Hero SKUs – Where are they?
Large food and beverage brands own the biggest SKUs
High share brands own more SKUs than low share brands and these on average are bigger (see this blog entry). Is this pattern consistent across category types? In other words, are certain categories more likely to boast really big SKUs than others? Such a pattern could stem from consumers seeking less variety or the relentless focus of very successful brands on specific products (think of the limited number of sizes of Nutella in chocolate spread or the reliance of Red Bull on one single can size for many years).
We merge brands into four category types: foods, beverages, household and personal care and compare the share of the category assortment owned by brands in different volume share tiers. This analysis is based on roughly 13,000 top ten brands across 20 countries and 87 categories. Again, we find a consistent pattern across categories: Larger brands get more sales from each of their SKUs. SKUs owned by brands in the 40 to 50% share tier are typically twice as successful as SKUs owned by brands in the 0 to 10% share tier.
However, hero SKUs are relatively more prevalent in food and beverage categories. For example, brands with a share of more than 40% in Food and Beverages command just 22% of the assortment in the categories they compete in, while brands of the same size in Personal and Household Care own more than 30% of the category’s assortment. In other words: the link between assortment share and market share is more pronounced for personal care than food brands. Some explanations that come to mind: Adding more variety to your assortment may be easier to achieve in food (e.g. adding another flavour to a chocolate assortment) which might motivate even small brands to pursue this route to growth. Food or beverage categories are also be more likely to boast multi-item offers (six-packs, family packs) which often focus on the most successful SKUs of large brands. If you have any other explanations we would love to hear (and explore) them.
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