NIELSEN | If you can’t see it, it must not be there, right? In the fast-moving consumer goods (FMCG) market, this couldn’t be farther from the truth. That’s because every category has a certain concentration of brands that aren’t top of mind for many, but they have the ability to shift the overall landscape if conditions are right. While these “invisible” brands aren’t necessarily a threat to larger brands by themselves, they can start to cause a stir when viewed as a group.
For example, let’s look at the carbonated soft drink category. In aggregate, the category generates more than $108 billion in annual global value sales. And while the overwhelming majority of those sales come from multinational and private-label brands, invisible brands account for 13% of total value sales. In dollars, that amounts to $12 billion.
Individually, a single invisible brand won’t likely generate sales that affect the overall category. There are, however, more than 1,900 invisible brands competing in the carbonated soft drink category. And when we drill down further, we see that the top 200 invisible brands generate about 60% of sales ($7 billion). So while individual brands might not register on the radar of large, global players, they can pose a threat as a group. And those are the situations that multinationals need to be on the lookout for.
Luckily for multinationals, invisible brands in this category are somewhat limited in their geographic reach. For example, more than 85% of them generate the majority of their sales from just one country. They are growing and gaining share, however: Invisible brands have gained dollar share in 19 out of 31 countries over the past two years, and they are growing their market share in four out of the world’s five primary geographic regions.
While the premise of invisibility in the FMCG space is fairly clear, a premise doesn’t have any defined parameters. So how are invisible brands classified in the market, and are there different segments within a broad universe of invisible brands?
To better understand the impact of the general invisible brand universe in the carbonated soft drink category, we segmented by country based on price positioning and reach. We then created three groups within the invisible brand category:
- Margin Drivers: Brands that make up a smaller group of high-priced offerings that take value share with premium products
- Challengers: Brands that use mainstream price positioning and may compete with large, well-known, global brands.
- Group Hazards: A group of value brands that, when combined as a large group, pose a risk to others in the space.
Once we segmented the brands, we analyzed them to identify the key themes across the ones that are growing the most. Notably, among the 1,900 invisible brands in the carbonated soft drink category, 70 brands account for about 50% of sales from the group.
When we looked at the traits and characteristics that drive big sales among the leading invisible brands, we found that they fell into three primary groupings: premium/unique; authentic/nostalgia; and inexpensive/replica.
While invisible brands in the carbonated soft drink category comprise 13% of global sales, that percentage equates to $12 billion. It’s also worth noting that invisible brands are growing and gaining share in many countries, predominantly in Asia-Pacific and Europe.
Perhaps somewhat expected, pricing strategies for invisible brands are notably diverse, with only one-third falling into the value range. And many invisible brands are amplifying their positions with strategic marketing efforts aimed at significant commercial gains. As a result, established multinational and private-label brands should be mindful of successful invisible brands and classify them according to brand positioning in order to tailor their own efforts to stay competitive. Securing shelf space, making strategic acquisitions and developing product extensions are all viable ways to stay ahead of the curve and deliver on consumer needs in an increasingly variety-rich market.
In the short- and even medium-term, invisible brands do not pose an overwhelming threat to large, multinational brands in the category, largely because of their massive scale and reach. That said, however, global players are seeking growth just like other players, and to find it, they need to evolve and remain agile—just like the invisible competition.