Traditional food brands, especially long-established non-perishable products, have been doing well in the coronavirus pandemic – to a large extent at the expense of upstart brands.
The Wall Street Journal reports that “insurgent brands” among consumer goods, defined as those with sales growing at least ten times faster than their product category, have fallen off during the pandemic. They had 35% year-over-year growth in January and February, but that fell to 5% in March and April, according to data from Bain & Co. Meanwhile, companies with established center-store brands have been reporting better-than-average results, including Nestlé, J.M. Smucker, Kraft Heinz, Mondelēz International and B&G Foods. Hershey noted that its confectionary products gained 3 percentage points over the past month.
The Journal posited several reasons for this phenomenon: Grocers are reducing SKUs to concentrate on their highest-volume products; insurgent brands often use contract manufacturers, many of whom have seen increased business and want to prioritize major customers; and private funding like venture capital is starting to dry up.