Navigating CPG Sales In Times of Economic Uncertainty and Inflation

Economic uncertainty and inflation are significantly impacting consumer behavior and purchasing power, posing new obstacles for CPG sales teams and their growth plans. At our recent webinar in collaboration with Trax Retail, we learned from successful founders and industry experts who have cracked the code to success in the current complex business landscape. Trax Retail is a global provider of retail management solutions for CPG brands. The company’s mission is to enable brands and retailers to harness the power of digital technologies to produce the best shopping experiences imaginable. Trax’s retail platform allows customers to understand what is happening on the shelf, in every store, all the time, so they can focus on what they do best – delighting shoppers.

Our panel of thought leaders included Kevin Mannering, Partner and Chief Product Officer at Rodeo CPG, Kayla Castañeda, Chief Executive Officer at Agua Bonita, Kaitlin Mogentale, Founder and CEO at Pulp Pantry, Georgios Tzafis, VP Emerging and Mid Cap CPG at Trax Retail, and Amy Howlett, Director of Global Investment Banking at Bank of America. Read on for key insights and actionable strategies for you to thrive in the face of economic uncertainty and drive long-term growth.

Summer Grocery Spending: Positive Trajectory Amid Inflation Concerns

According to Amy Howlett, Director of Global Investment Banking at Bank of America, grocery spending has risen during the spring and early summer, approaching levels similar to pre-pandemic times. Despite inflationary pressures, spending on food-related items is robust and on a positive trajectory. Moreover, the strong spending around the 4th of July holiday suggests a sustained trend, with little indication of any economic downturn.

While recent spending trends have shown a positive trajectory, concerns about inflation remain prevalent among consumers. In light of this, Kayla Casteñeda, CEO at Agua Bonita, has to balance the task of expanding into new retail outlets to increase brand exposure while ensuring that the products cater to price-conscious consumers.

Strategic Pricing Strategies: Boost Customer Engagement and Growth

CPG brands consistently grapple with the challenge of strategically pricing their products to draw customers – a challenge that is starker for emerging brands that seek traction and customer engagement. For brands that are new to the market, our expert panelists suggest lowering prices initially to encourage purchases and start building a loyal customer base. Only then, brands can confidently increase their prices to achieve a healthier margin that would support profitability in the long term. 

At Agua Bonita, Kayla offers her product at a premium via various distribution channels, including specialty stores and D2C, as a way to expand her reach. The brand, which was the first agua fresca (light non-alcoholic beverages made from fruits, cereals, flowers, or seeds blended with sugar and water) in the market, has experienced substantial growth over the past year, which the CEO achieved by making quick yet strategic and data-driven decisions, all while maintaining sufficient capital. In times of intense competition, this approach has proven successful for Kayla, who, despite paving the way for competing brands to bring similar products to market, has maintained category leadership.

Kaitlin Mogentale, Founder and CEO at Pulp Pantry, has adopted a different strategy. By offering discounted prices, product demos, and BOGO coupons, Kaitlin was able to incentivize repeat purchases and build customer loyalty, in stores and online. The company’s online loyalty program, which gives consumers access to exclusive discounts, affiliate rewards, and paid opportunities in content creation or sampling, has further supported the brand’s efforts to engage its existing customers and acquire new ones. Kaitlin’s advice to brand leaders is to think outside the box and find creative yet cost-efficient ways to boost engagement and loyalty across channels.

Distribution and Funding: Strategize for Success

In a time of economic uncertainty and price increases, businesses must adapt to remain competitive and avoid disruptions in their operations. When it comes to distribution, traditional models often translate to higher costs that emerging brands cannot necessarily afford. Both Kayla and Kaitlin have opted for DSD (direct store delivery), which is more efficient and cost-effective, to major retailers such as Whole Foods and Target. 

Kevin Mannering, Partner and Chief Product Officer at Rodeo CPG, underscored the challenge of raising funds in the current economic climate, highlighting the low venture funding during this year’s first two quarters. Georgios Tzafis, VP Emerging and Mid Cap CPG at Trax Retail, advises brands to engage existing investors for capital raising as opposed to going after new investors. When targeting investors, our expert panelists highlighted the importance of presenting a detailed and well-structured business plan that clearly communicates the required funds, how they will be used, and the anticipated ROI. Demonstrating the growth plan and path to profitability is essential to build investor confidence and successfully fundraise in the fiercely competitive CPG industry.

Retail Data: Shape Brand Strategies and Drive Market Growth

All panelists elucidated the importance of collecting and analyzing data at every step of the way. Analyzing the performance of your product against others in the same category would help brand leaders evaluate their pricing strategies, and identify areas for improvement but also substantiate success, posited Georgios. In addition, monitoring the pricing tactics of the category leader, for example, can guide brands as they test and learn the market and define their next steps. That said, Georgios acknowledged how difficult it can be for emerging brands to access valuable data points. At Trax Retail, he said, we continuously gather consumer data from in-store shoppers, giving brands access to the data that they need, cost-effectively, to support their journey.

Branchfood is a launchpad for food innovation. By bringing together all corners of the industry through curated events, investments, shared workspaces, and advisory support, Branchfood connects innovators and fosters growth to transform the food industry. Sign up for Branchfood’s monthly newsletter to be the first to know of such webinars and stay updated on the latest industry developments. 

Through retail data analysis and on-demand merchandisers, Trax's mission is to support your growth and boost shopper engagement with your product. ⁠To learn more about Trax and ways they can help you, visit https://disruptors.traxretail.com/ or reach out to Georgios Tzafis.