In Part 1, I detailed why many of today’s brands will no longer cut it as we near the end of the CPG 2.0 era. In Part 2 , I detailed how to create a sustained advantage by owning select supply chain components or competencies to differentiate your brand creating an unmatched value proposition.
CPG 3.0 companies have a combination of strategy and business models that iteratively gain more power over time. CPG 3.0 brands each approach their business in these 3 common ways:
- Building purpose-driven elements into their brand promise;
- Investing in competitive advantage capabilities that support that brand promise;
- Using their unique capabilities to make authentic and meaningful content to develop stronger customer relationships.
The resulting growth, loyalty and cost advantage drive reinvestable profit which leads to a virtuous cycle of further purpose-driven capability building.
In part III, we will close out the series by demonstrating that combining purpose, business model and supply chain strategy creates a powerful, enduring advantage.
Why Purpose = Advantage
Because CPG 3.0 brands have more capabilities across the supply chain, they are in a unique position to create truly better for our world propositions. In fact, the DNA of many of these brands DNA are steeped in their sustainable practices enabled by their unique supply chain and capability ownership. In Part 2 of this series, I shared multiple brands that are leading our CPG 3.0 movement. Let’s take a look at how some of them are combining purpose with sustainable advantage:
- @Agricultural Capital: Their vertically integrated supply chain puts them in a unique position to implement truly regenerative and sustainable practices at the farm and in processing. They can leverage their supply chain practices in high-quality content marketing in partnership with retailers or direct to the consumer. Being vertically integrated and controlling the full profit margin to retailers creates more profit to reinvest in their capabilities. They were recently honored as a Whole Foods Supplier of the Year.
- @Impossible Foods and @Beyond Meat: Their challenger brand statuses are based on a quest to reduce greenhouse emissions from cattle. They seek trial by leaning on consumers’ desires to reduce their animal-based consumption while enjoying the meat experience. Beyond Meat has had one of the most successful consumer good IPO’s in recent history.
- @Manitoba Harvest: On a mission to transform human health simply and sustainably via hemp. Manitoba’s supply contracts direct to farmers. These contracts allow them to require farms to follow more sustainable practices. Manitoba is now a global leader in hemp foods.
- @Thrive Market: Thrive Market is on a mission to make healthy living easy and affordable. They selectively curate products that meet their natural, organic and non-GMO standards. Their focus and capability in a niche arena allow them to deliver those goods at low prices. In turn, this combination makes their customers more loyal. Thrive Market is up 100%+ YOY gaining 100,000+ new customers in the pandemic (WSJ).
- @Costco & @Walmart: Both retailers control such a large part of our consumer economy through their scale that they are in unique positions to drive change. They also have a responsibility to provide consistent supply and food security. Owning more parts of the supply chain for these high demand commodities allow them to implement sustainable practices while also providing an affordable price point for the consumer. In turn, these highlight investments also create direct case studies stories they can share with their customers, thereby increasing loyalty.
The bottom line: Enduring brands provide an authentic consumer value proposition others can’t match.
It’s clear more consumers are choosing to support brands with values and purpose. According to Kantar, brands with a high sense of purpose have experienced a brand valuation increase of 175% over the past 12 years compared to the median growth rate of 86% for brands with a low sense of purpose. In another study with Millward Brown, when brands are linked to a purpose, 80% of them outperformed the market.
Finally, we all know people are the most important element of building successful companies. According to PwC, 88% of Millennials want to work for a company whose values reflect their own. Millennials will comprise 75% of the global workforce by 2025. CPG 3.0 companies will win the talent war.
The world faces many challenges and the consumer landscape continues to change at an accelerated pace. Companies and brands that don’t adapt will fail. Let’s work together to build next-generation, more sustainable and purpose-driven consumer good companies that support a better world.
This is Part 3 in a three-part series. Here is Part 2.