For small CPG brands, it can be tough to show retailers that you deserve a spot on their shelves. It can feel like a catch-22 – they want to see that you’re popular enough to distribute, but you need their distribution support to become more popular.
That’s where metrics like velocity come in really handy. Sure, dollar sales are important, but if you’re not one of the big guys with huge sales volumes and a network of established retailer relationships, how do you demonstrate your brand’s popularity? Velocity can do just that by showing how quickly your product sells wherever it’s available. If your product is selling well where it is sold, that tells a new retailer that there’s money to be made if they partner with you.
What velocity is and why it’s important to small CPG manufacturers
In the world of CPG retail metrics, velocity is often seen as the third most important number to monitor. Sales comes first, because of course it does, and distribution comes second, because to expand sales, you must expand distribution. Velocity follows those two because it’s a key part of the equation that drives sales. Your velocity multiplied by your distribution equals the amount of dollar sales you’ll achieve. If your brand already demonstrates strong velocity, but still lacks distribution, a retailer can infer how much money is to be made. Strong velocity means your brand has already passed the test of “sell-ability”. If your product is selling well where it is distributed, more retailers will want to distribute your product as well.
One category growing quickly with tons of smaller CPG brands sprouting up, gaining momentum, and demonstrating strong velocity is the non-dairy “milk” category. These days you can find everything from oat and almond milk to flax, hemp, and even pea protein “milk”. You may be familiar with the bigger brands like Califia dominating shelf space in grocery stores across the country, but what are some of the smaller upstarts vying for a space on the shelf next to them? Let’s use the Brand Ranking Report to sort by increase in velocity over the last year.
(This data was pulled from the Byzzer platform, powered by NielsenIQ, for total FMCG retailers for the 52 week period ending February 6, 2021.)
Ripple plant-based milk derived from pea proteins increased in velocity 12% over the past year. The brand name is based on the “ripple effect” of making sustainable, healthy purchases – a visit to their website shows you exactly how much good you’re doing for the planet and yourself. Their expansion into frozen desserts and milk positioned for kids suggests they’re poised to surpass that 12% growth in velocity in the coming year.
Horchata has been popular since the 13th century in Valencia, Spain, but it’s only recently that more foodies and now bigger retailers are starting to take note. In Spain the drink is made from tiger nuts, while in Mexico you’ll find mostly rice or coconut-based horchata. Kern’s version is rice-based and sweetened with cinnamon, earning it a 14% increase in velocity over the past year.
It’s no surprise that macadamia milk is making a big splash with consumers. This tasty nut-based milk has increased in velocity 19% over the past year. Like Ripple, the Milkadamia brand emphasizes their products’ benefits to the environment, and positions it as a superior choice for vegan and keto lifestyles. Their product portfolio has also grown to include buttery spreads and cooking oil sprays.
The nut-of-choice for these plant-based pioneers is cashew. (They also produce coconut and oat milks, among many other products.) As one of the creamier alternatives to dairy milk, it has become a popular choice, growing in velocity by 21% over the past year. Cashews are also pricier than other nuts like almonds or alternatives like oats, so Forager Project has cultivated a premium brand look and feel complete with a Bon Apetit-level recipe collection every plant-based foodie should bookmark.
Remember the days when the only available dairy milk alternative was soy milk? Westsoy does – they began in California over 35 years ago back when Americans sought more ways to decrease the fat in their diets. Nutritional science has evolved but Westsoy has remained a healthy milk alternative mainstay on shelves everywhere, even growing an additional 26% in velocity over the past year.
If you’ve ever tried a non-dairy milk alternative, it was likely by Blue Diamond. This brand doesn’t just boast great velocity growth – 28% in the past year – it also dominates overall dollar sales. Their Almond Breeze products were among the earliest available when the non-milk milks craze began to take off, and their continued strong velocity and distribution numbers are a testament to their continued popularity among consumers.
Silk was another early arriver to the non-milk milk trend. Since debuting their soy milk back in 1996, they’ve kept pace with retail trends and led category growth with the introduction of many other alternatives including almond, cashew, coconut and oat milks – an effort that consumers clearly appreciate as the brand continues to command a velocity growth of 33% over the past year.
This rice-based milk alternative has made some smart decisions to grow its brand: their products are not only plant-based like their competitors, but they obtained certified popular product characteristics like Non-GMO and organic. Rice Dream also has a competitive advantage with its price point – where other dairy milk alternatives top four or five dollars at retail, Rice Dream’s 32 oz carton usually retails for less than three dollars. It’s no wonder, then, that Rice Dream has increased in velocity 41% over the past year.
If it feels like Oatly is taking over the dairy-free world, that might be because it really is. Their sales numbers haven’t reached the echelons of bigger names like Califia or Blue Diamond yet, but their growth levels over the past year have been extraordinary, including a 51% increase in velocity in FMCG retailer sales. At this rate, they’re set up for huge retail success in the coming year – and their recent deal with F&B giant Starbucks means we’re all likely to be seeing a lot more Oatly in the non-dairy section of the dairy aisle.
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