The Buy vs. Build Shift
In 2025, CPG giants are abandoning internal innovation for acquisitions. Why develop new products when you can buy proven challenger brands? Recent mega-deals prove this strategy: PepsiCo paid $1.95B for Poppi, Flowers Foods spent $795M on Simple Mills, and Campbell’s acquired Rao’s for $2.7B, all brands that started small and built devoted communities.
The Innovation Problem
Big Brands Can’t Innovate. Challenger brands achieve nearly double the innovation success rate vs. leading brands. Traditional CPG companies generate less than 15% of revenue from new products (healthy benchmark: 15%+). Small brands captured 45% of recent sales growth despite representing only 11% of revenues.
Consumer Rejection of Corporate Innovation When big brands launch “better-for-you” products, consumers see through the marketing. But when challenger brands like Poppi (kitchen to $1.95B) or Rao’s (heritage Italian recipes) innovate, consumers embrace authenticity.
The Deals That Prove It
PepsiCo + Poppi ($1.95B) PepsiCo’s acquisition of the prebiotic soda brand gives instant credibility in functional beverages. Founded in 2018 and launched on “Shark Tank,” Poppi’s 14 flavors and Gen Z following represent innovation that PepsiCo couldn’t manufacture internally.
Campbell’s + Rao’s ($2.7B) Campbell’s bought Sovos Brands for Rao’s pasta sauce despite owning mainstream Prego. Rao’s represents 69% of Sovos’ sales and grew 37% organically, something Campbell couldn’t replicate. CEO Mark Clouse admitted: “We’re not touching it!” proving they bought authenticity they couldn’t manufacture.
Flowers Foods + Simple Mills ($795M) The acquisition shows traditional CPG companies diversifying beyond core categories. Simple Mills’ clean-label focus and 14% growth rate demonstrate market appetite corporate R&D couldn’t capture.
The New Playbook
For Big Brands
- Scout emerging categories early (prebiotic sodas, functional foods)
- Pay premiums for authentic brands with proven consumer connection
- Preserve founder leadership and brand DNA post-acquisition
For Challenger Brands
- Focus on authentic differentiation, not just “better-for-you” positioning
- Prove market traction before seeking funding
- Build supply chain resilience and maintain gross margins of 40-60%
I’ve seen this create incredible loyalty among remaining team members. They know that if circumstances change, they’ll be supported with dignity and genuine commitment to their success.
What This Means for Your Teams
The buy vs. build shift fundamentally changes how CPG companies should think about talent strategy. Traditional innovation roles are being replaced by acquisition expertise, but the human capital implications run deeper than just restructuring R&D departments.
The New Talent Priorities
Smart CPG leaders are now hiring for different skill sets. Instead of expanding internal product development teams, they’re building corporate development capabilities and cultural integration specialists. The most valuable employees can identify authentic brands early, negotiate complex acquisitions, and—critically—preserve the entrepreneurial DNA that made acquired brands successful in the first place.
The best outplacement recognizes that career transitions are deeply personal journeys that require customized strategies, not generic approaches.
Attracting Innovation-Minded Talent
The irony is that the best product innovators increasingly want to work for challenger brands, not corporate giants. This creates a talent acquisition challenge: how do you attract entrepreneurial thinkers to large organizations that have essentially admitted they can’t innovate internally? The answer lies in positioning your company as the platform that amplifies authentic innovation rather than the corporation that stifles it.
Forward-thinking CPG companies are restructuring their talent value proposition around being “innovation accelerators” rather than “innovation creators.” They’re attracting talent by offering the opportunity to work with multiple acquired brands, access to substantial resources for scaling proven concepts, and the chance to be part of preserving authentic brand stories at scale.
The Bottom Line
2025 marks the end of corporate innovation theater. Smart CPG companies recognize that authentic brand equity can’t be manufactured in boardrooms. It is built in kitchens and through genuine consumer connections. The new formula: Let entrepreneurs take the risk, prove the concept, then acquire the winners. It’s expensive but effective in a market where authenticity commands premium valuations—and where the right talent strategy determines who wins the acquisition game.