September 2, 2025 – Branding is essential for manufacturers and marketers of fast-moving consumer goods (FMCG). Companies strive to develop a brand that consumers recognize, respect, and want to purchase. Brands have additional benefits too. They contribute to and support financial value. The halo effects of brands extend into sub-brands and other markets.
Brand development has followed the trajectory of mass media. The market of brands incorporates brand messaging in packaging and across several aspects of media: advertising, sponsorships, and in-store promotions. However, mass media is declining, retail has become multi-channel, and consumer trust in companies is eroding. The pandemic and post-pandemic years forced retailing to evolve and changed consumer attitudes and behaviors.
That is why questions need to be asked about whether branding is relevant, valuable, and strong.
A Summary of Branding
A key reason for food product branding is to provide economies of scale in production, distribution, and media support to large companies. However, consumer trust in companies has eroded and has led to a drop in revenue. If brands exist mainly to benefit the consumer, then branding may be less powerful when prices are rising. It’s not enough to have brand awareness and a positive reputation, and ad targeting may not carry the right message. Brands need to show how they can make a difference in the eyes of consumers.
Drivers of Branding
Large, industrial food and beverage manufacturers were the leaders in developing brands for FMCG. Branding provided them with economies of scale in many areas – production, broad distribution, and effective marketing. Today, brands have the biggest presence in the large, affluent US market and other affluent markets. Also, brands today are not necessarily big, they can span product levels, and they may not be big in every market. Brands are considered to be business assets that boost profit margins and ward off competition. However, their value to the company may differ from how consumers view the brand. It’s important for brands to have function and value while supporting consumer sentiment. The relationship between brands and trust is threatened because consumers have less trust in authorities than they did before the COVID-19 pandemic. Consumers may demonstrate their trust socially or politically, but they also show trust in their food shopping. Companies think consumers have more trust than they really do. When consumers lose trust, companies lose revenue.
Methods Differ for Valuing Brands
Food and beverage companies may look at brands as assets that have monetary value. That is why a drop in the effectiveness of branding can cause a loss in value. Companies differ in the methods they use to value brands. Brands can have indefinite value or defined value over a set lifespan. Regardless of the method, this requires the use of estimates and best judgement. The calculated brand valuation is lower than FCMG company revenues. In contrast, brand equity cannot be measured because it is impacted by consumer attitudes.
Brands May Not Be Necessary
It is possible that brands have value only when prices are rising quickly. Consumers do not rely on brands when making purchases, they have lost trust in brands because of shrinkflation, and they view brands and private labels as being equal in quality. Private labels are growing fast in the US and in Europe. This shows that retailers have joined the branding game for food and beverage.
What’s Next for Branding in FCMG?
FCMG companies and their investors find brands to be meaningful. Brands are outward facing toward the consumer and inward facing to reflect the actions, policies, and strengths of their corporate owner. The value of a brand in both brand and profit margin depends on consumer buying behavior. It is unlikely that brands will disappear in the short-term, especially with many brands having great longevity. But in most markets, the value of brands is under attack.
In the past, FCMG companies overcame challenges by increasing noise around the brand using in-store promotions, promotional packaging and pricing, sponsorships, and events. These strategies work only in a stable retail environment and if product messaging is credible and accurate. Things are different today with fragmented media, a lot of noise, and product purchases across multiple retail outlets. Brands may be threatened by third-party manufacturing companies and marketers who can reverse-engineer and copy branded products. That is why brands need to work harder to retain customers.
It is time to rediscover branding. AI is helping FCMGs to pinpoint outreach to targeted customers with relevant and appropriate messaging. The wrong messaging will lead to the wrong results. Messaging needs to be more personal and offer extra value to the consumer rather than just being louder. It doesn’t always happen now and that’s why brands are more vulnerable. FCMGs can set sales and profitability goals for a brand but consumers may not be willing to pay extra for brands. Food and beverage brands must deliver value at an attractive price and quality that is comparable to other products on the market. They also need to present other reasons to purchase, for example, fashion, social causes, or support of local businesses.
This article is based on Innova’s The Business of Branding – Global report. This report is available to purchase or with an Innova Reports subscription. Reach out to find out more