How brands can continue to thrive

IT was only a decade ago when many industry analysts looked at two looming trends - the rise of retail consolidation and the proliferation of private labels - and issued dire warnings about the power of consumer packaged goods brands. However, their predictions turned out to be premature. Brands aggressively managed overhead costs, pursued dynamic growth in developing markets and gained scale, efficiency and entry to new markets through mergers and acquisitions (M&A). As a result, brands now report 10-year-high operating margins.

Of course, not all companies fared equally well. Nearly half of the highest-valued consumer goods companies in 1999 no longer rank in the top 20 by market capitalisation in 2015.

Also, between 2004 and 2014, the top three brands in major categories maintained top-three status in only 30 per cent of US categories we studied. Among the top three fresh bread brands in 2004, for example, only Pepperidge Farm remains. Even when top brands keep their status, they aren't always maintaining share. We found that across categories, more than 50 per cent of top three brands lost category share during the years 2004 to 2014.