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CPG Ecosystem Report by CMYK Ventures

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A look at emerging CPGs, new consumer services, and related opportunities, challenges, distribution, investors, and trends.

Research by Amrit Richmond / CMYK Ventures

Published in: Retail
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CPG Ecosystem Report by CMYK Ventures

  1. 1. CPG Ecosystem Research by Amrit Richmond / CMYK Ventures www.cmyk.vc / @cmykvc / amrit@cmyk.vc
  2. 2. A new class of brands… commands a new kind of agency… to reach a new generation of consumers. CMYK is a marketing agency and community for consumer brands, startups, and investors.
  3. 3. Over the last year at CMYK, we’ve been researching natural, organic, and emerging CPGs, new consumer services, and related opportunities, challenges, distribution, investors, and trends. We’re excited to share this research with you to inspire your future products, partnerships, investments, or content. Let us know if any ideas or collaborations come to mind, and if you know a consumer brand or trend that might not be on our radar.
  4. 4. Opportunities & Challenges
  5. 5. CPG x Technology Production & Retail Robots, AI, 3D printing, and connected sensors are helping CPGs save time and money on manufacturing, and beacons are helping retailers collect data. Digital Collaboration There are new tools to help CPGs with everything from designing a prototype, logo and packaging, to collaborating on marketing and content programs. Buying Experience While 88% of transactions still happen offline, consumers are increasingly buying goods online and on mobile. Brands need to adapt in order to stay relevant. Brand Engagement Brands that are winning the hearts of millennials are leveraging Instagram, Snap, YouTube, Twitter, Facebook, Pinterest, and emerging tech in creative ways. Shipping & Delivery Startups are creating new shipping and logistics tools, inventory sensors, on-demand apps, and delivery services to get your goods to consumers in a timely fashion. Product Discovery Millennial consumers are more likely to buy a product they discover on social media and YouTube than a magazine advertisement or editorial.
  6. 6. Opportunities for CPGs Voice Commerce & Integrations Amazon Echo and Google Home will open new doors for consumers to buy monthly essentials and gifts, discover recipes and content, keep a shopping list, and find new ways to use products they already own. eCommerce Technology is Improving Once a consumer visits your site, there’s no excuse for a bad customer experience with all the new tools available for analytics, search, inventory, cart abandonment, targeted emails, and newsletters. New Distribution Channels While retail is still a solid strategy, there are numerous startups, subscription boxes, and delivery services creating viable distribution channels for food, beverage, beauty, and apparel brands to reach new audiences. Partner with Like-minded Brands Every emerging CPG brand has something to offer through non-transactional partnerships, such as collaborating on a giveaway, social media cross-promotion, or integrating each other’s products into digital content.
  7. 7. Startup Strategy Direct to Consumer Many new CPGs start by selling direct to their customers, eliminating a retail markup. Important to note, D2C doesn’t mean online only, just that the brand is (usually) only available to purchase via its owned channels. Start Online, Then Go Offline Birchbox, Bonobos, and Allbirds launched their own retail stores after building up loyal customer bases online. Away and Casper have experimented with pop-up stores, either their own, or collaborating with other brands. Strategic Retail Brands like Harry’s, Bevel, BaubleBar, Casper, Shoes of Prey, and Brit + Co have featured their products or special collaborations in retail stores like Target, West Elm, and Nordstrom. Community Driven Products Glossier, makers of popular beauty products, started as a beauty and lifestyle blog. The company now develops new beauty products based on blog insights and customer feedback.
  8. 8. Challenges Facing Small CPGs Customer Acquisition Acquiring a new customer online can be time consuming and expensive, both for direct to consumer brands, and legacy brands and retailers launching eCommerce destinations and mobile apps for the first time. Finding & Choosing Business Vendors Selecting vendors to help set the foundation for your business, brand, website, and supply chain can take weeks, sometimes months. Ask your network and investors for vendor and agency recommendations. Capital to Launch, Grow & Thrive CPG startups are constantly oscillating between building the brand, team, and demand, and ensuring there’s enough runway to meet that demand. There’s room in the industry for new investors and capital sources. Building Consumer Trust With any new brand, it’s challenging to get consumers to taste, try, and trust a product. It’s even harder when consumers can’t see a product before they buy it. New CPGs have to get creative with try-on and sample programs.
  9. 9. Consumer Challenges Price Natural and organic shoppers are willing to pay a little more for your high quality products, but cost is still a factor. Consider what your target customer buys each month and how your product fits into their spending habits. Trust & Quality When trying a new product, consumers may consider your ingredients, brand integrity, packaging design, and quality of food or materials. Be transparent as possible to stand out amongst your corporate competition. Buying Experience It’s easier to change what a consumer buys versus how they buy a product. Consumers don’t want to jump through hoops to get their favorite lipstick, so make your goods easy to purchase across web, mobile, and/or retail. Subscription Fatigue While subscriptions offer convenience, ordering essentials from multiple websites is a pain point. With the exception of vitamins, a consumer may need longer than one month to replace your product with a new batch.
  10. 10. Consumer Funding Sources
  11. 11. Capital & Crowdfunding Venture capital funds, platforms, and programs investing in consumer goods and services. Venture Capital Capital Marketplaces, Lending & Crowdfunding Accelerator Programs
  12. 12. Corporate Innovation & Investing Food, beauty, personal care, and retail corporations are investing in the next generation. 301 Inc supports emerging food brands through a direct equity investment and the skills and capabilities of General Mills. Grace Beauty operates a fund to invest in the next generation of beauty, personal care, and fashion brands. Campbell's operates Acre Venture Partners to invest in the future of food and agriculture. Walmart’s Store No 8 is an innovation center for uncovering, inventing and investing in the future of commerce. The Unilever Foundry is a platform for startups and innovators to engage, collaborate & explore business ideas. LVMH Luxury Ventures aims to work with early-stage luxury brands that have high-growth potential and compelling business models. Tyson New Ventures seeks to invest in food and agriculture startups, with a focus on food production, distribution, nutrition, food waste, and safety. Eighteen94 Capital is Kellogg's venture arm, aiming to fund startups developing new packaging, ingredients, products, and technology.
  13. 13. Marketing, Partnerships & Distribution
  14. 14. CMYK Next Gen Consumer Digital Natives Access > Ownership Subscriptions > Drugstore On-demand Everything Lyft > Leasing a Car Travel > Buying a House Purposeful Work > 9 to 5 Job Working Parents Pets > Kids iPhone for Work, Play & All Day Social Media > Newspapers Cord Cutting > Cable TV Instagram > Fashion Magazines Spotify & Podcasts > CDs & Radio New Class of Brands Digital From Day One Direct to Consumer Sales Strategic Retail Placement Paired w/ an App or Hardware Customer Centered Community Minded Engage > Control Partnerships = Growth City-based Operations Natural or Organic Purpose x Profit Transparent Ingredients Venture Backed Small Budget, Big Impact
  15. 15. Product Discovery Goes Digital Traditional Discovery Magazine Editorials Magazine & Newspaper Ads Celebrity Endorsements TV – Ads & Product Placement Morning & Evening News Daytime Talkshows Cooking Shows QVC & HSN Radio – Ads & Features OOH Billboards Walking Around the Mall Trying New Products at the Grocery Store Trying New Products at the Beauty Counter Personal Shopper Services Word of Mouth Modern Discovery Product Features in Blogs & Newsletters Social Ads (Instagram, Facebook, Twitter) Digital Influencer Endorsements Ads & Products in Original Video Series Short, Live Videos on Social Media Digital-first Daily New Shows Short Cooking Videos on Social Media Daily Deals & Luxury Flash Sales Podcast Ads Online Banner Ads & Search Results Curated Commerce – Web & Mobile Meal Delivery Kits Curated Subscription Boxes Curated Wardrobe Boxes Word of Mouth (Through Social Media)
  16. 16. The New Marketing Stack The game has changed for how CPGs advertise, and acquire and interact with customers. Social Media Email & Collaboration Data & Insights Mobile & Integrations Web Video Marketing & Ads Retail Restaurants & POS Referrals & Contests Influencer Management eCommerce & Payments Out of Home
  17. 17. New Sales Channels Partner opportunities for consumer brands to increase revenue and brand awareness. Natural & Organic D2C Curated Commerce Direct to Offices Curated RetailSubscription BoxesCommunities
  18. 18. Meal & Grocery Delivery. Meal kits are an ideal partner for non-perishable products and condiment brands. Meal Delivery Kits Ready to Eat or Cook CSAs & Fresh Groceries
  19. 19. Cafes & Fast Casual Restaurants Big chains and emerging restaurants offer numerous partner opportunities for food and lifestyle brands. Big Chains Next Generation Food Service
  20. 20. Social Media Communication Health & Wellness Fitness Live / Work Space Travel Transportation Fashion Beauty & Hair Telecom Entertainment Music Home Finance Kids & Family Consumer Tech & Services Partner with emerging and established startups on content, giveaways, and cross-promotion.
  21. 21. A New Class of Brands
  22. 22. Brand Categories Food & Beverages Consumables across dairy, protein, fruit & vegetables, beverages, snacks, and sweets. Personal Care Beauty, skincare, haircare, and feminine care products. Babies & Kids Food, toys, education, and services to help parents raise happy and healthy kids. Home Products for the home, across the kitchen, bedroom, bathroom, security, and decor. Health & Wellness Vitamins, supplements, mood boosters, and self care treatments. Apparel Clothing, shoes, accessories, and and wearable gadgets. Pets Food, toys, gadgets, and services for raising healthy dogs and cats. Parents Apparel, gadgets, and services to make life a little easier for new parents.
  23. 23. Food & Beverages Plant Based Ice Cream & Yogurt CondimentsMeal Starter Kits Grains & Pasta Drinks & Smoothies Sweets & Gum Snacks & Bars
  24. 24. Apparel & Accessories Apparel & Bags Jewelry & Watches Travel & GadgetsIntimates Shoes & Laces Eyewear & Contacts
  25. 25. Beauty & Personal Care Beauty Hair Feminine CareSkin Nails Supplements Dental Hygiene Men’s Grooming
  26. 26. Home & Decor Bed & Bath Kitchen Paper & Cleaning Decor & AccessoriesFurniture Hardware
  27. 27. Babies, Kids & Parents Apparel Baby & Mom Food & Beverages Toys & Technology
  28. 28. Pets Food & Treats Toys & Technology Lifestyle
  29. 29. Consumer Hardware Trends
  30. 30. Connected Home Entertainment Kitchen Internet SecurityAir, Temperature & Lights
  31. 31. Consumer Gadgets Photo, Video & VR Travel & Outdoors Beauty & Oral Care
  32. 32. Health, Fitness & Lifestyle Wearable Devices Fitness Equipment Behavioral Change
  33. 33. Food, Beverage & Beauty Trends
  34. 34. Ingredient Trends Food, supplement, and beauty brands are experimenting with these healthy and trendy ingredients. Coconut Brands are using coconut for flavor, moisture, and as a sugar alternative in food and beauty. Avocado Skin, hair, and condiment brands are using avocado oil for flavor and deep conditioning. Lentil Lentils are being pressed into high-protein, vegan, gluten free pasta products. Charcoal From lemonade to peel off face masks, charcoal is the go-to detoxifying ingredient right now. Chia This little seed is trending in yogurt cups, baked goods, and ready-made snack pouches. Plants Nuts, peas, and seeds are being turned into milk, yogurt, cheese, and alt-meat products. Additional Trends Probiotics, Reishi, Cricket, Kale, Maca, Moringa, Collagen, Algae, Beet, CBD, Turmeric, Rose Quinoa This ancient grain can now be found in cereals, meal kits, snack bars, and protein powders.
  35. 35. Convenience Grab & Go Beverages Cooking & Meal Starters
  36. 36. Transparent Ingredients Beverages Snacks & Food Personal Care
  37. 37. Superfood Ingredients Chia Kale Coconut
  38. 38. Superfood Ingredients #2 Avocado Turmeric Carrot
  39. 39. New Beauty Face Lips & Eyes Nails
  40. 40. Skincare & Body Skincare DIY Spa Sun Protection
  41. 41. Skincare Ingredients Charcoal Rose Apple
  42. 42. Plant-Based Products Milk Cheese & Ice Cream Alternative Burgers
  43. 43. Diet-friendly Foods Gluten Free Vegan Paleo
  44. 44. Probiotic Infusion Beverages Food Supplements & Skincare
  45. 45. Adaptogens & Energy Reishi Low Sugar, High Protein Brain & Energy
  46. 46. Grassfed Dairy & Ghee Beef Products Misc
  47. 47. Modern Agriculture Smart Greens Grow at HomeContainer Farms
  48. 48. New Protein Products Crickets Collagen Bone Broth Jerky & Meat Bars
  49. 49. Wine, Spirits & Beer Wine & Rose Spirits Beer & Cider Mixers
  50. 50. Big Food
  51. 51. Big Natural & Organic An overview of the world’s largest CPG corporations, independent naturals, and acquired brands. Corporate CPG Big Natural & Organic Acquired Brands
  52. 52. Natural Products M&A Unilever General Mills J.R. Smucker Coca Cola PepsiCo Hain Celestial Danone / WhiteWave Boulder Brands Hormel ConAgra CP Clorox Kraft Heinz Hershey Kellogg’s Snyder’s Lance Mars Campbell’s Starbucks
  53. 53. Big Food Launches Natural SKUs Brands like Campbell’s, Quaker, Purina, and Jell-O are launching new natural product lines.
  54. 54. Private Label Natural & Organic Supermarkets Everything Stores Direct to Consumer
  55. 55. Big Retail, eCommerce, Apparel & Beauty
  56. 56. Grocery & Home Retail Stores Natural & Organic Grocery Large Grocery Chains Home & Gadgets Convenience
  57. 57. Apparel & Beauty Retail Stores Multi Department Retail Beauty Brands w/ Retail Fashion & Shoes Beauty & Wellness
  58. 58. eCommerce Destinations Fashion & Shoes Resale & Consignment Beauty Marketplaces Flash Sales
  59. 59. Beauty, eCommerce & Retail M&A Acquisitions listed focus on recent news and consumer companies. Omissions were not intentional. Amazon Walmart Unilever LVMH / Kendo L'Oreal Target Estee Lauder Nordstrom eBay PetSmart Coach Apple
  60. 60. Retail, eCommerce & Shopping Trends
  61. 61. Personalization Wellpath Wellpath sells custom protein powder mixes and vitamin regimens as a monthly subscription. Customers complete a five minute consultation online to see their personalized Wellpath Solution. Care/of Care/of sells supplements based on a customer’s health goals and diet, shipped monthly via a subscription. Each day is pre packed into a grab and go pouch with the customer’s name on it. Function of Beauty Function of Beauty sells custom haircare based on a customer’s hair type, goals and preferences. Each bottle includes your name on it, and bottles aren’t filled until each unique order is placed.
  62. 62. Direct to Consumer Bundle & Save The Honest Company, Thrive Market, and Grove Collaborative all offer incentives for consumers to purchase multiple products online at the same time, and sometimes these bundles are offered as a monthly subscription. Subscriptions Brands like Ritual (women’s vitamins) and LOLA (organic tampons), both sell their products direct to consumer through a monthly subscription. Amazon also offers subscription options for single items on its site. Community-Driven Glossier, makers of popular beauty products, started as a beauty and lifestyle blog called Into the Gloss. The company now develops new beauty products based on a combination of blog insights and customer feedback.
  63. 63. D2C Brands Expand Offline Birchbox Beauty retailer Birchbox launched its first store location in New York, complete with a nail bar. The beauty retailer will open a second store in Paris in spring 2017. Bonobos Visit a Bonobos Guideshop to find your perfect fit, and receive complimentary style assistance along the way. Allbirds Direct to consumer shoe brand Allbirds opened its first pop-up store in San Francisco in 2017.
  64. 64. Retail Partnerships Retailers are partnering with startups and brands on exclusives, collaborations, and shop-in-shops. Target Nordstrom Bloomingdale’s West Elm
  65. 65. Tech Enabled Shopping Spring Spring allows consumers to shop from 1,500+ emerging and established brands in their mobile app. Some compare Spring to the experience of shopping in a (mobile) mall. Shoptiques Shoptiques invites consumers to shop from dozens of local boutiques through their website. For small retail stores, Shoptiques manages their eCommerce infrastructure. Stitch Fix After a customer completes a style quiz, Stitch Fix mails five clothing and accessories pieces, curated by both human stylists and algorithms. Customers only pays for the items they keep, and ship the rest back to Stitch Fix.
  66. 66. Food Vending Machines Byte Foods and Souvenear both feature products made by third-party brands. Byte Foods Byte Foods provides vending machine-like fridges to offices, and stocks them with healthy grab & go snacks, meals, and beverages. Byte automatically knows what was purchased and charges accordingly. Farmer’s Fridge Farmer’s Fridge is a fresh food vending machine offering breakfast, salads, side dishes, snacks, and beverages. You can find their machines in airports and hospitals around Chicago. Souvenear Souvenear curates vending machines in airports with non-perishable food and snacks made by local artists and entrepreneurs. You can find their machines in Oakland, San Francisco, and Kansas City.
  67. 67. Retail Store Design Expanded Inventory Urban Outfitters and Anthropologie have expanded their beauty departments to sell makeup, skincare, and body products by independent brands. In-Store Cafes Lululemon and Alo Yoga have coffee shops, and sometimes lounges, inside their stores for customers to buy lattes and relax while they shop. Beacons & Sensors Beacons and new technologies allow retailers to collect data about the number of walk-in customers, what they tried on, how long they stay, and how often they return to the store.
  68. 68. Thanks for reading!
  69. 69. CMYK Ventures www.cmyk.vc / @cmykvc / amrit@cmyk.vc

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