The Problem with Growing Too Slowly

Although I caution against chasing¬†unicorns, this is not meant to validate any brand’s growth rate in the single digits YoY. This slow growth rate may be in line with the premium CPG sector overall, and it may be much faster than commodity brands in most categories, but it opens you up to major competitive assaults from late-moving brands.

How?

Well, there is too large a group of eyeballs focused on the next new thing in premium CPG, whether D2C or at retail. Big companies are studying emerging brands in scanner data every quarter, taking note of those with wildly high velocities. Ideas are being over-advertised and dispersed at the expense of competitive advantage for innovations lacking manufacturing-level insulation from copycats.

The odds are getting better than a late mover with better capital, a more disciplined team, and better connections will leapfrog a slow-growing brand with an otherwise scalable innovation. This burdens founders to market to professionalize and network quickly and carefully without over-promoting their existence to lazy copycat stakeholders.

Ultimately, if you’re growing in the single digits YoY for more than a year, and it wasn’t caused by supply disruption, then you need to step back and take a hard look at your team and your business. You need to get closer to Riding the Ramp or get on it. Or you may find yourself chased and beaten to scale. While the #2 position may work out if the overall sector was destined to become a multi-billion cash generator, look at Zico. Moving second in a segment is never destined to get very big anyways.

This is why it’s essential to study and assess your innovation’s long-term scalability as you put together your strategic plan early on. Done well, it can alert you to a sense of urgency that might otherwise not be clear. Sometimes, you do need to gun for the #1 position like Vita Coco did.

Dr. James Richardson

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