In an environment in which efficiency is paramount, sales and marketing agencies have emerged as one of the winners in the current recession.

Robert Hill

Leveraging their diversified skill sets and retail and customer knowledge, these companies have been able to capitalize on increased outsourcing of some functions by CPG companies seeking to streamline their own operations in the downturn and amid ongoing industry pressures.

“This economy is one that is going to be good for an agency like ours, because people are going to seek to cut their operating costs and improve their effectiveness simultaneously,” said Chip Hoyt, vice president of marketing at Plano, Texas-based Crossmark. “We can do things better than companies otherwise would be able to do on their own, and at lower cost. That's the entire premise.”

In short, sales and marketing agencies can benefit from a cost-cutting environment like the one the industry currently finds itself in the midst of.

According to a recent survey of food and beverage industry executives by consulting firm KPMG, cost cutting is still a priority for a significant number of companies, many of which are looking to at least next year before economic recovery takes hold. More than a third of executives in the survey — 37% — said they were still focused on cutting costs, while the rest said they were investing for growth.

When asked to identify the biggest challenges they currently faced in dealing with the economic downturn, more than half (52%) of the food and beverage leaders cited managing or cutting costs, the second-most-cited challenge after finding new sources of revenue growth.

The shift to more at-home dining has also been a boon to sales and marketing firms in the CPG industry, executives at these firms told SN.

“We're extremely optimistic,” said Robert Hill, president and chief executive officer of Jacksonville, Fla.-based Acosta Sales and Marketing Co. “The reality is, we're not in the foodservice business, and the consumer seems to be spending more time at home, which is good for our business. There are also certain categories that are performing extremely well in this environment, such as pasta and rice.”

He said Acosta is also seeing increased demand for the creation of in-store events that allow the company to leverage its portfolio of brands to create marketing events, such as a value message about breakfast or about grilling — the company represents Kingsford charcoal, Vlassic pickles, Heinz ketchup, Bush's baked beans, and Dixie plates and cups, for example.

“So, as the retailer searches for value solutions, we are trying to leverage our portfolio and the right brands to do that,” he said.

Hill agreed that the trend toward outsourcing has been beneficial to sales and marketing agencies.

“We are seeing CPG companies taking as aggressive an approach to outsourcing as we have ever seen, which bodes well for the agency space,” he said.

Most CPG companies have outsourced retail functions, he explained, but many companies that have kept their direct business have outsourced the sales call, “at least to the retailers that are not among their top 10 customers,” Hill explained. “Many CPG companies are considering, and acting on, outsourcing differently than they have in the past.”

Acosta's business model also exemplifies the diversification that has helped some sales and marketing agencies grow, despite the economic shifts.