Shifting diets, increased competition and economic challenges mean big business for CPG liquidators

The onslaught of tariffs and rising operational costs also don’t help; now grocery brands have to find ways to move products and generate cash flow. According to executives at liquidation platforms like Sotira and Martie, in recent months, they’ve been receiving more premium products than usual. They also believe factors like shifting diets, high grocery prices, and increased competition in saturated categories like energy drinks and better-for-you beverages are prompting brands to sell off excess products long before their sell-by dates.

Earlier this year, VC-backed software company Sotira began seeing an influx in shelf-stable food and beverage products coming in. The company, which officially launched in 2023 and raised a $2 million pre-seed round in February, discreetly offloads suppliers’ excess inventory and helps connect them with vetted buyers.

Amrita Bhasin, co-founder and CEO of Sotira, told Modern Retail that around three or four months ago she began noticing “a big increase in your typical junk food brands” coming to the platform. Bhasin declined to name specific brands, but said they are from the big snack conglomerates “that have raised their prices in the last few years.”

Bhasin believes that Sotira has seen an uptick in this type of inventory for a few reasons: One, big CPG companies have raised their prices so much, leading price-conscious customers to buy fewer snacks. “A bag of chips is now $7 or $8, when it was about half of that in 2021,” she said. But Bhasin also believes it may be due to increased GLP-1 drug usage, which impacts people’s appetites. “We’re also seeing a 50% year-over-year increase on chips and cookies from junk food brands,” Bhasin said. That includes better-for-you options like low-calorie or gluten-free variations.

While many brands are marking down these products on grocery shelves, Bhasin said a lot more of the excess inventory is funneling down to the secondary market. “And it’s coming through at good prices, which is really great for my business because this stuff continues to sell.” The retail buyers on Sotira tend to be from rural and regional retailers, many of which are offline liquidators and discount stores.

Bhasin also said she’s seeing a lot of energy drinks right now. The amount of inventory Sotira is receiving in the energy drinks and caffeinated beverages category is up 75% year-over-year.

“We’re seeing energy drinks right now, specifically athlete and celebrity beverages,” Bhasin said, which began last summer and has ramped up since. Many of these premium brands, she explained, are prime examples of products that went viral on social media and over-produced stock to expand in retail. 

“Then, all of a sudden, the TikTok hype went away, and now there’s a ton sitting in the warehouse,” Bhasin said. She also noted many of the products tend to be high in sugar or caffeine, which Bhasin suspects are being impacted by changing dietary preferences and the dawn of GLP-1 medication.

Bhasin said the secondary market is a win-win for platforms like Sotira and the brands offloading products, who would otherwise have to pay to dispose of them. “We are experiencing very strong growth off of a small team, which is always great from a VC perspective,” Bhasin said.

Online discount grocery startup Martie, which sells overstock products from premium CPG brands, is seeing a similar trend. “It’s been ramping up specifically in the last six months,” said Martie co-founder Louise Fritjofsson.

“We see a lot of inventory with more than a year until their best-before date,” Fritjofsson said. “In today’s market, brands are planning ahead.”

Since launching with shelf-stable food, Martie has expanded into categories like beauty and skin care, home goods, household, and pet. The range of brands has also expanded to include more premium names, Fritjofsson said, such as Brightland, Momofuku, Osea and Goop.

Among emerging CPG specifically, Fritjofsson said, this year, there is a seemingly infinite amount of inventory offered to Martie. “Brands are being squeezed on cash flow at this point and need to generate revenue sooner, so that’s something we’re seeing more of now,” she said.

For example, three years ago, brands were more comfortable sitting on their inventory until their sell-by dates approached. “Now they’re offering us products that have 1.5 years of shelf life,” Fritjofsson said. She added that more food and beverage startups are thinking ahead about product offloading and building the process into their models to ensure healthy cash flow.

Given that many of these brands are on the higher end, price-sensitive customers are looking for deals to try them. “Fifty-five percent of our users actually come to Martie specifically to discover new products,” Fritjofsson said. “Our brands and vendor partners are noticing this, as well.” It also helps that brands have become more open to selling in the off-price or surplus channels.

Last year, Martie grew 300% year-on-year in terms of GMV. “But with this market and our position, we can go a lot faster,” Fritjofsson said. “So we are scaling up our warehouse and our operations team.” 

Similar to Sotira, Fritjoffson said Martie is receiving more beverage inventory, specifically healthy alternatives like non-alcoholic drinks and sparkling water. “There is a lot of competition in beverage, and now we’re starting to see a ton of inventory being liquidated in that category,” Fritjofsson said. This is due to overproduction and an overestimation of how many brands can succeed. “There have been a few acquisitions but the category is cooling down,” she said.

With the growing interest from brands that want to work with Martie, Fritjofsson said the company is considering expanding the selections. “We are sticking within our categories for a couple of months, but we have bigger plans for more categories coming soon,” Fritjofsson said.

At Sotira, Bhasin said there is opportunity to build out capabilities for more product categories. One example is apparel, which the company is experimenting with as plus-size inventory infiltrates the platform. Bhasin said, with retailers pulling back on these lines due in part to GLP-1-related weight loss, many are offloading deadstock. 

Overall, Bhasin said there are many ongoing factors that are contributing to brands rushing to offload overstock inventory. “My suspicion is that it’s the current economy and the tariff situation,” she said, along with grocery inflation leading people to shop carefully while indulging in small purchases like snacks.