Macro Environment

📉 The Economic Forces You Can’t Ignore

If distribution feels harder and expensive, it’s not in your head. The data backs it up. We are looking at 3 converging forces squeezing the CPG P&L right now:

1. The distribution bottleneck

Getting on the shelf is expensive; staying there is harder. Retailers are exerting massive pricing pressure while distribution costs rise, meaning the cost per incremental sale is climbing. 

Even when demand exists, supply chain delays and freight inflation are causing slower restock cycles.

• The reality: You aren't just paying for the product; you're paying a premium just to get it to the customer.

2. Trade spend is eating revenue

Trade promotions are traditionally the second-largest expense for CPG brands (after COGS), but this line item might be growing faster than revenue.

• The leak: Retailers are demanding deeper deals, but brands often can't distinguish between incremental lift and subsidizing future demand.

• The result: Founders are rightfully panicking that promotional pricing is eroding long-term profitability rather than building loyalty.

3. The tariff sting is real

Tariffs are no longer a "future threat." They are hitting the P&L now. Emerging tariff regimes on imports from China, Mexico, and Canada have raised costs for raw materials and packaging.

• The pass-through: Early indicators show tariffs have begun to pass through into consumer prices, with core goods seeing prices rise relative to pre-2025 trends.

• The fallout: Campbell’s recently warned that tariff-related price hikes are already hurting soup sales, a clear signal that price sensitivity is impacting demand. Tariff uncertainty is now a top consumer concern, second only to inflation itself.

🧠 Takeaway: If you treat trade spend as a "fixed cost" rather than an investment channel that needs rigorous auditing, it will become a silent profitability leak. In a tariff-heavy world, brands that can’t adapt their pricing strategies to these new cost structures will be left behind.

CPG Roast: The Night We Stop Taking Ourselves Seriously

Let's be honest: between supply chain nightmares and tariff talks, this industry takes itself way too seriously. We think it’s time for a break.

On January 12th, 2026, Brevo is taking over Caveat in Manhattan for the CPG Roast. They’ve lined up professional comedians to roast some of the biggest names and brands in the game live.

Come grab a drink, network with your fellow operators who have a sense of humor, and watch your peers (and maybe yourself) get roasted. It’s a high-energy event, exactly the release valve you need to kick off Q1 strong.

🗓️ When: January 12th, 2026 7:00-9:00 PM EDT
🔗 Save your spot: CPG Roast Registration

Trends

📊 The Rules of Engagement Have Changed

For years, CPG brands could rely on inertia loyalty, the idea that once a customer bought your product, they’d keep buying it out of habit. That dynamic is fading.

The 2025 consumer isn't necessarily hostile, but they are incredibly pragmatic. Here is how their behavior is shifting the playing field:

1. Price sensitivity is the new baseline

Brand storytelling matters, but it’s fighting an uphill battle against the wallet.

• The data: A recent analysis found that 46% of shoppers now cite price as the top factor in purchasing, and 33% will switch brands for a discount as small as 10%.

• The "dupe" shift: This shift is increasingly becoming about perceived value. Even higher-income shoppers are trading down to store brands and "dupes" because the quality gap has closed.

2. Loyalty has become fragile

"True Loyalty" (deep emotional commitment) hasn't disappeared, but it is shrinking. It has dropped to 29%, a significant reduction from 2024.

• The trend churn: We are seeing a rise in "Trend Loyalty." About 15% of consumers buy products simply because they are trending, and 29% move on once the buzz fades.

• The reality: You can't build a sustainable LTV on hype alone. If the product experience doesn't immediately justify the price, the customer is gone.

3. The gap between discovery and conversion

The path to purchase has split. Discovery is increasingly digital and entertainment-led, while conversion remains fragmented.

• The TikTok factor: U.S. spending on TikTok Shop grew ~52% year-over-year in late 2025, contributing to an $87 billion social commerce market.

• The disconnect: While discovery happens on the "For You" page, the actual purchase often still happens in a grocery aisle or on Amazon. Brands that treat these as separate worlds (with different pricing or messaging) are seeing conversion rates suffer.

🧠 Takeaway: In a market where people wait for a price drop before buying, consistency is your best defense. If your digital ad promises a specific benefit or price point, and the shelf (physical or digital) doesn't match it, you lose the sale.

Tactics

🛠️ 5 Operational Mistakes to Fix Before Q1

These are the specific operational leaks that are bleeding cash from CPG P&Ls right now. Here is how to plug them.

1. The acquisition addiction

A lot of founders fixate on ROAS and new customer acquisition while ignoring the second purchase rate.

This happens because they often use acquisition volume as a proxy for Product-Market Fit. 

But this masks poor product retention. If you pay $50 to acquire a customer who only spends $40 once, you are scaling a loss.

The fix: Switch to Cohort-Based LTV, stop celebrating Day 1 revenue, and track the 60-Day Payback Period. 

If a customer cohort hasn't paid back their CAC in gross margin dollars within 60 days, that channel is toxic. Turn it off or fix the retention loop before spending another dollar.

2. Scaling false positives

It’s a big mistake assuming you have PMF because your first 500 units sold out to friends, family, and early newsletter subs.

This is because early signals are often biased. Launching into mass retail based on "warm audience" data leads to costly missteps in inventory planning.

The fix: The "1,000 Stranger" rule. Do not scale production until you have sold 1,000 units to cold traffic. That’s the only truth serum.

3. The siloed channel strategy

DTC and retail are not separate businesses with separate goals (e.g., you can’t push a high-price bundle on social that isn't available in-store).

This keeps happening because teams are often divided by channel. But fragmented experiences lead to lost conversions. 

The fix: Unified Price-Pack Architecture (PPA).

• DTC: Use for high-AOV stock-up (e.g., "The Monthly Bundle").

• Retail: Use for trial (e.g., "The Single Can").

• The Rule: Ensure your ad creative explicitly matches the channel where the conversion happens. If you are driving to Target, show the 4-pack, not the web-exclusive 24-pack.

4. Treating trade spend as rent

The mistake is setting a trade budget (promos, slotting fees) because "that's what we did last year," without measuring incremental lift.

Trade spend is often the second-largest P&L item, yet it’s frequently misaligned with actual channel strategy. Brands view it as a fixed tax rather than an investment.

The fix: Audit every promo from 2025. Did the "Buy 2 Get 1" drive new users, or did it just subsidize loyalists who would have bought anyway? If the data is murky, cut the spend. Make the retailer earn the budget.

5. Marketing ingredients instead of occasions

Don’t make ads that scream "5g Sugar!" or "Keto Friendly." This is brands obsessing over features. But in CPG, features are commodities. Almost every other brand has them or will copy them.

The fix: Pivot your creative to the usage occasion. 

• Don't sell "Caffeine Water"; sell "The 2 PM Slump Killer." 

• Don't sell "High Protein Cereal"; sell "The 3 PM Hunger Crusher." 

Anchor the product to a specific habit in the customer's day, not just a label on the back of the package.

🧠 Takeaway: You cannot fix all five of these at once. Pick one to tackle first and then move on to the list. (Recommendation: Start with #4, it’s the fastest way to free up cash flow without launching a new product).