Tompkins Fulfillment Services

Welcome to the 11th edition of Q&A with Dr. Tompkins. Today, we have a special guest who will be answering a few great questions: Keith Goldsmith, SVP of Strategic Initiatives at MonarchFx.

Q & A with Jim Tompkins

What are the current trends in the Food and Beverage Industry?

For DTC, many think of grocery as a “final frontier” and a relative laggard, but now is considered among the fastest growth category. Nearly half of all Food CPG consumers now do some portion of their shopping or research online and forecasts of online grocery are expected to be 100b or 20% of the market by 2025. 

There are several key trends that are accelerating online grocery, but all have a basis in consumer shifts for increased convenience and selection, combined with digital marketplaces and new fulfillment systems enabling the buyer of getting what they want, where they want it, all without a price premium. Each of the major players in food will respond accordingly as noted below creating the need for a new ecosystem for fulfillment, MonarchFx.

For years, grocers and CPG’s have been trying to satisfy endless consumer demand for further individual taste and “niched” products through SKU proliferation with large grocers now carrying more than 40k items. The “endless” online aisle is the only sustainable solution with cross-brand, pooled inventories by region, a perfect fit for MonarchFx Food and Beverage. 

Millennials and Gen Z’s are much more health conscious, digitally adept, and less brand loyal to big brand CPG’s creating the rapid emergence of so called “challenger brands” for everything from baby care products to pet foods. The largest CPG’s total share has decreased from 33% to 31% in the last several years; that share directly transferred to over 10k new entrants whose share is now 19% from 17% or 145b in sales. 

The rapid growth of kitted and subscription products like meal kits built by individual order (like Blue Apron) are also in this category; expected to grow ten-fold by 2022, while grocery stores decline >1% annually. Equally opportunistic for hyper growth is the emergence of new marketplaces aggregating brands by specialty or category. Gluten Free, Kosher, opportunistic bulk purchased, regional tastes, are all good examples. 

How can large CPG Food companies engage with their consumers?

Large CPG’s without exception realize the need to create direct consumer engagement or risk a long-term brand dilution through smaller nimble brands, white label knock-off’s, and the like. Unlike specialty brands, large CPG’s are relatively new to digital save for market placement and they have recently named new teams in charge of digital strategies to complement traditional retailer business. While slow to adopt and still many challenges, there is no question that CPG’s are adopting strategies including trials, sampling, promotion, and indeed selling direct that barely show in today’s numbers. While it will be a very small percentage of their total sales for the foreseeable future, as this starts to take off it will equate to a huge new eaches supply chain considering these brands currently own over a third of the total food market.

There is a tremendous amount of variability in DTC, versus the CPG’s traditional bulk business creating a need for a completely new agile network to try different programs without committing to long-term capital and inventory positions.

How are grocers handling all this rapid growth?

As consumers are given same day service expectation with pick up or delivery options grocers have responded aggressively both to protect and grow share with a myriad of options. This group is best positioned to adopt a unichannel strategy and is doing so, but largely in response to consumer demand without yet re-engineering their underlying supply chains making DTC mostly a loss leader to date. As density in DTC increases (and it is quickly) Grocers need consumer cart building fulfillment bypassing the grocery store all together. 


Be sure to send me your questions!


James A. Tompkins, Ph.D.
Chairman and CEO, MonarchFx

Executive Assistant: Debbie Flynn, 919-855-5447