THE ROAD TO 2025

CPG at the Tipping Point:

How Brands Can Win in
the New Routes to Market
With consumer packaged goods increasingly moving to digital
shelves, the old ways of promoting brands are obsolete. Brand
providers will need to rethink product value, meet consumers’
digital and physical ‘moments of need’ and enhance visibility in
their demand-based fulfillment models.

July 2017
THE ROAD TO 2025

EXECUTIVE SUMMARY

In 2025, the center store is gone.

Replenishment of consumer products such as laundry soap and snack foods that shoppers
used to pick from the shelf has morphed into a largely online task. Consumers restock their
cupboards from wherever they are, with a tap and swipe or a conversation with an AI
assistant (think amped-up versions of today’s Siri and Cortana). In some cases, smart
appliances trigger replenishment on their own.

Packaging has changed, as well. Fast-moving consumer goods that once constituted the
bulk of center store inventory – personal care, beauty and cosmetics, home cleaning
products, food and beverage – are now designed for easy, speedy shipment through online
channels. Product formulation is about “eaches” rather than cases and pallets.

Dystopian, yes. But not far-fetched: The disappearing center store is much closer than you
think.

In 2018, online sales are expected to represent a scant 5% of the books of business for
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consumer packaged goods (CPG) companies. By 2025, however, digital routes for
center-store volume will mushroom to 40%. According to a joint report from the Food
Marketing Institute and Nielsen, consumer spend on online grocery shopping is forecast to
reach $100 billion within the decade – the equivalent of 3,900 grocery stores based on
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store volume.

The shift is happening far more quickly than predicted. In a recent move to build its
e-commerce sales and challenge Amazon, Walmart rolled out its Pickup Discount program,
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which reduces prices on purchases that consumers make online and retrieve at its stores.
In June, Walmart grabbed headlines with its acquisition of men’s online retailer Bonobos –
just as Amazon announced its purchase of Whole Foods.

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The actions of both giants highlight the direction in which the CPG market is heading, if not
hurtling.

How will CPG companies win when the major routes to market tilt toward digital? The good
news is that as the physical shelf shrinks, lower trade spend will decrease costs. But gone
is the once clear path for driving foot traffic and obtaining preferential shelf position. The
loss leader model will no longer work. Trade promotion will evolve from the banner level to
the individual level. Personalization will be key.

Perhaps even more challenging for CPG companies, brand loyalty will take a back seat to
price and convenience in the digital market. Way, way back. “If you were among those kids
who had Kellogg’s Corn Flakes on the breakfast table, drank a Coke from time to time,
enjoyed your favorite KitKat and . . . have always used Tide, don’t expect the next generation
to follow you,” cautions branding guru Martin Lindstrom. “Your familiar global brands will
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begin dying in 2017.”

For CPG companies, transparency will become a lifeline to relevancy and profits. At the
digital shelf, consumers will view everything about a product, from its price, to the processes
used to manufacture it, to its provenance. Consumers will shop based on need, not brand.

The challenge will be to meet customers wherever they are. With only a sliver of personal-care
products being sold online today, there’s plenty of opportunity for brands to make their
mark. But they’ll have to move fast: Just three e-tailers – Amazon, Walmart and Target –
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comprise 82% of those sales.

How will businesses get on consumers’ shopping lists at home? How should strategies
change when stores are places for experience rather than product distribution? The answer
is to rethink brand value, the relationship between digital and physical shelves, and the
supply chain.

CPG at the Tipping Point: How Brands Can Win in the New Routes to Market | 3
 To ensure consumers will reach for their brand,
businesses will increasingly rely on establishing
brand value, which is the summation of not just
the product but also the product’s story and
the convenience it offers.

BRAND VALUE: TRANSPARENCY IS CRITICAL

In 2025, fewer consumers will shop in stores for utilitarian goods. Long aisles of fast-moving con-
sumer goods will be replaced by smaller spaces stocked with convenience products that emphasize
freshness, such as to-go items and perishable goods. To replenish consumer goods, customers will
reach for the digital shelf.

To ensure consumers will reach for their brand, businesses will increasingly rely on establishing brand
value, which is the summation of not just the product but also the product’s story and the convenience
it offers. Ninety-four percent of consumers surveyed by Label Insight say they’re likely to be loyal to
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a brand that offers complete transparency. The emphasis on transparency will fundamentally change
the construct of products, as well as the ways in which consumers access them.

What’s more, businesses will no longer vie for consumers’ attention with other products in the same
category. Instead, their rival will be experience. “We compete with the latest song of Beyoncé, with the
latest telephone from Samsung or Apple,” Mauro Porcini, PepsiCo’s first-ever chief design officer, told
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a conference audience in March. “We compete for mindshare and relevance in the life of people.”

Against that backdrop, price still matters, perhaps more than ever. Private-label brands, such as
Walmart’s Great Value brand, form an immediate threat. Walmart’s CEO Doug McMillon recently pre-
dicted that the widespread availability of name-brand products online will compress product margins
over time. “Having a private brand from a margin mix point of view has always been important, but it
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is even more important now,” he said.

Amazon’s entry into private-label brands is already making inroads in more than a dozen categories,
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including grocery items, pet supplies and home goods. One Wall Street analyst forecasts Amazon’s
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total U.S. market share will surpass 50% in five years.

Transparency Beyond Pricing

The emergence of online shopping has already given brands a lesson in the power of price transpar-
ency. Within seconds, smartphone-wielding consumers can scout the prices that provide the best
deals and the most convenience. Walmart’s CEO pointed to price transparency as a key motivator in
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the retailer’s Pickup Discount program.

Now the same openness applies to all aspects of a product’s perceived value. For starters, top-selling
products will need to fulfill consumers’ desire for improving their lives. Concern for the environment
also influences product purchases for 45% of consumers, according to Nielsen’s 2015 poll. Social
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value and the consumer’s community also weigh in, each influencing 43% and 41% of respondents.

4 | CPG at the Tipping Point: How Brands Can Win in the New Routes to Market
But such “good for you, good for all of us” products are about more than being green. They connect
with individuals in more personal, emotional ways. Transparency in sourcing and ingredients helps
shape brand value by deepening consumer trust. It guides consumers to products that feel tailored to
their interests and worldviews. It’s through transparency – and the sense of belonging it creates – that
CPG companies will achieve brand preference.

Equally important is openness about a product’s provenance. Consumers want to know how a product
is processed, the source of its ingredients and who made it. They’re interested in what others say
about the product in online reviews and social media. Many are increasingly curious about certifica-
tion and guideline compliance. Demand for transparency is especially high among food products.

Getting Started With Transparent Labeling

Labels are a key component in transparency, and consumers will pay a premium for this information.
Seventy-three percent say they would pay more for a product that offers complete transparency in all
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attributes, according to Label Insight.

Industry initiatives such as the SmartLabel QR code offer CPG companies a way to begin. Launched
by the Grocery Manufacturers Association in 2015, the effort lets consumers access product informa-
tion online through search engines as well as on brands’ and retailers’ websites. Smartphone users
can scan QR codes on packaging.

The GMA predicts that within five years, the initiative will cover 80% of food, beverage, pet care, per-
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sonal care and household products. Albertson and Conagra Brands have signed on to SmartLabel, and
more than 1,100 products in Mondelez International’s U.S. snack portfolio are now searchable on the
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SmartLabel app.

Some brands are going a step further. Earlier this year, Target announced plans for full visibility into
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chemicals contained in or used to make products it sells. Unilever is voluntarily disclosing online the
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fragrance ingredients in products sold in the U.S. and Europe. With the move, Unilever has its eye on
both the bottom line and consumer satisfaction. Its “sustainable living” brands have experienced 30%
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higher growth than other product lines.

Embrace One-to-One Engagement

With stores’ roles diminishing and the digital shelf ascending, it’s imperative that CPG companies
engage directly with consumers to preserve brand value. Until now brands have never been required
to engage one-to-one with consumers. Most know only the most basic details about who their custom-
ers are and how they shop, with little visibility into in-store information such as footfall and sales.

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THE ROAD TO 2025

Knowing consumers and engaging one-on-

one with them represents power for brands
and rocks the time-honored model of
working through retailers as the middleman.
E-commerce sales, however, are a different story. In the digital realm, brands can see an array of con-
sumer behaviors, from click-throughs, conversions and average order value, to navigation paths.
Knowing consumers and engaging one-on-one with them represents power for brands and rocks the
time-honored model of working through retailers as the middleman.

Companies are already instigating consumer dialogs around new product development. Discount cos-
metics brand ELF Beauty, for example, launches new products first on its web site, and then widens
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distribution to retail after online consumers give products the thumbs up.

Launched as an online-only operation in 2004, ELF now rings up strong retail sales per linear foot of
shelf space at Target, Walmart and CVS. It also operates 15 branded brick-and-mortar retail stores, and
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sells through the digital shelves of e-tailers such as Amazon.

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Outside-In: Innovation Starts With Consumers

By 2025, consumer participation will be embedded into all innovation processes. Real-time input will
replace panel feedback and other backwards-looking approaches to product development. Consum-
ers’ role in development, marketing and promotion will intensify and start much earlier in the process.

Most CPG companies are just getting up to speed on techniques such as social media sentiment
analysis. But in 2025, it will become standard practice to take the pulse of consumer opinion as it’s
happening.

Equally important, CPG companies will listen to the products themselves. As home appliances get
smarter, with everything from refrigerators to washing machine components pushing out data, they’ll
alert consumers and manufacturers when parts need to be replaced and systems replenished and
then automatically replenish them. Receiving and acting on the rivers of data feeding in from smart
products will be a core competency for CPG companies.

Receiving and acting on the rivers of data

feeding in from smart products will be a
core competency for CPG companies.
New Products Will Fuel Brand Loyalty
Such changes in product development and replenishment will completely disrupt the way consumers
choose products. For one thing, brand loyalty will be a volume business, dependent on a steady stream
of new products that consumers engage with at multiple touchpoints. The market is already headed
this way. UK-based appliance maker Dyson Ltd., known for its flashy cordless vacuum cleaners and
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high-end hair dryers, says new products fuel 80% of its sales.

In addition to needing as many opportunities to connect with consumers as their innovation pro-
cesses can deliver, CPG companies will also need to roll them out much more quickly. ELF launches
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new products in as few as 20 weeks from concept, and 27 weeks on average.

A business’s brand portfolio is only as good as its newest product success. The challenge will be to
integrate shopper participation into the CPG enterprise, from innovation to purchase. Many brands
still rely on processes designed to invent products and push them out. But success in 2025 will flip
that scenario: Brands will switch to an outside-in perspective. They’ll need processes that support the
involvement of consumers and shoppers in everything from ideation and beta testing to packaging
and rollout.

Moving from traditional software-defined, push-based models will require a transition away from
legacy brand systems that are not equipped to receive and track the consumer-centric information
that’s at the center of enterprise-wide digital processes.

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THE ROAD TO 2025

Innovation Platforms: At the Heart of Brand Value

Innovation platforms will serve as the heart of CPG businesses’ efforts to stoke brand value in 2025.
Most innovation platforms consist of the following elements:

• Real-time, outside-in architecture, consisting of open APIs, ecosystems of partners and plug-
and-play capabilities. It’s the platform economy, and for CPG companies accustomed to the linear,
producer-driven model, the new demand-driven platforms require changes not only to infrastruc-
ture and organizational structure but also alterations across the value chain.

• Listening capabilities. Knowing what consumers are saying online about a business’s products
and services is essential to outside-in product development. While social monitoring collects tid-
bits such as mentions and posts, social listening adds analysis and reflection. It helps brands see
where they fit into the public discourse.

Sentiment analysis, which involves machine learning and artificial intelligence (AI), is another pow-
erful but still emerging tool that is not yet a replacement for traditional market research. By 2025,
social listening will make sophisticated correlations among data sets that will help brands deter-
mine how information is changing brand perception and driving ROI.

By 2025, social listening will make

sophisticated correlations among data
sets that will help brands determine how
information is changing brand perception
and driving ROI.
• Real-time product updates. Social listening lets brands refine products in real time. For an indus-
try accustomed to development cycles that often last five or 10 years, this is a seismic shift.
Already, companies can launch a new product in the evening, watch for the social response and
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iterate based on feedback. By morning, the company might be on the fifth product release.

• Collaborative value networks, based on the shopper-led, pull-based value chains that are inte-
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grated by the Internet of Things (IoT). Personalization will require brands to increase their focus
on collaborative value networks and, as product providers, participate in the communities that
form around them, such as smart cities.

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Key Recommendations
The following guidelines can help brands increase transparency internally and across the network of
business partners and consumers.

• Corporate soul searching: What will the brand be? The question might sound existential, but a
fundamental issue all CPG companies must address is whether their brand portfolio will focus on
replenishment-based products, or on products that consumers experience and drive in-store traf-
fic. Utilitarian and experiential brands require very different capabilities and brand journeys. With
its immersive store experiences and product consultants, beauty retailer Sephora innovates in
ways that are very different from, say, Clorox Corp., which pioneered shippable bleach crystals and
the “connected” Brita water pitcher. Knowing their objective will drive organizations’ choices in
technology, people and processes.

• Define what transparency means for the brand, consumers and retail customers. What details
do consumers want about the brand and category? Is the business able to convey that information
in clear, accessible language that resonates with different communities? Consumers and shoppers
aren’t chemists, and lists of ingredients are only the first step. Consumers want experiences that
are simple and straightforward, and that offer context for how a product fits into their community.
Along the brand journey, transparency needs to occur during awareness, intent and selection
phases, as well as during consumption and sharing.

• Transparency doesn’t happen overnight. Because transparency cuts across the enterprise, it
requires a roadmap and a phased implementation. A transparency roadmap can help businesses
prioritize, synchronize and measure implementation. Organizations should define new processes
and an enterprise information architecture, including capabilities to address customer identity
access management and ensure the architecture accounts for new transparency content require-
ments, such as social media outreach, blog posts and videos.

• Just do it: Develop an effective digital strategy to address Amazon, Walmart and emerging
non-traditional players. Some CPG companies continue to turn a blind eye to digital’s ramifica-
tions on brand value. Businesses need to assess the position their brand will play in the 2025
market ecosystem, and identify the retailers, channels partners and direct-to-consumer partici-
pants to partner with.

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THE ROAD TO 2025

DEMAND SHAPING: REIMAGINE THE SHELF

Brands have always defined their value and telegraphed messages to consumers. The difference
today is that brands must go to consumers, not the other way around. The extent of the shift can’t be
overstated. According to Google, we stop to buy, research and discover on our smartphones 150 times
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a day. Impressive, but the job for brands extends beyond that: In addition to being where smart-
phone users are, brands need to be everywhere consumers are offline, as well.

We call these potential points of intersection with consumers “need moments.” They happen every-
where, and replenishment brands must be ready for them. Need moments are about engaging with
consumers wherever they happen to be and serving them in the moment, whether it’s an impulse buy
or a conversion that takes several visits.

Transparency helps answer the questions that arise at need moments. Which diaper will help my baby
sleep through the night? Which brand of sparkling water contains vitamins? If CPG companies aren’t
fully transparent both on the digital shelf and in need moments, they will miss out on the digital world
of commerce.

Social Networks and Need Moments:

Can They Deliver Profits for Brands?
With their critical mass and ability to influence purchases, social networks are target-rich environ-
ments for need moments – and often the first step to meeting consumers where they are. Destinations
such as Facebook and Instagram are also at a key inflection point: Brands must be there, but profits
have thus far been elusive. How does social influence purchases? Even more important, will brands
find a way to sell directly through social?

Twitter and Facebook have retired their commerce operations, with Twitter shutting down its Buy
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button in early 2017 due to lack of traction with consumers and brands. Now Instagram is embedding
a shopping capability, offering shoppable images on brands’ Instagram posts that connect consumers
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to “shop now” buttons and then on to brand websites to complete the transaction.

Establish an Always-On Shopping Platform

By 2025, when 40% of CPG purchases will move through digital channels, an always-on shopping
platform will provide a path to consumers. It lets brands be everywhere the shopper is in the digital
and physical spheres, and it allows them to extend personalization services critical to connecting with
consumers in need moments.

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The always-on shopping platform consists of the following elements:

• A real-time architecture that’s anticipatory. Brands need an architecture that can receive and
respond to large streams of real-time digital data to gain insight and understanding.

Localization is the mantra for retail and CPG companies, and achieving this capability depends on
data. Kroger, for example, is testing sensor-laden interactive shelves, which detect shoppers in the
aisles via their smartphones and offer them personal pricing and product suggestions as they walk
along. The chain is also testing “digital shelf edges” in 14 stores. Sensors detect a customer with
the store’s mobile app while walking down the aisle, and high-definition displays on the shelf edge
highlight relevant products. For a gluten-free shopper, the shelf in the nutrition-bar section might
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highlight gluten-free products.

• Transparency construct. Transparency is also a data issue. An important goal of the always-on
shopping platform is to provide immediate answers for consumers and shoppers, throughout the
buying journey and beyond. Because existing product information management systems (PIMs)
typically do not contain the accurate data to do that, a renewed emphasis on transparency needs
to be embedded into PIM and ERP systems and continuously updated across both digital and phys-
ical packaging.

• Connection to the digital shelf. How do CPG companies translate brick-and-mortar shelf pres-
ence into digital success? Online grocery has sputtered so far, but 2025 suddenly looks very
different given reports that Amazon has set the goal of becoming a top-five grocery retailer by
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then. The online giant’s Pantry could crack open e-commerce momentum for the CPG cate-
30
gory,  with its offerings of crackers, cookies, chips, coffee and other non-perishables for a delivery
fee of $5.99 per carton.

We envision augmented and virtual reality playing a role in these new shopping experiences, espe-
cially to manage the first moment of truth, instigate impulse buys and energize consumers.

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THE ROAD TO 2025

The digital era has turned the tables

on the traditional relationship
between brands and retailers.
In the days of physical-only shelves,
retailers expected suppliers to
perform. Now it’s brands that
expect retailers to deliver.

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Banding Together: Retailers and Brands as Collaborators

The digital era has turned the tables on the traditional relationship between brands and retailers. In
the days of physical-only shelves, retailers expected suppliers to perform. Now it’s brands that expect
retailers to deliver.

Target’s planned redesign in 600 stores features two entrances – one for quick shopping, and the
other for shoppers who want to peruse aisles more casually – which is an indication of retail’s race to
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keep up with customers who want it all.

Capitalizing on center-store opportunities will be essential for CPG companies and retailers. Yet for
most brands, traditional POS measurement tools reflect only brick-and-mortar sales, and do not factor
in e-commerce sales and the role this channel plays in driving overall category and brand growth. That
disconnect can leave brands and retailers at a disadvantage: When online and offline sales are com-
bined, many categories viewed as flat or declining are actually growing.

With retail analytics, stores can measure the effectiveness of online and offline campaigns in driving
store traffic. Sometimes called “phygital,” this consolidated view will be all-important in 2025.

Store-Level Planning: Getting Replenishment and Planning Right

Store-level planning helps CPG companies determine how much of their book of business comes from
in-store purchases rather than online orders. How will brands get the assortment right at each store?
Most CPG companies manage at regional or national customer levels, yet getting replenishment and
planning right at local levels will be a must in the shrinking middle space. Space planning will be a
balancing act: Brands will adjust space downward to reflect the lower levels of foot traffic, but not so
far that consumers can’t find them.

Given the shift in how consumers search and find products, the integrated shelf – spanning digital and
physical channels – will redefine categories. For example, “good for you, good for all of us” products
require realigning the physical shelf to accommodate transparency and new packaging and digital
access for more information.

As merchandising and demand planning move to finer levels of granularity, CPG companies will need
to respond to real-time shelf activity and conditions, and incorporate shelf-level economics into their
thinking. For example, how will their innovations improve retailers’ overall shelf economics over a
private label SKU?

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Key Recommendations
The consumer brand journey will continue to evolve across the changing landscape, and shoppers will
expect brands to be there for their need moments.

• Understand the brand journey and the associated need moments. Look across awareness,
intent, purchase and payment, consumption and feedback, focusing on the full range of digital and
physical platforms:

»» Amazon platforms, including Prime, Alexa, Dash and Pantry.

»» Walmart’s in-store, online and fulfillment services.

»» Direct-to-consumer opportunities, including chatbots and life management platforms.

»» E-tailing boutiques.

»» Online and physical channels, such as convenience, prescriptions and grocery.

»» Home-delivery retailers.

»» Smart home appliances.

• Evolve digital brand shelf and digital merchandising capabilities. Major opportunities exist to
alter demand-shaping activities in marketing, trade spend and new-product introduction. For
example, businesses will need to redefine brand categories to align with consumers on transpar-
ency issues such as nutrition, provenance and social responsibility.

• Define and implement an enterprise information architecture that enables personalization.

The new architecture must incorporate sourcing and communication of transparency across the
consumer brand journey and need moments. It also must be able to manage millions of consumer
and shopper identities in a secure, effective manner.

• Move to store-level category management, leveraging clustering where appropriate. Busi-

nesses need to move to store-level planogramming, reframing categories based on transparency
and aligning physical and digital shelves.

• Restructure sales organizations and empower account managers with store-level P&L
responsibilities. Organizations should equip account managers to optimize key demand-shaping
levers, such as trade spend, media spend, pricing and new product placement. They should create
monthly go-to- market executable plans across digital and store levels, and measure the effective-
ness of online and offline campaigns in driving store traffic.

• Develop the capabilities to translate marketing insights into field action and compete in
shorter intervals. Go-to-market plans need to accelerate from quarterly to monthly across media,
trade promotions and new-product introductions. Businesses should work with retailers to craft
new category definitions based on transparency. With the shift to digital, businesses need to shift
trade spend and marketing execution from mass to personalized approaches.

14 | CPG at the Tipping Point: How Brands Can Win in the New Routes to Market
Fulfillment by 2025 will require moving from
the push model to responding to individual
intent and demand signals.

RETHINK FULFILLMENT: NETWORK-BASED SUPPLY CHAINS

With digital commerce, demand shaping can be changed in an instant. As a result, fulfillment by 2025
will require moving from the push model to responding to individual intent and demand signals.
Getting there is no small feat. After decades of loading pallets and shipping them to retailers, CPG orga-
nizations now face the task of fulfilling online orders that are picked and packed as “eaches,” that is,
single boxes with individual items routed to customers’ homes.
A key challenge for all brands today is rethinking manufacturing and distribution practices to reduce the
cost of “eaches” fulfillment. As they do, the shadow of Amazon looms long: There’s no doubt the online
giant will continue to improve its shipment times to counter any advantages that brick-and-mortar chan-
nels can leverage.
How can fulfillment begin to respond to individual intent signals? Even before the first moment of
truth, predictive signals such as digital couponing offer clues regarding intent. They can be early indi-
cators of how demand is developing and take the pulse of store-level new-product introductions.
These early signals provide fulfillment with input to production and distribution plans.

Blockchain: Supply Chain, Provenance and Food Safety and Recall

Blockchain has important implications in the supply chain. This decentralized software mechanism func-
tions as a public, digital ledger. It records transactions between two parties – purchases, contracts and
records – and arranges them in data batches called blocks. The blocks are distributed across a chain of
computers, each of which approves transactions before they are verified and posted. Each update is a
block in the chain.
The technology offers a unique combination of security and versatility. For supply chains, it offers
improved visibility and transparency. Because blockchain’s distributed ledgers allow all parties in an
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ecosystem to have copies of transactions, they bring clarity to often opaque supply chains. Blockchain
can also streamline and secure interactions among manufacturers, retailers, financial institutions and
government organizations. Its ability to certify authenticity gives it an important role in the food indus-
try. (For more details on blockchain’s rippling retail impact on CPG companies, read our report, “How
Blockchain Can Help Retailers Fight Fraud, Boost Margins and Build Brands.”)
More companies are testing blockchain implementations. Microsoft recently announced Project Mani-
fest, a blockchain solution the company hopes will help distributers and retailers track goods with a
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radio frequency identification device (RFID). The solution is designed to ensure products and labor
policies comply with Microsoft standards.
Blockchain’s supporters see the technology as an ally in food safety and recall. The coffee industry is
testing a solution that benefits small farmers in developing countries and first-world coffee lovers.
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Walmart is running two blockchain pilots that track food from farm to store.
Smart contracts show off distributed ledger technology’s versatility throughout enterprises. An
important development brewing in advertising and promotions is the development of blockchain-based
contracts that offer transparency and an audit trail. MadHive is one of the newcomers in this arena. It
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runs a blockchain-powered platform that focuses on digital advertising networks.

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Key Recommendations
With the shift to digital and the hollowing of the center store, supply chains will require major restruc-
turing and alignment with shopping platforms. A key goal will be to rethink manufacturing and
warehousing to optimize brick-and-click as more sales move online.

• Develop supply chain management control towers that provide an understanding of how brick-
and-click channels are shifting, what brands are moving more quickly online, and where, from a
geographic and store level.

• Implement new supply chain management processes that rethink replenishment. Demand
signals originate from a wide range of sources. Many existing and emerging demand signals can be
collected and aggregated, enabling operations to respond more precisely to shopper demand.
Businesses need to ensure the supply chain can leverage all demand signals, including smart prod-
ucts, digital commerce, point of sale and social media.

• Develop provenance capabilities that address transparency and, where applicable, counter-
feiting and food safety and recall. We suggest businesses begin exploring blockchain as a
promising mechanism to address provenance and transparency.

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FOOTNOTES

1 “U.S. e-Commerce Poised to Net 5% of CPG Sales By 2018: Report,” Progressive Grocer, March 10, 2016, http://www.progres-
sivegrocer.com/industry-news-trends/national-supermarket-chains/us-e-commerce-poised-net-5-cpg-sales-2018-report.

2 “Grocery Is the Next Big Retail Sector Being Reshaped by Digital,” Food Marketing Institute, http://www.fmi.org/digital-shop-
per/.

3 George Anderson, “Walmart May Win the Store Pickup Battle But Not the War with Amazon,” Forbes, April 19, 2017, https://
www.forbes.com/sites/retailwire/2017/04/19/walmart-leverages-in-store-pickup-in-battle-with-amazon/#67e8811f4cc5.

4 Martin Lindstrom, “The End of Global Brands,” LinkedIn, Dec. 14, 2016, https://www.linkedin.com/pulse/end-global-brands-
martin-lindstrom.

5 “U.S. Baby Products Market Down $3 Billion and Online Sales Drop Five Percent from 2016,” TABS Analytics, April 26, 2017,
http://www.tabsanalytics.com/blog/topic/press-releases.

6 “2016 Transparency ROI Study,” Label Insight, 2016, https://www.labelinsight.com/Transparency-ROI-Study.

7 Michelle Toh, “Pepsico’s First Chief Design Officer: People Don’t Just Buy Products Anymore,” Fortune, March 20, 2017, http://
fortune.com/2017/03/20/pepsico-design-chief-mauro-porcini/.

8 Mark Hamstra, “Walmart CEO Cites Growing Importance of Private Label,” Supermarket News, March 14, 2017, http://www.
supermarketnews.com/walmart/walmart-ceo-cites-growing-importance-private-label.

9 Sarah Perez, “Amazon’s Private Label Brands Are Killing It Says a New Report,” Techcrunch, Nov. 3, 2016, https://techcrunch.
com/2016/11/03/amazons-private-label-brands-are-killing-it-says-new-report/.

10 Lauren Thomas, “Amazon Shares Get New $1,100 Price Target from Wall Street Analyst,” CNBC, April 10, 2017, http://www.cnbc.
com/2017/04/10/amazon-stock-upgraded-on-its-prime-program-growing-market-share.html.

11 Marc Lore, “Empowering Customers With More Ways to Save,” Walmart, http://news.walmart.com/2017/04/12/empower-
ing-customers-with-more-ways-to-save-introducing-pickup-discount.

12 “Consumer Goods Brands that Demonstrate Commitment to Sustainability Outperform those that Don’t,” Nielsen, Oct. 12,
2015, http://www.nielsen.com/us/en/press-room/2015/consumer-goods-brands-that-demonstrate-commitment-to-sustain-
ability-outperform.html.

13 “Study: Nearly Three-Fourths of Consumers Would Pay More for Products that Offer Complete Transparency,” Cision, Aug. 30,
2016, http://www.prnewswire.com/news-releases/study-nearly-three-fourths-of-consumers-would-pay-more-for-products-
that-offer-complete-transparency-300318901.html

14 Melissa Kvidahl, “GMA Q&A: What You Should Know About SmartLabel,” Supermarket News, Sept. 13, 2016, http://www.super-
marketnews.com/marketing/gma-qa-what-you-should-know-about-smartlabel.

15 Douglas Yu, “Mondolez Rolls Out SmartLabel App to Keep its Consumers Informed,” Bakery & Snacks, Feb. 17, 2017, http://www.
bakeryandsnacks.com/Manufacturers/Mondelez-rolls-out-SmartLabel-app-to-keep-its-consumers-informed.

16 Anya Khalamayzer, “Target’s New Chemical Policy Hits a Bullseye,” GreenBiz, Feb. 10, 2017, https://www.greenbiz.com/article/
targets-new-chemicals-policy-hits-bullseye.

17 “Unilever Announces New Ingredient Transparency Initiative for its Home and Personal Care Brands,” Unilever, July 2, 2017,
https://www.unilever.com/news/press-releases/2017/Unilever-announces-new-ingredient-transparency-initia-
tive-for-home-and-personal-care-brands.html.

18 Anya Khalamayzer, “Unilever Rises Above the Regs on Chemicals Transparency,” GreenBiz, March 6, 2017, https://www.green-
biz.com/article/unilever-rises-above-regs-chemicals-transparency.

CPG at the Tipping Point: How Brands Can Win in the New Routes to Market | 17
THE ROAD TO 2025

19 Chris Lange, “ELF Beauty Closes In On Secondary Offering,” 24/7 Wall St, March 31, 2017, http://247wallst.com/consum-
er-products/2017/03/31/elf-beauty-closes-in-on-secondary-offering/.

20 Elaine Low, “ELF Beauty CEO Amin on Social Cosmetics and the Ageless Beauty Boom,” Investor’s Business Daily, Dec. 29,
2016, http://www.investors.com/news/e-l-f-beauty-ceo-amin-on-social-cosmetics-and-the-ageless-beauty-boom/.

21 Mark Scott, “Dyson Is the Apple of Appliances (and Just as Secretive),” The New York Times, April 2, 2017, https://www.
nytimes.com/2017/04/02/technology/dyson-british-consumer-electronics-company.html.

22 Ibid.

23 Mark Chinn, “Six Ways to Tap into Your Customers for New Product Innovation,” Business 2 Community, Feb. 26, 2015, http://
www.business2community.com/business-innovation/six-ways-tap-customers-new-product-innovation-01168940#vwxkB-
p67YWzjlQjx.97.

24 “Rethinking the Value Chain,” The Consumer Goods Forum and Capgemini, 2015, http://www.futurevaluenetwork.com/media/
downloads/2015/09/FVN-2025-report.pdf.

25 Sridhar Ramaswamy, “How Micro-Moments Are Changing the Rules,” Think with Google, April 2015, https://www.thinkwithgoo-
gle.com/articles/how-micromoments-are-changing-rules.html.

26 Ingrid Lunden, “Twitter Is Phasing Out the Buy Button,” Tech Crunch, Jan. 17, 2017, https://techcrunch.com/2017/01/17/bye-
buy-on-twitter/.

27 Elyse Dupre, “Warby Parker Aims to Increase Visibility of Shopper Intent and Sales with New Instagram Functionality,” DMN, Nov.
6, 2016, http://www.dmnews.com/social-media/warby-parker-aims-to-increase-visibility-of-shopper-intent-and-sales-with-new-in-
stagram-functionality/article/570948/.

28 Kim S. Nash, “At Kroger, Technology Is Changing the Grocery Store Shopping Experience,” The Wall Street Journal, Feb. 20,
2017, https://www.wsj.com/articles/at-kroger-technology-is-changing-the-grocery-store-shopping-experience-1487646362.

29 Spencer Soper and Olivia Zaleski, “Inside Amazon’s Battle to Break Into the $800 Billion Grocery Market,” Bloomberg, March
20, 2017, https://www.bloomberg.com/news/features/2017-03-20/inside-amazon-s-battle-to-break-into-the-800-billion-gro-
cery-market.

30 Aliza Freud, “Amazon: CPG Friend or Foe?” Media Post, Jan. 9, 2017, https://www.mediapost.com/publications/article/292456/
amazon-cpg-friend-or-foe.html.

31 Ben Rosen, “Are You a Speed Shopper or Browser? New Target Stores to Accommodate Both,” The Christian Science Monitor,
March 21, 2017, http://www.csmonitor.com/Business/2017/0321/Are-you-a-speed-shopper-or-browser-New-Target-stores-to-
accommodate-both-video.

32 Alison Schiff, “Blockchain Is Bubbling Up as a Solution to the Supply Chain’s Transparency Woes,” Ad Exchanger, March 21,
2017, https://adexchanger.com/online-advertising/blockchain-bubbling-solution-supply-chains-transparency-woes/.

33 Luke Jones, “Microsoft Announces Project Manifesto Blockchain for Tracking Projects,” WinBuzzer, Jan. 26, 2017, https://
winbuzzer.com/2017/01/26/microsoft-announced-project-manifest-blockchain-tracking-products-xcxwbn/.

34 Erica Shaffer, “The Blockchain Gang,” Food Business News, Feb. 27, 2017, http://www.foodbusinessnews.net/articles/news_
home/Food_Safety_News/2017/02/The_blockchain_gang.aspx?ID=%7B01D9ABFC-FF0C-4430-A5C7-F19F9A3DEC95%7D.

35 Jeremy Epstein, “The Digital Advertising Strategy No One’s Told You About: Blockchain,” Venture Beat, April 9, 2017, https://
venturebeat.com/2017/04/09/the-digital-adverstising-strategy-no-ones-told-you-about-blockchain/.

18 | CPG at the Tipping Point: How Brands Can Win in the New Routes to Market
 THE ROAD TO 2025

ABOUT THE AUTHORS

Hari Natarajan is a Senior Leader with Cognizant Business

Consulting with more than 19 years of business and IT
management and consulting expertise. He specializes in
business transformation for the consumer packaged goods and
retail industries, with a focus on digital commerce, business
insights, sales and marketing strategy, trade promotions and
supply chain management. Hari is an expert in the application
of design thinking, persona-based design, the Question to
Action™ framework and user-centric design principles. Hari can
be reached at Hari.Natarajan@cognizant.com | LinkedIn: www.
Hari Natarajan
linkedin.com/in/hari-natarajan-542944/.
Senior Leader, Cognizant
Business Consulting

Upendra Kendurkar is a Senior Consultant with Cognizant

Business Consulting, aligned with the Retail and Consumer
Goods Practice. He has over 12 years of hands-on experience in
trade promotion, social media, mobile business, e-commerce,
sales transformation, procure-to-pay, marketing and loyalty,
while helping to create cohesive, value-added customer
experiences across multiple channels. Upendra holds an MBA
from SP Jain School of Global Management, Singapore, and a
computer engineering degree from DAVV University, Indore,
India. He can be reached at Upendra.Kendurkar@cognizant.
com | LinkedIn: www.linkedin.com/in/upendrakendurkar/.
Upendra Kendurkar
Senior Consultant, Cognizant
Business Consulting

ACKNOWLEDGMENTS

The authors would like to thank Keith Scovell for his immense con-
tributions to the creation of this white paper.

CPG at the Tipping Point: How Brands Can Win in the New Routes to Market | 19
ABOUT COGNIZANT BUSINESS CONSULTING
With over 5,500 consultants worldwide, Cognizant Business Consulting offers high-value digital business and IT consulting services that
improve business performance and operational productivity while lowering operational costs. Clients leverage our deep industry experience,
strategy and transformation capabilities, and analytical insights to help improve productivity, drive business transformation and increase
shareholder value across the enterprise. To learn more, please visit www.cognizant.com/consulting or email us at inquiry@cognizant.com.

ABOUT COGNIZANT
Cognizant (NASDAQ-100: CTSH) is one of the world’s leading professional services companies, transforming clients’ business, operating and
technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innova-
tive and efficient businesses. Headquartered in the U.S., Cognizant is ranked 205 on the Fortune 500 and is consistently listed among the
most admired companies in the world. Learn how Cognizant helps clients lead with digital at www.cognizant.com or follow us @Cognizant.

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