. All of the iconic consumer brands of our lifetimes- Coca-Cola, Lay's, Cheerios, Oreos, and more--were built on a simple, three-part formula. First, generate massive demand by placing huge national ad buys. Next, create ubiquity by stocking the brand across every conceivable grocery store shelf. Third, harvest as much profit as possible through the economies of scale created by giant production runs."
"This model worked especially well in America because this country is huge, rich, and culturally homogeneous. National TV ad campaigns could shape popular tastes at scale so that, in turn, a single formulation of a cereal, snack, or soda could satisfy tens of millions. But that world is now gone, and gone with it is the reliable engine of big CPG company growth. The culprit? Social media."
A three-part CPG playbook relied on massive national ad buys, ubiquity across grocery shelves, and economies of scale from giant production runs to drive growth. That approach succeeded in a large, wealthy, and culturally homogeneous United States where national TV campaigns shaped popular tastes and single product formulations could satisfy tens of millions. Social media shifted consumer discovery to thousands of nutrition-themed micro-communities on TikTok, Instagram, and YouTube, driving recipe and product trials and changing eating habits. Hundreds of direct-to-consumer brands emerged to serve niche preferences, and online shopping freed picky shoppers from store assortment limits.
Read at Fortune
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