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.”
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outperform the markets [because they] are facing smaller, nimbler, niche competition… a ‘one size-fits-all’ approach is outdated.”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