This is how strong FMCG brands grow

Growth in the FMCG market has a clear path: increase your penetration. Colgate, Nivea, Dove and Vim have achieved that the most on a global scale: they continuously expand their reach to new markets.

Consumer preference

That makes sense, because these brands mainly achieve growth in growth markets, which have contributed more than 50 % of global consumer spending for the first time ever in 2016. That is according to market research firm Kantar Worldpanel’s fifth annual Brand Footprint report, which investigates the growth factors that create a brand product’s success.

It is an impressive piece of work, considering the numbers: analysts examined 15,300 brands across 200 categories in 43 countries and five continents, which represent 73 % of the global population. That resulted in a top 50 of largest global brands, with Coca-Cola firmly in first place, followed by Colgate and Lifebuoy at some distance.

Penetration is key

A top 50 is always nice, but the insights behind it are far more interesting. Where does this position of power come from? It sounds deceptively easy to achieve: the largest brands in the world are those that attract the most buyers and those who grow the fastest are the ones that attract the most new buyers.

This does not necessarily mean that these brands sell more to their current customers: they actually do, but it does not define their success. Frequency is not the issue, penetration is, which is a very important distinction. If you realize 40 % of brands reach fewer than 5 % of a country’s families, then you can also clearly see they still have plenty of growth potential.

Even Colgate, the brand with the highest level of penetration worldwide, “only” reaches 62 % of the world’s population, which shows it still have plenty of potential: to reach another 1 % of worldwide penetration would come down to 11 million additional buying families. Haircare brand Sunsilk managed to do exactly that in 2016: it reached another 11 million new families, particularly in growth markets, which helped it breach the top 10 for the first time.

Strategic routes

What are some of the global brands’ growth strategies? One is to tap into new consumer needs, like how Nescafé developed a new type of coffee on-the-go for the United Kingdom: coffee you prepare at home and take with you on your trip (the Azera). Another strategy is to tap into new moments of consumption: rice brand Gallo launched a new range of healthy, sweet and hearty rice snacks in Argentina for instance. Brands can also move into new product categories, like P&G’s fabric softener Downy, which now also sells air fresheners and candles.

In order to reach new target audiences, brands will develop new types of products, like how Ben & Jerry’s has dipped into the vegan market. Brands also grow through a geographical expansion, like Heinz introducing its ketchup to new Chinese regions or Dove that is working the Indian market with its baby products.

Four global brands with growth

Kantar noted four global brands that achieved significant growth for each of the past five years. These are those shining examples:

• Colgate is the world’s largest care brand and the only brand that more than half of the world’s population buys. It attracted more shoppers than any other brand in the past five years. One of the reasons for its success is how it adjusts to local flavour preferences.
• Nivea marries a strong brand identity to major innovations and continued investments into its brand awareness. In the past year, the brand jumped ten places in the Brazilian ranking thanks in part to an award-winning campaign on children’s protection against the sun.
• Unilever’s cleaning brand, Vim, has grown because of its continuous efforts to expand into growth markets, tapping into new consumer needs faster than its competitors.
• Dove, which also belongs to Unilever, enticed another 14 million households in 2016. It keeps expanding into new categories and new markets, which allows it to attract even more new consumers.