Consumer: Food CPG - Case Study

Industry: Food CPG - breakfast & snacks
Area: Pricing Power Clarity, Offering Design & List Price Optimization

In collaboration with EBITDA Catalyst, Revology's strategic partner for driving value creation for mid-market Private Equity.

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SITUATION

Highly successful growth CPG brand - breakfast & snacks

• Size: $250-500M revenue

• Geo scope: Americas

• Premium "good-for-you" category rapidly growing

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Concentrated Channel Strategy

• Primarily big box retail / grocery channel

• Somewhat horizontally diversified product lineup across multiple food and snack categories

• Club channel SKUs performing very well
  
  Inflation & Profitability Pressures

• Several key ingredients & commodities on accelerating inflation trend.

• Hero SKUs pressured under psychological price points

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  Competitive & Share Gain Opportunity

  • The largest competitor in the category was challenged with unprecedented brand perception and dilution challenges

  • Client had a unique potential opportunity, but any path to capitalize seemed risky / different from the status quo

ACTION

• Developed in-depth category value maps vs competitors

• Explored implications of price ladder coverage & white space for pricing upside potential

• Established core SKU economics
  SKU-level margins & impact on overall top- and bottom- line $.

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• Modeled Price Elasticity by Category
  Waterfall approach based on salient drivers of increase /decrease in price elasticity

• Refined elasticity / price action response frameworks by category / hero SKUs:

  +/- adjustments from category Px sensitivity benchmarks.
  Stress-tested financial model at various key driver assumptions.

  Partnered with client to collect competitive & channel intel

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  Recommended priority opportunities for price-pack & trade investment to win market share vs key competitor

  • Recommended top ideas for price-pack expansion (sku x channel)

  • Areas where trade investments could profitably expand market share

OBSTACLES

Cost and Competitive Pressures

• Specific cost hits from ingredient & commodity inflation, AND capitalizing on a key competitor’s challenges.

• Persuading retailers to partner in RGM actions.

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Profitability:

Strong revenue growth trajectory, challenges converting to EBITDA gains.

Psychological price points presented a daunting ceiling and retailer resistance point.

Pricing & Growth Path:

Lack of reliable price elasticity estimates. Retailer resistance to price increases. Had already taken an increase in previous years

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  OFFERING DESIGN:

  • Immature price pack architecture.

  • Unclear if top opportunities lie in further horizontal NPI or vertical pack development.

RESULTS

FINANCIAL IMPACT & STRATEGIC WINS

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• Implemented price optimization actions across core categories $13–17M / Year profit (VCM) gain.

• Developed framework to monitor results & iterate.

• Preparation for Phase 2 follow-up 6 months later.

• 11% GM$ improvement

• Key psychological price barriers overcome.

• Clarity on GTM direction for price pack /share take from key competitor.

  Clearly improved pricing know-how, cohesion, confidence & culture, client “learned to fish.

Developed repeatable financial & organizational win for a beloved growth brand building internal know-how and confidence.