Startup CPG, Emil Capital Partners, SPINS share tips for success in 2025

In the final episode of the Founders’ Fundamentals podcast of 2024, Ryan Daily, senior correspondent at FoodNavigator-USA, explored what founders need to know about growing their business in 2025 with insights from:

• Daniel Scharff, CEO and founder of Startup CPG
• Benji Fitts, director of consumer education at SPINS
• Melissa Dolan, director at Emil Capital Partners

2025 is ‘the year of the side hustle’

In the new year, aspiring CPG founders should think twice about going all in on their CPG dreams, Scharff admitted. 2025 “is the year of the side hustle” as founders balance their ambitions with needing to fund their brands and pay their expenses, he added.

Founders with successful careers might want to hold on to them as long as possible and use the income to help fund their CPG ambitions, Scharff noted. The CPG industry is very capital-intensive, so a steady income can help pay business expenses.

While founders should not quit their day job, they also “need to be involved in everything” related to the business and be careful when delegating tasks to other people, Scharff said. “CPG founder life is not ‘work/life balance’ life,” he added.

‘We are going to start to see signs of the consumer struggling’

In 2025, brands must be aware of the economic reality many consumers face, including persistently high food prices despite inflation being near the US Federal Reserve’s target of 2% for several months now, Dolan explained.

Additionally, credit card debt increased by $24 million to hit $1.17 trillion in the US in the third quarter of 2024, indicating that consumers are struggling to pay for everyday goods, according to the Federal Reserve Bank of New York. Retailers are feeling the pinch from credit card swipes, as they are charged 2-4% per credit card transaction.

“A big prediction I have for 2025 is that we are going to start to see signs of the consumer struggling, and I think consumers will be looking for value in many instances or premiumization,” Dolan said.

She added, “Founders should really focus on how to communicate value. And that does not mean that every business needs to be priced at the low end of the spectrum. It could mean, how do you think about deals differently, or promotions or advertising in a new way to communicate value to your consumer.”

Save money by not putting promos ‘on auto-pilot’

CPG brands can save money by strategically planning retailer promotions to get the most sales lift, Fitts noted. Brands should check on promotions periodically and not simply set the programs “on autopilot,” he explained.

Quarterly promotions are a “bad piece of advice that is commonly distributed,” Fitts noted. Instead, brands should set their promo calendars based on specific goals.

While brands might be tempted to skimp on promotional activities, these activities can drive volume growth and help gain market share, Fitts noted.

“In the MULO and natural channels, the promoted volume went from 28% to 33% and from 22% to 25% over,” respectively, for the last three years, Fitts noted.

“One way that companies are really becoming more competitive and driving trial and trying to steal market share away from their competition is to go harder on promotions,” he added.

‘Focus on the fundamentals and sustainable growth’ to secure VC funding in 2025

Founders hunting for venture capital in 2025 might have better luck finding capital, as major CPG companies start to snap up companies in an apparent M&A race – like PepsiCo acquiring Siete Foods for $1.2 billion and Mars acquiring Kellanova (the former snack division of Kellogg’s). Lower interest rates provide additional support.

When searching for venture capital, founders need to “focus on the fundamentals and sustainable growth,” including unit economics, conserving capital and telling a data-driven story, Dolan explained.

“2024 was a challenging year for founders, but deal volume has started to pick up. So, we are seeing it tick up slowly. Dollar volume is on track to surpass 2023, but definitely still down substantially versus the zero-interest rate era, and we have seen that deal volume skewing to fewer larger deals. So, while volume is up, deal count is still down, and it is largely being buoyed by insider rounds on existing portfolio companies,” Dolan explained.

She added, “The number of investors this year is down 55% since 2021 and that is driven by a few factors, but by and large there has been a lack of exits.”

Capitalize on tradeshow appearances requires following up

Many CPG brands are gearing up for another year of trade shows, such as Natural Products Expo West and the Winter Fancy Food Show, which both happen in the first quarter of 2025.

Attending large trade shows can be expensive for small startups, but these events give founders face time with buyers hunting for innovative products or investors writing checks.

Founders should “focus on making new connections” while exploring the competition, Fitts said. Founders should communicate outside the event hours, including happy hours, pre-show activities or one-on-one meetings at venues around the event.

Most importantly, brands must follow up with prospective buyers quickly after the event to keep the show momentum, Fitts explained.

“If you are not following up a week after the show or a little bit less, you are not doing it right, and you are just letting things fall through your fingertips. And so, include a personalized note, some samples, your sell sheet, whatever to really solidify that spark of connection that you made with someone,” Fitts elaborated.