Consumer Products -- Where's the Growth?

A recent report from PWC, cited in Consumer Goods Technology, notes sharply lower growth projections for the next 12 months from 59 "large consumer products businesses".

Like everyone else relying directly on consumer optimism and retail sales, this is  bad news.

The good news, according to the article, is that companies are seeking growth from international sales, but even that is waning, as the effects of the US economic slowdown take effect on the global stage.

Focusing on the US Market, one of the areas of growth most overlooked is what consumer product companies typically call "Alternate Channels" or "Special Markets".  What this means, in reality, is sales that don't come through the Grocery, Mass or Drug channels -- or, for short, non-Wal-Mart sales.  The alternate channels include, for example,

• Hotel Gift Shops and Pantries
• Campgrounds and other Outdoor Retailers, such as RV Parks, Marinas and Golf Courses
• Community Pharmacies
• School Fund-raising Programs
• Small format retailers, such as independently owned and operated convenience stores.

A number of consumer products companies looking for growth, including Kraft, Pepsi and Nestle, are keyed in on these markets in a big way.  This is a $50B market -- and the aggressive companies are anxious for an unfair share of this market.  Unfortunately, getting to these small, individual businesses is no easy task.  Imagine, for example, sending a rep out to meet with an individual Marriott Courtyard or a KOA.

My own company, Tradavo, small today, but growing rapidly, is working both sides of these channels -- we enable small business and retailers to purchase products from a variety of consumer products companies, while giving those companies a very cost-effective way to target and promote new and existing products to these retailers.

Of course, the direct impact we'll have on the top line of a major consumer products company is small, but the brand impact -- the "ripple effect" of consumers buying in our channels is felt very immediately in traditional retail, where the needle can indeed be moved.

For consumer product companies, ignoring these channels represents a risk -- especially where growth over the next 12 months will be hard to find.