Half of all brands face in-house competition
About 30% of families in New York only have one child1. Imagine that: no competition between you and your siblings, but with it, a loss of kinship.
FMCG is not as different as it seems. Category assortments consist of numerous brands from which shoppers choose their preferred articles. Some of these brands are owned by the same ‘parent’ (manufacturer). Building a brand portfolio entails both risks (supporting two brands requires more resources than supporting one brand) and opportunities (two brands may reach more buyers and may garner more sales than just one). But how frequent is such in-house competition?
Across more than 1,400 categories in 17 markets we find that:
- About 55% of all top ten brands in a category are ‘on their own’ i.e. no other brand in the top ten is from the same manufacturer
- Some categories are much more likely to have multiple brands from one manufacturer, such as beer (only 26% of all brands are on their own), washing powder (29%) and shampoo (31%)
- Brand portfolios are less common in chocolate spread (80% single-brand portfolios) and ketchup (76%)
Number one brands are more likely to be part of a portfolio, they tend to be part of bigger portfolios, and they are most likely to partner with the #2 brand in the category. Several reasons for this observation come to mind:
- In some instances, it may come down to shoppers trusting the abilities of the parent company
- In other categories, it may reflect a better negotiating position vis-à-vis retailers
- In others cases, it may simply be the consequence of a takeover
Either way, strong brands are less likely to compete on their own.