Memo: Redefining The Revenue Model in CPG

It’s been a boom season for consumer packaged goods and perishable foods brands. This growth skewed heavily towards those properly positioned to benefit from omnichannel distribution and it punished many who rely solely on direct-to-consumer and subscription models.

This week – after sitting with executives at one of America’s most prominent grocers, I was left thinking about all of the changes in how we consume the consumer packaged goods that we love. Here is what I concluded after those conversations:

You have a subscription to products that you like, you repeat purchase the products that you love. More often than not, those repeat purchases exceed the volume of the product that you’d consume if you subscribed to a monthly shipment from the same company.

Olipop and Poppi need no subscription box – they have Amazon Prime Now and DoorDash. I would venture to guess that the enthusiastic Olipop fan buys 4-5 cases of four per month ($50) through various channels. Wild Planet needs no subscription box, nor does Primal Kitchen, Bar Harbor, Organic Girl, Brad’s products, Dave’s Killer Bread, Waterloo water, Bare Bones bone broth, Bulletproof, or Force of Nature meats. Prime Now basically advertises these brands at no cost to them. Whether perishables or not, brands are losing volume to those positioned to help consumers with immediacy.

The subscription model in the food industry has been a popular trend, particularly in the past decade, with businesses offering curated boxes of ingredients, snacks, or specialty products to consumers on a regular basis. However, by 2022, the landscape had changed, with subscription box sales diminishing post-pandemic. For a deep dive on that, start here at The Subscription Crash

Winc, Birchbox, and Blue Apron’s shrinking markets tell the story of what happens when a subscription model falls out of favor with consumers. Each company’s current concerns teach a different lesson: Winc’s DTC-only strategy diminished growth, Birchbox’s acquisition partners failed at every turn, and Blue Apron can’t seem to turn a profit. In each case, these subscription companies learned that the novelty of subscription wears off.

As a result of recessionary effects in 2021 and 2022 and the move towards retail media networks, the emphasis has shifted towards making consumer packaged goods, both perishable and non-perishable, available for immediate purchase and consumption through services like Amazon Prime Now, DoorDash, Instacart, and Thrive Market. Three of these platforms have robust retail media networks and those three (Prime Now, DoorDash, Instacart) allow for instantaneous availability of goods.

Grocery delivery is set to become a $1 trillion market by 2027 fueled by this model. What’s not included in this figure is the subscription box model. The subscription model in food has now become a form of down-side protection – which aims to “reduce the frequency and/or magnitude of capital losses, resulting from significant asset market declines” for brands looking to maximize revenue. It’s a model that protects a nonsensical (at this point) dependency on aging digital customer acquisition channels (Meta, et. al.)

As the market for grocery shifts to marketplace, this change impacts the consumer’s purchasing behavior and the CPG retailers. Traditional subscription models may actually slow sales velocity and overall volume for the best brands.

Down-Side Protection and Maximizing Revenue

In the current market landscape, the subscription model serves as a way to offer predictable (but increasingly less-reliable) steady stream of revenue through the commitment of customers to receive products periodically. This model, however, does not maximize revenue potential as it limits the frequency and volume of purchases made by consumers. For product-based brands that are truly indispensable, with high loyalty and affinity, a study of consumer behavior suggests that buyers prefer purchasing these products as needed throughout the days, weeks, or months.

Brands with a loyal customer base have a greater potential for revenue generation by catering to the convenience of purchasing products as and when required, rather than committing to a fixed subscription. This trend is particularly evident among the major grocers who benefit from buyers’ repeat purchases throughout the week, as opposed to stocking up through bulk purchases at stores like Costco or relying on traditional subscription models. By focusing on immediate purchase and consumption, brands can maximize revenue while providing a more tailored and flexible service to their customers.

Dynamic Shelf Space, Cooking Schedules, and Refrigerator Capacity

I have two subscription services that see more trash can time than freezer or refrigerator time. In fact, it’s time to cancel those subscriptions. If I cannot get them through Prime Now, DoorDash, or a like-service, I will just find a substitute. This is likely a shared consumer mindset as more products are available through grocery delivery services.

One of the key advantages of this shift towards immediate purchase and consumption is the increased flexibility it offers to consumers in terms of their shelf space, cooking schedules, and refrigerator capacity. Traditional subscription models often require consumers to plan their meal schedules around the arrival of their subscription boxes, leading to potential food waste and inefficiencies in meal preparation. By purchasing products as needed, consumers can adapt their cooking schedules to their daily routines, dietary requirements, and preferences.

Additionally, this approach allows users to be more dynamic in their shelf space and refrigerator capacity management. Traditional subscription models may result in overcrowded shelves or refrigerators, as consumers must accommodate the bulk delivery of food items. On the other hand, purchasing products as needed allows consumers to optimize their storage space, avoid clutter, and reduce food waste due to spoilage or expiration.

Rewarding CPG Retailers with Significant Brand Equity, Product Loyalty, and Affinity

The shift towards immediate purchase and consumption of CPGs not only benefits consumers but also rewards the retailers who have developed significant brand equity, product loyalty, and overall affinity. These retailers have invested in building strong relationships with their customers, ensuring high-quality products, and providing excellent customer service.

By offering products for immediate purchase, these retailers can capitalize on their brand’s reputation and loyalty to drive sales and increase revenue. This approach further strengthens the relationship between the retailer and the consumer, as it demonstrates the retailer’s understanding of their customers’ preferences and their ability to adapt to the changing market landscape.

The move towards retail media networks, as often discussed here, has also created new opportunities for CPG retailers to target their marketing efforts and engage with their audience more effectively. By leveraging these platforms, retailers can further enhance their brand presence, drive consumer engagement, and foster long-term relationships with their customers.

The decline of the subscription model is a headwind facing many companies that have relied solely on this mechanism as a second-order effect of measuring paid advertising spend (with LTV or lifetime value as the holy grail of marketing efficacy) has paved the way for a more dynamic and flexible approach to purchasing and consuming consumer packaged goods. By focusing on immediate purchase and consumption, brands can maximize their revenue potential while providing a more convenient and adaptable service to their customers.

Out: monthly recurring revenue (MRR)

The value of a customer was viewed through two lenses: lifetime value and as a unit in a larger monthly recurring revenue rate. I would argue a new measure will become accountable.

In: monthly repeat rate (MRR) 

Thanks to data from platforms like Amazon Prime Now, DoorDash, or Instacart, a product retailer can measure a customer based on how often that customer buys the same product throughout the month and how that frequency of purchases lends itself to overall volume.


While subscription models can provide a predictable and steady stream of revenue for brands, they may not always be the most effective method for maximizing sales. The sales performance of brands through subscription models or Amazon Prime Now can vary depending on the specific brand, product, target market, and consumer preferences.

Brands can better understand the product’s performance by constantly assessing repeat sales (MRR) through delivery systems. The data will better assess competitive landscape and promote a better understanding of seasonal sales trends. This shift has enabled brands to capitalize on their strong relationships with customers and leverage retail media networks to further enhance their marketing efforts and brand presence.

The changing landscape of the food industry highlights the need for brands and retailers to adapt their business models to better serve the evolving preferences and needs of their customers. By embracing the shift towards immediate purchase and consumption, brands can not only maximize revenue but also foster stronger relationships with their customers, ensuring sustainability and continued growth in a highly competitive market.

By Web Smith | Edited by Hilary Milnes with art by Alex Remy and Christina Williams

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