Although new initiatives have been launched and progress made in recent years, the CPG industry is still a laggard when it comes to promoting diversity and inclusion.
This shouldn’t be the case, particularly since FMCG products are bought and used by consumers regardless of age, gender and ethnicity. The CPG business is the most democratic industry that exists in this regard. We’re all customers.
Additionally, diversity and inclusion result in innovation. The more people from diverse backgrounds that are brought into the CPG business, the more innovation we’ll see. This includes both individuals working for major companies and brands, as well as founders from diverse backgrounds who start their own companies and brands.
One of the most promising developments in the CPG industry over the last decade has been the increasing number of women, traditionally non-represented minorities and members of the LGBT community who entered the business as founders of start-up brands. Many of these founders have brought unique and popular new brands and products into the industry because of who they are. This is the business case for diversity and inclusion.
Additionally, we’ve seen some movement at major CPG companies to elevate women and minorities into more senior executive positions, although the industry still remains a boys’ club at the top, which has resulted in new approaches like a greater emphasis on better-for-you brands, as well as increased outreach to under-represented and under-served people and communities.
I think it’s fair, though, to say most of the diversity and inclusion efforts to date by big companies, investors (in early-stage and emerging brands) and grocery retailers (CPG’s sister industry) have been mostly around the edges. The pandemic and the current period of high food inflation have also blunted these efforts.
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The future of America is a country of older and diverse people. These, along with women, are the current and future CPG consumer. They demand different products and different approaches. The industry and those around it need to respond to bolder initiatives to increase diversity and inclusion, which will, in turn, increase innovation.
I think 2023 is the perfect time for major CPG companies, investors and retailers to make a greater commitment to increasing diversity and inclusion in the industry. Not only is it the right thing to do, it’s the smart thing to do. The industry needs a fresh, new burst of innovation and there’s no better place to start than with bold initiatives designed to encourage more women and traditionally under-represented minorities to not only come into the CPG business but to start their own companies as well.
Here’s what I’d like to see happen starting in 2023:
Big CPG and investments in start-ups
The CEOs of each of the top CPG companies should double the amount of money they have budgeted for diversity and inclusion programmes. This includes internal training and education efforts designed to promote women and minorities, as well as college scholarships for students interested in getting into the CPG industry. Big companies need to hang out the “diversity welcome” sign.
Additionally, major CPG companies should redouble their efforts to invest in early-stage and emerging CPG brands. Corporate venture-capital funds created years ago are lacking, largely a result of the pandemic and the food inflation period we’ve been in. These funds need to be resuscitated, with a focus on making companies founded by traditionally under-represented entrepreneurs a top priority. CPG companies founded by women, as well as by Black, Latino and Asian entrepreneurs, for example, struggle not only to get funding from traditional venture-capital firms but, in many cases, they can’t even get their attention.
I’d also like to see major CPG companies look into creating loan funds for early-stage and emerging CPG companies started by traditionally under-represented founders. These loans could be very low-interest and have long-term payback schedules. In some cases, the loan could even be forgiven. Loans of as little as $25,000-100,000 would make a huge difference to numerous women and minority-founded CPG companies.
Venture capital should prioritise diversity
One of the biggest changes in the CPG industry over the last two decades has been the movement of venture capital into the industry, with many of the funds coming from the tech sector.
Some CPG venture-capital firms make an effort to reach out to women and minority founders – or at least listen to them if they do the reaching out – but much more can (and should) be done by these investors.
Venture capital is now institutionalised in the CPG industry and I’d like to see these firms and investors take a more responsible role and put a greater priority on diversity and inclusion when it comes to traditionally under-represented founders. There are numerous qualitative reasons they should do this but they should do it most importantly because they are in a position to do so. Moreover, diversity most often equals innovation and there’s opportunity in these diverse founders and the companies they create.
I’d also like to see venture capitalists figure out on their own how they can help encourage more women, minorities and LGBT to start CPG companies. The first step on this road is to make them feel wanted and needed. Encouragement across the board, including funding.
The role of retailers
A number of grocery retailers have realised my argument that diversity and inclusion equals innovation in the CPG business and have started programmes geared to companies and brands founded by traditionally under-represented founders.
Kroger, Target and Albertsons are three big grocery retailers at the forefront of diversity and inclusion for CPG brands of all sizes.
To date, the primary focus of these retailer programmes has been the creation of accelerators, pitch contests and giving points to brands in terms of shelf authorisation based on ownership status. These are great advancements and have helped numerous brands.
Now is the time for these retailers to expand these programmes – and for grocers that don’t have such programmes to start them. We’re in a flush period where new CPG companies, many of which are very innovative and differentiated, are being started by diverse founders. These entrepreneurs could use not only programmes but financial assistance in the form of investments and loans from retailers big and small.
Innovation is the lifeblood of retail as it is the lifeblood of the CPG business and some of the most interesting and innovative brands today are being created by traditionally under-represented founders. They need more help and retailers are in the perfect position to offer that help. It’s a win for retailers, as well as companies.
When it comes to the CPG industry, the basics, starting with the product, still matter but diversity also matters because it results in innovation. It’s also good business because, when people see people who look like them, as well as products and brands that appeal to them, they appreciate it. That can generate brand loyalty.
On the heels of the pandemic and two-plus years of wild food price increases, the CPG industry needs renewal; a new commitment to innovation. It also needs to do more of the right thing. A major focus on diversity and inclusion across the board can play a huge role in this renewal and new era of innovation.
It’s time to get to work.
Just Food columnist Victor Martino is a California-based strategic marketing and business development consultant, analyst, entrepreneur and writer, specialising in the US food and grocery industry. He is available for consultation at: firstname.lastname@example.org and https://twitter.com/VictorMartino01. You can read more of his columns for Just Food here.