Research Briefing: Poppi runs its first Super Bowl ad as CPG startups expand retail distribution
In this edition of the weekly research briefing, we examine how prebiotic soda brand Poppi ran its first Super Bowl ad amid increasing efforts by startups to expand distribution strategies, as seen in recent data from Modern Retail+ Research.
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CPG startups aim to reach a mass market audience
Breaking News: Prebiotic soda brand Poppi ran its first-ever Super Bowl ad this week, receiving mixed reactions. The brand promoted itself as a healthier alternative to traditional soda with its clean ingredients and prebiotics. Startups like Poppi are trying to reach a mass market audience as their retail distribution grows. More food and beverage startup products are lining the shelves at grocery stores in recent years, including premium grocers like Whole Foods and Erewhon, according to analysis by Modern Retail+ Research.
Questions: What retail distribution strategies are startup CPG brands using? When does direct-to-consumer remain the better choice?
Answers From Research:
Food and beverage startups have partnered with a large number of retailers, with food most popular in mass grocery and beverage most popular in premium grocery, according to analysis by Modern Retail+ Research. The trend points to growing headaches in shipping and fulfillment processes and shifts in shopping trends post-pandemic.
Beverage brand Swoon co-founder Jennifer Ross said her company has moved away from DTC primarily because of the rising costs of fulfillment. “Selling a beverage and shipping it is very expensive because of the weight,” Ross said. “It was hard to continue to make that [DTC] channel profitable while meeting consumer expectations and how quickly they want the product.”
Not all startups are eliminating DTC, however. Eleven out of the 14 food and beverage brands included in the study continue to sell some form of their most popular item on their own DTC website. All sell larger packs, such as a 12-pack case of 12 oz. cans, rather than the single-serve options available in stores. Selling in larger packs on a brand’s website offers better margins on each sale, which is important as CPG is a capital intensive game, and profitability is increasingly important to investors.
Want to learn more: Modern Retail’s annual CPG report analyzes startups’ retail distribution strategies.
READ MORE ABOUT STARTUPS’ DISTRIBUTION STRATEGIES
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