For emerging CPG brands, the journey from a home kitchen or a small-batch facility to the shelves of a national retailer is fraught with challenges. While many founders focus entirely on the quality of their product, the reality of the retail industry is that a great product is only half the battle. Success depends on your ability to navigate the complex relationship between the distributor, retailer and shoppers.
In my recent interview at ECRM’s Center Store Grocery Sessions, Shannon Peffley, founder of CPG Xperience, shared some advice for new CPG founders based on his more than 20 years of experience spanning distribution, brand ownership, and consulting.
To ensure your brand is built for longevity, here is a deep dive into the four mistakes Shannon Peffley warns every CPG founder to avoid during the buyer pitch process. You can watch our full interview in the video below!
Executive Summary: Key Pitching Mistakes for CPG Brands
- Lack of Retailer Research: Failing to visit stores and understand the specific demographic of a retailer.
- No Velocity Plan: Focusing only on getting on the shelf rather than how to get the product off the shelf.
- Pricing Errors: Engaging in a “race to the bottom” and failing to account for distributor margins and promotional costs.
- Lack of Transparency: Overpromising on manufacturing capacity or social media influence.
Mistake 1. Entering the Pitch Without ‘Boots on the Ground’ Research
The most common mistake Peffley identifies is a lack of retailer-specific knowledge. Many brands walk into meetings with a generic pitch deck that could apply to any retailer. To a buyer, this signals that the brand doesn’t understand that retailer’s specific customer base.
Peffley’s Insight: “I think one of the biggest mistakes that a lot of brands have is they don’t understand who the retailer actually is. They’ve never actually been in a store. They don’t understand the demographic that’s shopping there or why their product is actually a good fit there for the store.”
When a buyer asks, “Where do you see this on my shelf?” and the founder gives a generic answer like, “With the other snacks,” they’ve already lost the buyer’s confidence.
How to Fix It: Before the pitch, you must conduct physical or digital store audits. If you cannot visit a location, Peffley suggests leveraging your network. “Reach out to a friend. ‘Anybody live near a Central Market or an H-E-B that can go in for me and connect with that?’ See if it’s an older demographic or a younger demographic.”
Knowing whether a retailer uses specific promotional programs, such as front-end register placement or specialized end-caps, allows you to tailor your pitch to their specific operational style.
2. Focusing on Distribution Over Velocity
For many founders, the goal is getting that initial purchase order. However, Peffley argues that getting onto the shelf is actually the easy part. The real challenge is staying there.
The Mistake: Having a plan to get on the shelf, but no plan to get off the shelf and into shoppers’ baskets.
Peffley’s Insight: “I always tell brands, the easiest part is getting on the shelf. It’s hard, but it’s probably the easiest step. That’s when the real work begins. Tell me how you’re going to get off the shelf.”
Retailers are not interested in products that take up space without moving. If your product doesn’t have velocity (the speed at which product is sold), you will be discontinued within a few months.
How to Fix It: You must present a robust marketing and pull-through strategy. This includes:
- Social Media Proof: Demonstrating a following that will actively seek out the product. “If you can go into a Target and say, ‘Hey, we have two million followers and we’re going to post on here twice a week that we’re in Target,’ that’s going to be part of your marketing plan for them,” says Peffley.
- Local Focus: Start regional and “go deep before you go wide,” says Peffley. Ensure you have a loyal customer base in a specific area before trying to conquer the national market.
3. Racing to the Bottom on Pricing and Margins
Pricing is where most emerging brands break their business model. Many founders believe that being the cheapest option on the shelf is the best way to win a buyer’s heart. Peffley warns that this is a recipe for bankruptcy.
The Mistake: Not understanding the full cost of goods sold (COGS) and the various “takes” from distributors and retailers.
Peffley’s Insight: “The race to the bottom is not the answer. Build good quality margins from the get-go – don’t tell them, ‘Hey, once we scale, we’ll get our pricing down.’ It never happens because it’s just a snowball effect.”
The Pricing Reality Check: When setting your Suggested Retail Price (SRP), you must account for:
- Retailer Margin: Typically 35% to 55%.
- Distributor Takes: National distributors (like UNFI or KeHE) take a percentage of the sale.
- Promotional Spends: Free fills, slotting fees, and Manufacturer Charge Backs (MCBs).
If you price your product too low initially, you won’t have the funds needed to run the promotions that drive the velocity mentioned earlier. If you try to raise prices 90 days after launch, the retailer is more likely to drop you than accept the hike.
4. Overpromising and a Lack of Transparency
In the high-pressure environment of a buyer meeting, there is a temptation to say “yes” to every question. If a buyer asks if you can supply 5,000 stores by next month, a desperate founder might say yes without having the co-packer or supply chain in place.
The Mistake: Lying about capabilities, social media reach, or inventory levels.
Peffley’s Insight: “The second you lie, it’s going to come back. If you lie about your social media following, it’s easy to look up. If you lie about where you’re at, it’s easy to look up. Just be real and honest.”
Buyers are industry veterans. They can smell BS from a mile away. If you promise a national rollout and fail to deliver, you haven’t just lost a sale – you’ve burned a bridge with a category manager who may move to other retailers throughout their career.
How to Fix It: Be a straight shooter, and honest about what your capabilities are, and what they are not. If you aren’t ready for national rollout, propose a test. “Give us the top 100 stores. Let’s make sure that we are a good fit for you and this partnership works,” Peffley suggests. This builds trust and allows you to work out supply chain kinks on a manageable scale.
Final Checklist: Are You Ready for Your Retail Buyer Pitch?
Here is a final checklist based on Shannon Peffley’s expert advice:
- Have I visited the store? Do I know exactly which shelf and which aisle my product belongs in?
- Is my pricing sustainable? Does my SRP account for distributor margins and a 15-20% marketing/promo spend?
- Do I have a “Pull Plan”? How will I alert my followers that I am in this specific retailer?
- Am I being transparent? Can my current manufacturing partner actually handle the volume I am promising?
The Importance of Professional Coaching
Navigating the CPG landscape is difficult, but you don’t have to do it alone. As Peffley notes, many brands use services like CPG Xperience or platforms like ECRM and RangeMe to bridge the gap between a great idea and success at the shelf. “I love giving free information. I love connecting. I love helping founders down the right path,” Peffley says.
By avoiding these four common mistakes, you move your brand from the statistic category into the success story category.
Watch my full interview with Shannon Peffley below!