The Middle Is Collapsing. Most Manufacturers Are Still Pretending It Is Not.
- Julio Hernandez
- 2 days ago
- 2 min read
Updated: 23 hours ago
Mainstream CPG is being hollowed out from both ends simultaneously. The go-to-market strategy built for the middle no longer works. Consumer goods consulting practices and brand teams alike need a clearer answer than promotion.
For three decades, mainstream CPG was the engine. Products priced between value and premium, broad appeal, predictable volume, consistent margin. The middle was not just a strategy. It was the entire business model. And that model is now under siege from both sides at once.
The Floor Drops: Private Label Goes Permanent
The bottom pressure is no longer cyclical. Inflation drove shoppers to store brands starting in 2022, but what happened next was not a reversion. They tried private label, liked it, and stayed. For any CPG consulting practice advising on portfolio strategy in the U.S., this is the single most consequential structural shift of the decade.
Walmart, Kroger, Costco, ALDI, and Lidl are building brand portfolios that compete directly with the manufacturers they carry. Since 2021, private label unit sales rose 2.3% while national brand units fell 6.8%. That is a structural share transfer, not a dip.
The Ceiling Rises: Challengers Redefine Premium
From above, a different kind of pressure. According to McKinsey, disruptor brands in bath and body, performance nutrition, and shaving and grooming now contribute 50% or more of total category growth. In pest control, two brands, Zevo and STEM, account for roughly 70% of growth and a 20-point share gain.
Fairlife, Alani Nutrition, Liquid Death, and Rao's are no longer emerging. They are setting the pace. Meanwhile, PepsiCo, Kraft Heinz, General Mills, Conagra, and Campbell's defend mainstream SKUs with promotional tools that are losing effectiveness by the quarter. The same pressure is reshaping Hispanic consumer CPG trends, where challenger brands with cultural relevance are outgrowing legacy players in some of the fastest-growing U.S. segments.
Who Is Living This Right Now
The pressure is category-agnostic. Mondelez, Kellanova, Nestle, and Hershey carry heavy mainstream exposure in snacking and dairy. Colgate-Palmolive and Procter & Gamble face the same compression in personal care. For LATAM brands entering the U.S. market, the implication is direct: the mainstream middle is the highest-risk entry position available today.
Who Is Living This Right Now
The pressure is category-agnostic. Mondelez, Kellanova, Nestle, and Hershey carry heavy mainstream exposure in snacking and dairy. Colgate-Palmolive and Procter & Gamble face the same compression in personal care. For LATAM brands entering the U.S. market, the implication is direct: the mainstream middle is the highest-risk entry position available today.
The Response Is Not Defense
The instinct is to promote harder, cut price, or extend the SKU line. All three protect the metric without fixing the problem. A real CPG brand challenger strategy requires naming which positions can be rebuilt at premium, which can run as cash engines with minimal reinvestment, and which should be exited before private label forces the decision.
Unilever is making that call. Nestle is doing it through its portfolio reset. Small brands working with CPG growth consulting partners rather than large legacy firms are moving faster precisely because they carry less to defend.