Insurgent brands to capture 35% of consumer goods market

There’s no question that insurgent brands are here to stay.

The barriers to entry and the cost of launching a new brand have never been lower.

But there is hope on the horizon for the large established consumer goods companies that have been battling them in the war for growth.

New research from Bain & Company, Grow like Insurgent Brands: How to put the Consumer back in Consumer Goodssuggests that insurgent brands – those with at least US$25 million in sales and growing at least ten times their category rate in the past five years – will continue to capture a significant share of growth in consumer products.

A prior Bain & Company study found that these brands accounted for less than 2 percent of the market share across the 45 categories that they have disrupted, but captured around 25 percent of the growth from 2012 to 2016.

Two years later, insurgent brands’ share of growth increased to around 30 percent of the growth from 2014-2018.

However, Bain & Company expects that their share will stabilize at 35 percent by 2025.

“The more we see insurgents gaining ground, the clearer their path to brand growth comes into focus,” said Brian McRoskey, co-author of the report and a partner in Bain & Company’s Consumer Goods practice.

“In some ways, they represent a return to the basics for brands: being close to consumers and creating unique offerings that meet consumer needs.

“At large companies, the combination of scale, cost pressures and bureaucracy have made it hard to maintain a single-minded focus on the consumer.”

Big companies can learn from insurgent brands

Bain & Company’s findings offer a double-dose of hope for these larger companies.

It means that industry growth prospects are more promising than many big companies may have believed – when a brand serves its consumers well, they buy.

It also means a blueprint for growth exists as insurgent brands provide continuing lessons to the broader industry in agile ways of working, asset-light business models, and purpose-driven consumer focus.

To compete, incumbents cannot continue running their businesses as they have for decades.

But they also cannot simply try to replicate the insurgent model for success.

Instead, large consumer goods companies need to create a hybrid model that maintains the economics of their existing brands while they develop new approaches that embed insurgent learnings.

That will mean focusing on four areas.

  1. Rediscover the consumer. Among the hallmarks of insurgents are their ability to authentically and purposefully serve an unmet consumer need and maintain a strong and consistent connection with those consumers. Some large consumer goods companies are starting to put the consumer back in the center.
  2. Rethink brand portfolio strategy. Winning incumbents take a holistic approach to brand portfolio strategy, balancing brands of different sizes in order to meet the future needs of their consumers.
  3. Build repeatable M&A capabilities. Increasingly, large consumer goods companies are turning to M&A to acquire insurgent brands. Acquisitions help incumbents create faster-growing portfolios that leverage scale and breadth of distribution to further grow the insurgent – potentially taking the insurgent brand into other categories or markets. As demonstrated by Bain’s long-term research into M&A performance, the best companies will develop repeatable capabilities for M&A success.
  4. Create nimble ways of working. Finally, incumbents need to change their ways of working to be faster, more agile and to accelerate capabilities for test-and-learn. And they need to do this across and throughout a billion-dollar corporation.

John Blasberg, a partner in Bain & Company’s Consumer Goods and the report’s co-author said: “Given the low barriers and low cost to build brands and bring products to market, insurgent brands are here to stay.

“There will continue to be insurgents looking to capture the growth by relentlessly upping the game.

“Incumbents that learn from these insurgents and respond by focusing on these four key areas can capture and create their own growth, creating the consumer products company of the future.

“The more that incumbents can learn from insurgents, the less they have to fear.”

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