How end markets reveal winners and losers
Still, Tier 1 brands continue to dominate in certain end markets. One is pet food, where large brands with a premium offering (think General Mills) have been gaining share. Consumer health is another market where Tier 1 brands outshine smaller competitors.
Larger Tier 2 (middle-market or challenger) brands tend to outperform in food and beverage categories with higher SKU variation, like snacks. Middle-market alcohol brands also outperform the broader market as craft brands like White Claw, Twisted Tea and Tito’s gain popularity.
Smaller Tier 2 (micro) brands are better positioned to win in categories that are being reshaped by disruptive trends. An example of this is plant-based alternatives to dairy. Tier 2 brands also have the advantage where ecommerce accounts for a larger portion of sales, such as beauty and personal care, enabling smaller brands to reach more customers.
Finally, private label brands stand out in categories like shelf-stable food, where brand loyalty is lower and price sensitivity is higher.
Figure 3 shows how market share has changed for Tier 1, Tier 2 and private label brands across eight customer segments.