CAGNY 2025: Day 3

Here we are again, to cover the third day of CAGNY! Day 3 added a number of Home & Personal Care companies to the mix. Today we heard from Freshpet , 宝洁 , Kerry , US Foods , IFF , The Clorox Company , E.L.F. BEAUTY , Church & Dwight Co., Inc. and Diageo . Let’s dive in...

Insight to Plan – From strategy to resource allocation

Today featured two relatively small consumer goods companies – Freshpet and e.l.f. Beauty. We all are watching Freshpet carve out its niche in a red-hot space with some giant competitors (and more entering the fray); we all envy e.l.f. Beauty’s speedy growth in the mercurial and highly competitive beauty market; In both cases, leadership talked about the distinctiveness of their market position. Check out these results.

Church & Dwight used to show a slide representing the story of David & Goliath, with the implication that they were successfully beating the much larger Goliath. Since then, this still moderately-sized company has diversified quite a bit, all through their acquisition-led strategy. Check out their history and rigorous acquisition criteria. (It’s important to note that acquisition is not their only growth lever, and 50% of their organic sales growth this year came from innovation - a 2pp bump.)

While no one would call them small, US Foods also faces even larger competition, and as a newcomer to CAGNY, it was interesting to hear about their strategic positioning and choices as a US pureplay distributor, focused on independent restaurants, healthcare and hospitality.

And finally, we turn to Diageo, who comes at the story from the position of leading market strength. During their discussion, Diageo provided a fair amount of commentary on their belief that market challenges are cyclical and not structural – and, indeed, that the existing structural factors are ones that benefit them in their leading position with strong presence across geographies, categories and price points.

Innovate to Scale – Inventing the consumer offering

New flavors of well-known brands still seem an attractive proposition, and Sally Grimes, Diageo NA CEO, featured several examples when talking about the product innovation the company has been pursuing. Notably, 28% of recruits to Crown Royal Blackberry were actually new to the whisky category.

Going a step further, P&G CFO Andre Schulten discussed two new product innovations. Downy Rinse & Refresh and Tide Clean Boost create incremental demand in the category – as new odor removal products that are additions to the existing laundry regime. Tide evo is a new laundry detergent format, with the same high-performing cleaning features, but which, in addition, addresses the problem of waste – including plastics waste, but also weight and space in the home. Backing this product are 50 granted patents, highlighting the science that went into this innovation.

Speaking of science, we heard from both Kerry and IFF today – both science-based, R&D driven companies. Kerry addresses large-scale consumer trends in taste and biotech with significant investments in their science and tech ecosystem.

Simon Herriott, IFF’s President, Health & Biosciences, discussed how the company uses their strengths in 3 key capabilities to capitalize on the consumer megatrends that matter:

• Discovery and innovation (obviously, powered by science)
• Scaling proteins and microbes from lab-to-pilot-to-production
• Translating R&D to commercial success with customers

Engage to Advocate – Winning engagements with consumers and customers

P&G still has one of the best models for full end-to-end superiority, ranging from initial innovation all the way through consumer delight at home. A large part of their well-known superiority model falls in the Engage to Advocate arena.

The company does a nice job of linking together the different activities and functions in the model - and then using their data and technology strengths to go deep. For example, using automated media buying to increase reach with precision, backed by their proprietary consumer 360 database; using AI to improve the effectiveness of advertising ideas, conducting automated testing in their AI studios?in a matter of days vs. weeks, at 1/10th of the cost; and utilizing gen AI to develop new concepts – a tool that generates ideas in minutes vs. weeks, increases the number of concepts 10x, enables viewing and editing in 1-2 hours vs, 600+ hours, ?and improves the quality based on extended sources of data.

P&G is also pursuing superior retail execution. Mr. Schulten described how this helps small, independent retailers in markets within APAC, the Middle East and Africa. To feed this capability, the company analyzed more than 20 million images and POS data across 300 country/customer/category combinations, providing retailers with insights to optimize their shelf sets. For example, with a UAE retailer, the company combined insights with their programmatic shelf capability to recommend the elimination of items that accounted for 10% of shelf space but only 3% of sales. This led to overall category growth and disproportionate sales for P&G – as well as reducing cost and complexity for retailer.

In another example, US Foods CEO Dave Flitman said “We love our customers” and went on to describe how they show this love:

• Quality, bolstered by productivity across innovation, and their Scoop platform that takes in customer inputs
• Support, through team-based selling with segment-specific solutions
• Digital tools like their MOXē commerce platform and VITALS
• Deliveries, including the launch of Pronto (small truck, frequent deliveries, fresh)

Diageo doubled down on the idea that, in our industry, commercial excellence wins. Ms. Grimes presented a slide on turning around the Casamigos brand. First was getting commercial right – then brand building advertising – then innovation. ?

I want to include this picture of the Freshpet planograms - because they demonstrate so well the niche positioning of this brand and how they are shifting the mindset from "animal feed to human food". The majority of their sales are in stores selling human food; the frequency of their heavy shoppers is something like weekly/ biweekly (again, more like human food). Co-founder & President, Scott Morris said that it was looking at Pret a Manger's refrigerators that gave them the idea for this display; it's a good demonstration of how their consumer message and identify comes to life at retail.

Plan to Deliver – Delivering on the promise

What do you picture when you think of aging scotch? I think of fine barrels lovingly coddled by an old caretaker with generations of experiences in their lineage. Not so. Today, Diageo shared that they are using robotics and automation to transform their venerable scotch business. Rigorous scenario planning and AI across the network has resulted in synchronization of the network and the avoidance of significant waste.

Enablers: Let’s take a look at Attract to Belong

A couple examples on talent, today. First, Church & Dwight consistently uses the following slides to talk about their people, and they are rightfully proud of their industry-leading revenue per employee, as well as compensation schemes directly tied to the metrics that matter. For example, gross margin is 20% of all employees’ annual bonus.

Diageo talked about upskilling their sales force to drive route to market excellence. With the University of Michigan, they have co-designed a program to build the category expertise and business skills that enable salespeople to help their customers build their whisky and tequila businesses.

A bit of a double-click...

As I conclude, I’d like to spend a moment reflecting on Clorox and their compelling end-to-end story. Since Linda Rendle gained the top position as Chair and CEO, Clorox has been one of my favorite segments of CAGNY – sharp, strategic and well-structured. And she did not disappoint this year. Let’s start with some fun things I learned:

• I’m not the only one who finds cleaning soothing. Go #CleanTok
• Cats are cool
• Fridgescaping is a thing (like landscaping or tablescaping, but for your fridge)

Most importantly, I learned that there’s still headroom for growth in making unpleasant household tasks better and easier. Ms. Rendle demonstrated this as she walked through the progress and advancement of their IGNITE strategy. The last few years have represented a number of hefty investments in building the data and technology to drive the business – and open new market opportunity. Here is a sampling of what struck me:

• Holistic Margin Management demonstrates the positive performance impact of end-to-end enterprise. Not only does the framework holistically touch each part of the operations, but it also forces the integration across functional lines. Take design to value in Kingsford– a partnership between R&D and manufacturing and supply chain that examines cost at every stage and optimizes while providing even better burn, with cheaper ingredients and more efficient storage. Or take the price-pack-architecture example with Clorox wipes, where the company is working the retailers to understand what works.

• Superior innovation is a core pillar of the strategy, creating new growth in categories that we all considered old, tired and even impossible to further innovate. The success of Scentiva proves us all wrong.

• The company is seeking new performance frontier capabilities in multiple areas, including personalized consumer engagement. Personalization works, but has been time and resource prohibitive. Clorox’s gen AI-enabled content engine makes it possible to develop a staggering amount of tailored content – faster and cheaper. As a result, the company is now looking toward 1:1 communication – and indeed has a goal of getting to 1:1 making up 50% of media spend in the next five years.

• Another new performance frontier capability is leveraging their digital core to drive innovation, reducing cycle time 65%, generating higher consumer interest and yielding 3x more ideas in the pipeline.

• Finally, the digital core removes waste in core operations, using AI and machine learning to reduced inventory and cost.

As I said, it's a well-integrated story of consumer understanding and data and tech transformation powering new performance frontier capabilities and next gen outcomes across the enterprise.

And, here we end Day 3. Tomorrow, we close out the week with Colgate-Palmolive, L’Oréal, Celsius Holdings and Nestlé. I’ll see you there!

Want to hear more? Check out CAGNY 2025: Day 0,? CAGNY 2025: Day 1, CAGNY 2025: Day 2, CAGNY 2025: Day 4 and CAGNY 2025: What didn’t we hear?