Forget Category Captains. We need Category Lieutenants:
The retailer is interested in the consumers’ behaviour in each of the two or three hundred categories it offers, but owing to a lack of critical mass in each category, the retailer does not have the budget or the personnel to discover the information. However, for a manufacturer, concentrating on a small set of categories, it is worthwhile. Another approach is to become category lieutenants. This is where a smaller supplier looks to complement the category captain by providing niche brands where the captain is weak or absent, and perhaps offering me-toos to reduce the dominance of the Category Captain
But is trade spend paying back? The evidence suggests not. One AC Nielsen study suggested that 90% of trade-marketing initiatives do not produce a positive ROI. While a staggering 40% of items
sold in US supermarkets were on promotion.
Total global trade spend is now estimated to be over $125 billion, well above the total profits of the major retailers, and McKinsey estimate it to be typically 30% of an FMCG manufacturer’s cost base, second only to the cost of goods at 40%. Most manufacturers now spend more on trade marketing than brand/ consumer marketing
3,200 Members in the Private Label Manufacturers Association. The market to supply private label is competitive - private label sales were more than US$60 billion in 2011 and no manufacturer
can expect to succeed if their approach is half-hearted.
The most vulnerable brands to private label are not the strongest but the weakest. Manufacturers have one advantage that can never be overcome if used witli focus, vigour and investment and that is innovation. Yogurt, seemingly an ideal category for private label to take the lion’s share, has seen private label share decline. The top-five leaders, Danone, Yoplait/Sodiaal, Yalkult Honsha, Nestle and Muller represent half of all yogurt sales. Their innovation has been developing premium products, like pro-biotic yogurt and yogurt enhanced witli fruit, and tliey launch continually; between 2006 and 2010 Danone introduced nine new products.