The data is brutal. Between 70% and 85% of new CPG products fail within their first two years on retail shelves. Even among established food companies, Nielsen research reveals that only 15% of new product launches remain commercially viable after 24 months.
But here’s what the statistics don’t tell you: the difference between the top 20 food companies and the bottom 20,000 isn’t just capital or distribution power. It’s strategic clarity.
Research from the University of Toronto found that while top food companies experience a 24% failure rate, smaller competitors face an 88% failure rate. The key differentiator? The apparent lack of research and strategic marketing execution among smaller brands.
After working with dozens of food and beverage brands from heritage meat companies to breakthrough FMB innovators. I’ve identified five strategic gaps that consistently separate retail winners from the brands that wither on the shelf.
The Hidden Cost of Retail Rejection
Before we dive into the gaps, let’s acknowledge what’s at stake. When a food brand fails in retail, the consequences cascade:
- Wasted manufacturing capacity and ingredient commitments
- Damaged retailer relationships that take years to rebuild
- Eroded investor confidence and difficulty securing future funding
- Demoralized teams who lose faith in the brand’s potential
- Opportunity cost of 18-24 months spent pursuing the wrong strategy
For mid-market food brands with $5M-$50M in revenue, a single failed retail expansion can be existential. But here’s the counterintuitive truth: most retail failures aren’t caused by bad products. They’re caused by strategic blind spots that are entirely preventable.
Strategic Gap #1: Mistaking Distribution for Demand Generation
The symptom: Your sales team secures placement in 500 new doors. Three months later, velocity is anemic, retailers are threatening to delist you, and your cash is tied up in slow-moving inventory.
The reality: In 2025’s fragmented retail landscape, shelf space no longer equals sales. With 86% of CPG dollar sales now coming from omnichannel shoppers, and online CPG sales growing at nearly 5x the rate of in-store purchases, distribution without demand generation is a fast track to failure.
Nielsen analysis from 2013-2017 showed that while distribution points increased across major food categories, sales velocity plummeted. More doors didn’t mean more revenueit meant more places to fail.
What winning brands do differently:
They build demand beforeand duringdistribution expansion. This means:
- Deploying targeted consumer activation in markets 60-90 days before retail launch
- Creating pull-through demand via digital channels, influencer partnerships, and sampling programs
- Establishing velocity thresholds and walking away from underperforming doors before they destroy brand perception
- Leveraging retail media networks to drive awareness at the moment of purchase
- Measuring success by velocity per door, not total door count
The craft beer category offers cautionary tales of local brands that expanded geographies too quickly during the boom years, achieving massive distribution at huge expense, only to retreat months later when velocity couldn’t sustain shelf presence.
Bottom line: Distribution is necessary but insufficient. Demand generation must lead your retail strategy, not follow it.
Strategic Gap #2: The Product-Market Fit Illusion
The symptom: Your product tests well in focus groups and gets positive feedback from early adopters. But when it hits the broader retail market, growth stalls and repeat purchase rates disappoint.
The reality: Nielsen BASES research found that 80% of CPG innovations fail when they launch before they’re truly ready. The kicker? Innovations with strong product performance are 15x more likely to succeed long-term than those with poor performance.
The problem isn’t usually the product itselfit’s launching with incomplete product-market fit. In 2025’s market, “good enough” isn’t good enough. Consumers are more deliberate, value-conscious, and willing to switch brands than ever before. With 87% of shoppers now using an average of 3.9 cost-saving strategies, every purchase is scrutinized.
What winning brands do differently:
They validate product-market fit through velocity, not vanity metrics:
- Testing in constrained markets with intensive measurement before regional rollout
- Establishing clear velocity benchmarks (turns per store per week) before expansion
- Using early retail data to refine formulation, packaging, and positioning
- Building feedback loops between retail performance and product development
- Walking away from concepts that can’t achieve target velocity, even if sunk costs are high
A regional poultry brand we worked with had strong brand awareness but couldn’t break into premium retail channels. The issue wasn’t the productit was positioning. By repositioning from “better ingredients” to “culinary versatility for weeknight cooking,” we unlocked a new consumer segment and tripled velocity in test markets within six months.
Bottom line: Product-market fit is proven by consistent repurchase velocity, not initial trial rates or positive sentiment.
Strategic Gap #3: Category Blindness
The symptom: You’re focused on your direct competitors while missing the real threator opportunityfrom adjacent categories.
The reality: The 2025 consumer doesn’t think in category silos. They think in need states and occasions. When someone wants a quick protein snack, they’re choosing between jerky, protein bars, cheese snacks, and packaged meat products. If you’re only tracking your immediate category, you’re flying blind.
Private label now represents a massive competitive threat, with retailers planning to grow private label to 30% of market share by 2033. Some leading retailers like Aldi and Trader Joe’s already see private label comprising 69-80% of sales. In many categories, store brands aren’t “cheap alternatives” anymorethey’re premium competitors with better margins and permanent shelf placement.
Meanwhile, food service continues to blur with retail. With food delivery’s share of global food service spending rising from 9% in 2019 to 21% in 2024, the competitive set has exploded.
What winning brands do differently:
They compete on occasions, not categories:
- Mapping competitive sets by usage occasion, not product classification
- Tracking category migration patterns (e.g., consumers trading down from full-service restaurants to premium prepared foods)
- Identifying whitespace where consumer needs aren’t met by existing solutions
- Building brand positioning that transcends category boundaries
- Monitoring private label quality and pricing to stay ahead of retailer brand competition
A beverage client launching a flavored malt beverage (FMB) initially focused on competing with other FMBs. By expanding the competitive analysis to include ready-to-drink cocktails, hard seltzers, and craft beer, we identified a positioning gap around “sophisticated flavor without the craft beer complexity” that drove 40% YoY growth.
Bottom line: Your real competition is whoever solves the same consumer need state, regardless of aisle location.
Strategic Gap #4: The Omnichannel Execution Disconnect
The symptom: You have an e-commerce strategy and a retail strategy, but they operate in separate universes with different messaging, pricing, and promotional calendars.
The reality: Your consumers don’t care about your organizational structure. They’re browsing your products on Instagram, comparing prices on Amazon, reading reviews on your DTC site, and buying in-store at Whole Foodsoften in the same purchase journey.
With online CPG sales growing at 5x the rate of in-store sales and 86% of CPG dollar sales coming from omnichannel shoppers, the brands winning in 2025 have integrated channel strategies, not parallel ones.
Here’s the trap: many brands treat e-commerce as a “new channel” to add on, rather than recognizing that all channels now influence each other. A negative review on Amazon affects in-store sales. A stockout at Target drives customers to your DTC siteor to a competitor. Pricing gaps between channels create consumer confusion and margin erosion.
What winning brands do differently:
They orchestrate channels as an ecosystem:
- Aligning promotional calendars across all channels to maximize impact
- Creating channel-specific value propositions while maintaining brand consistency
- Using digital channels for education and retail channels for conversion
- Leveraging retail media networks to reach consumers in-store and online
- Building unified data infrastructure that tracks consumer journeys across touchpoints
- Optimizing for “search to shelf”ensuring digital discovery leads to in-store purchase
One prepared foods brand we advised was hemorrhaging money on separate promotional strategies per channel. By coordinating retail promotions with digital awareness campaigns and ensuring Amazon ads aligned with in-store displays, we improved promotional ROI by 60% while reducing overall marketing spend by 15%.
Bottom line: In 2025, omnichannel isn’t a strategyit’s table stakes. The question is whether you’re orchestrating or just juggling.
Strategic Gap #5: Treating Marketing as an Expense, Not a Revenue Driver
The symptom: Marketing is the first budget cut when growth slows. Marketing plans are built around available budget, not required outcomes. Marketing reports on activities and impressions, not revenue and velocity.
The reality: This is the most insidious gap because it’s both a cause and consequence of failure. Brands that view marketing as discretionary spending rather than revenue infrastructure consistently underperform.
CircleUp analysis revealed that the biggest CPG companies invest an average of 6x more in marketing and advertising than in R&D, with R&D accounting for just ~2% of revenue. Yet when growth slows, marketing is often the first budget slashedcreating a death spiral of declining awareness, lower velocity, and lost shelf space.
The University of Toronto research showed that the “apparent lack of strategic marketing” was the key differentiator between top-performing food companies and those with 88% failure rates. It’s not about spending moreit’s about spending strategically.
What winning brands do differently:
They build marketing as revenue infrastructure:
- Establishing velocity targets and working backward to required marketing investment
- Testing marketing tactics in controlled markets with rigorous measurement
- Building owned audiences through content, email, and community that aren’t dependent on paid media
- Creating measurement frameworks that connect marketing spend directly to retail velocity and revenue
- Investing in consumer education that builds category demand, not just brand preference
- Treating every marketing dollar as working capital that must generate ROI
One organic meat brand faced a chicken-and-egg problem: retailers wanted to see stronger velocity before expanding placement, but velocity was limited by insufficient consumer awareness. By reallocating budget from trade promotion to targeted digital campaigns in existing markets, we increased velocity by 45%which gave retailers confidence to expand distribution.
Bottom line: Marketing isn’t a cost centerit’s the engine that turns shelf space into sales. Fund it accordingly.
The Path Forward: From Diagnosis to Strategy
If you recognized your brand in two or more of these gaps, you’re not alone. Most mid-market food and beverage brands struggle with at least three of these challenges simultaneously. The good news? These gaps are fixable with the right strategic approach.
Here’s what successful turnarounds have in common:
1. Brutal honesty about current state
Winning brands don’t sugarcoat velocity data or blame external factors. They face reality, acknowledge what’s not working, and make hard decisions about SKU rationalization and market focus.
2. Strategic focus over opportunistic expansion
Instead of chasing every potential door or channel, they identify the specific retailers, geographies, and consumer segments where they can winand they dominate those first.
3. Integrated planning across functions
Marketing, sales, operations, and finance work from a single strategic playbook with shared objectives and accountability for velocity, not just revenue.
4. Disciplined measurement and iteration
They establish clear success metrics, measure religiously, and adjust quickly based on data. Failing fast in test markets is infinitely cheaper than failing slowly at scale.
5. Investment in strategic capabilities
Whether through internal hires or external partners, they ensure they have expertise in demand generation, category strategy, omnichannel execution, and performance marketing.
The 2025 Reality: Adapt or Get Delisted
The retail environment has fundamentally changed. Private label growth, omnichannel consumer behavior, value-consciousness, and retailer consolidation have created a far more challenging landscape than even five years ago.
The brands that will survive and thrive in this environment aren’t necessarily the ones with the biggest budgets or the most doors. They’re the brands that close these five strategic gaps before their competitors do.
Every month you operate with these blind spots is a month of wasted marketing spend, underperforming retail placement, and eroding retailer confidence. The question isn’t whether you have these gaps most brands do. The question is whether you’ll address them before they become existential.
Because in 2025’s retail environment, the market doesn’t wait for brands to figure it out. It simply moves on to the next one.
Ready to close the strategic gaps holding your brand back?
YVenture Strategy works with food and beverage brands to turn retail challenges into category leadership. From demand generation frameworks to omnichannel execution, we build the strategic infrastructure that separates retail winners from the 85% that fail.
Let’s talk about your brand’s specific challenges and the strategic roadmap to sustainable retail growth.ut for a growth assessment. Yventure helps emerging brands design channel strategies that unlock scale while preserving identity.
