CHICAGO — According to market research firm IRI, small, extra-small and private label consumer packaged goods (CPG) manufacturers in the United States gained market share over their larger competitors in 2020. This was a result of channel and category shifts, and supply chain constraint issues.

CPG industry sales last year grew 10.3% to $933 billion. Altogether, large manufacturers lost 1.3 market share points last year, the equivalent of $12.1 billion in sales, a deficit that smaller manufacturers and private label co-manufacturers picked up.

Of the 10.3% growth, smaller manufacturers accounted for nearly one-third of that growth, gaining 1.1 share points, and private label manufacturers accounted for nearly one-fifth of that growth (18%), gaining 0.2 share points. Larger manufacturers made up 34.1% of total CPG growth in 2020.

IRI shared large manufacturers have lost market share every year for the past five years, but remain a dominant figure of total sales in the United States at 46.7%.

“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,” explained Krishnakumar “KK” S. Davey, Ph.D., president of strategic analytics for IRI.

“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,” he continued. “Several brands attracted a number of new buyers as in-home consumption surged. Large manufacturers fared relatively better in the third quarter, but still lost significant share (1.3 points versus year-ago as compared vs. 1.9 share points versus year-ago in the second quarter). The fourth quarter saw some improvement and reversion to historical trends (-0.8 points versus year-ago).”

Davey added that many of the extra-small manufacturers IRI is referring to were new entrants to the market in categories that were experiencing supply constraint, including soap, hand sanitizers, home health care, and others.

Restrictions on consumer mobility affected large manufacturers’ growth in the convenience channel, IRI stated, which accounted for a loss of 0.5 share point overall. IRI said it expects this channel to bounce back as social distancing guidelines relax later in 2021.

“Looking ahead, we anticipate that consumer mobility will increase substantially over the next few months, and the convenience channel will bounce back as economic activity, especially construction-related activities, improves, providing a strong tailwind for large manufacturers,” Davey said.

Smaller manufacturers gained market share in all but one category — home care — out of the 10 tracked by IRI. These include frozen food, beverages, general food, refrigerated food, alcohol, beauty, health, home care, general merchandise, and tobacco.

These smaller manufacturers saw high growth in market share for hygiene, personal care, and health and wellness products, which were in high demand throughout the course of 2020. Many of them took advantage of supply chain agility in paper and hygiene products, as some larger manufacturers found difficulty meeting the surge in demand in those categories.

“While some of the 2020 consumption trends will continue with consumers working from home at least part-time, away-from-home consumption will continue to gain back lost share. We expect smaller and mid-sized players to continue to gain share from large manufacturers.”

Additionally, IRI’s e-commerce analysis pointed to shelf-stable food and beverage, pet care and personal grooming products growing much faster than in other retail channels. E-commerce had already been gaining market share in the pet care and other sectors, a trend that was accelerated by the COVID-19 pandemic in 2020. 

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