Colin Lewis: FMCG has become a breeding ground for underperformance

The big FMCG companies might still get the kudos from marketers, but on results, innovation, insight and diversity they have taken their eyes off the ball and let nimble disruptors in.

marketing underperformance

Results. Innovation. Insight. Diversity. Four of the biggest buzzwords in marketing today. But are they any longer words you associate with big FMCG companies such as Procter & Gamble (P&G), Unilever or Nestlé?

Most FMCG brands are losing market share and underperforming on organic sales growth. Although demand for consumer goods is increasing globally, sales growth at 34 of the world’s 50 biggest FMCG brands fell to just 0.7% between 2012 and 2016. P&G has been accused by investor Nelson Peltz of a decade of underperformance and having “aging brands with a lack of breakthrough innovation” and a “suffocating bureaucracy”.

What about innovation and insight? Five-year-old ice cream brand Halo Top grew its sales 2,500% in 2016 in the US, its tubs beating Unilever’s Ben and Jerry’s and Nestlé’s Häagen Dazs last summer. Unilever CEO Paul Polman reacted with: “The success of the low-calorie ice cream has surprised us in the US.”

READ MORE: Is FMCG still the best learning ground for marketers?

P&G claims to be the first company “to conduct deliberate, data-based market research with consumers” in 1924. But CFO Jon Moeller recently said “we’ve been unable to put our finger on” why US shoppers continue to reduce spending on consumer goods.

P&G also missed the direct-to-consumer razor market. Dollar Shave Club, Harry’s and others grabbed 14% of the men’s razor market from P&G’s Gillette brand.

With the proliferation of new brands, fragmenting consumer tastes and changes in retail, how long can this dichotomy between reality and what is now a semi-religious belief about ‘blue-chip marketers’ continue?

Let’s see how the blue-chips are doing on diversity and talent. A recruiter of FMCG marketers tells me: “There is no diversity. When I found incredible people and pitched them to these brands, they said they were not going to look at anybody unless they had worked in other blue-chip FMCG brands.”

So, what’s going on? Rakesh Kapoor, CEO of Reckitt Benckiser, calls it as it is: “Large companies are finding it difficult to outperform the markets [because they] are facing smaller, nimbler, niche competition…  a ‘one size-fits-all’ approach is outdated.”

Given the track record on results, innovation, insight and diversity, why do these brands get the kudos from marketers? Many of the arguments in their favour come from marketers who once worked at these companies. Given our personal biases, we’re likely to support the path we chose, but this is a backward looking view.

With the proliferation of new brands, fragmenting consumer tastes and changes in retail, how long can this dichotomy between reality and what is now a semi-religious belief about ‘blue-chip marketers’ continue? FMCG brands face competition for the best talent as they compete with smaller, disruptive, founder-led startups. It’s time to move on from previously held marketing shibboleths and start embracing a new reality.

Colin Lewis is CMO at OpenJaw Technologies

Hide Comments2 Show Comments
Comments
  • Sharon Slater 8 Aug 2018 at 12:29 am

    This does not surprise me at all. Speaking as someone who has been out in the field (Grocery Field Sales )
    New brands we are now seeing in store , especially in Sainsburys and Waitrose are so relevant today. Many are building a large and loyal online following with Instagram Facebook etc and they understand the importance and value of accessing their customers through these channels and are investing in this. Wheras this is something the global giants have failed to adapt to for whatever reasons whether it’s lacking innovative new talent or other.

    With these new brands, the packaging is vibrant and fresh with a taste to match and unfortunately many household recognised brands are sadly becoming dated in every way. Packaging. Branding and taste.
    Speaking as a consumer I don’t think you can reinvent some of these recognised brands because no matter how many different varieties flavours or whatever they will always be accociated with that brand…but maybe I’m wrong there.

    I also think many of these new brands work and organise their business in a lean, streamline and relevant way and I would imagine digital helps considerably when trying to acheive that, wheras due to the sheer size and complexity of the global giants they are unable to operate in this way.

  • Mark Cichon 14 Aug 2018 at 10:48 am

    Mars has a huge focus on diversity and inclusion and even took a gamble on an agency guy like me to run their marketing department. Innovation, only if its incremental, not just for the sake of it, many believe in growth from optimising the core. CMI does a great job in identifying insights, both business and consumer opps.

  • Post a comment

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here