The first year in CPG can be a wild ride and a costly one if you’re not careful. Let’s break down the most common pitfalls and how to sidestep them.
Year One: Where Dreams Meet Reality
Launching a new CPG brand is exciting, but the first year is often the most dangerous. You’re juggling product development, distribution, sales, and marketing while trying to keep cash flow under control. I’ve seen brands soar in their first twelve months and I’ve seen others burn through every dollar before hitting their stride. The difference often comes down to avoiding a handful of predictable mistakes. After more than thirty years in the CPG space, working with both massive global brands and nimble startups, I’ve learned that these errors show up again and again. The good news is they can be avoided with the right strategy and mindset.
1. Skipping Market Research
Some founders are so confident in their product that they skip understanding the category and competition. This leads to pricing that’s out of step with the market, packaging that doesn’t resonate, or targeting the wrong audience entirely. I once met a founder selling a premium cookie for $7 a pack into discount grocery stores. Sales tanked. After realigning the channel strategy and pricing to match consumer expectations, their velocity tripled.
How to Avoid It:
Before launching, spend time studying your category in detail. Visit stores, take note of price points, packaging colors, and product claims that dominate. Compare your product to the top three sellers and be honest about where you fit. You can also work through our Process to create a fact-based market entry plan rather than relying on assumptions.
2. Mismanaging Cash Flow
It’s tempting to pour every dollar into production, marketing, or events. But in CPG, cash flow is your lifeline. Many brands overproduce inventory or lock themselves into expensive trade promotions they can’t sustain. One beverage startup ordered six months of product based on verbal commitments from retailers — commitments that never turned into actual purchase orders. They ended up discounting heavily to clear stock, wiping out profits.
How to Avoid It:
Forecast conservatively. Only produce what you can reasonably sell based on signed agreements or proven velocity data. Keep a cash reserve for unexpected expenses like rush orders or freight increases. And track your accounts receivable closely so you’re not left waiting months for payment.
3. Overcomplicating the Product Line
Founders often think more SKUs equal more sales. In reality, launching with too many flavors, pack sizes, or varieties can overwhelm operations and confuse buyers. A snack brand I worked with launched in eight flavors. Their production runs were tiny and costly, and they had no sales data to know which flavors were winners. By focusing on their top three, they cut costs by 25% and improved in-stock rates.
How to Avoid It:
Start with your strongest performers and prove them out in market before expanding. Use sales data, retailer feedback, and consumer insights to decide when — and if — to add SKUs. Simplicity early on keeps costs in check and ensures consistent quality.
4. Neglecting Marketing Basics
Some small brands assume a good product will sell itself. But without visibility, even the best products get lost on the shelf. According to Social Nature’s research on common CPG marketing mistakes, many new brands fail to invest in foundational marketing like clear messaging, social proof, and in-store support. Even simple tactics like consistent social media posting, local influencer outreach, and in-store demos can move the needle in the first year.
How to Avoid It:
Develop a basic marketing plan that covers online and offline touchpoints. Prioritize clear brand messaging, strong visuals, and shopper engagement. Test affordable grassroots strategies like sampling events or community sponsorships before diving into costly ad campaigns.
5. Mispricing the Product
Your pricing has to cover costs, support promotions, and still be competitive. Too low, and you erode margins. Too high, and you stall velocity. One refrigerated product I advised had a great margin on paper but was priced $2 above the category leader. Consumers tried it once but didn’t return. A $1 price drop brought them in line with the market and doubled repeat purchases.
How to Avoid It:
Analyze competitor pricing in your category and calculate your minimum viable margin. Factor in trade spend, discounts, and distributor cuts so you’re not left losing money during promotions. Review pricing regularly as costs shift.
6. Ignoring Retailer Expectations
Retailers have specific requirements for packaging, shelf life, and promotional support. Missing those details can cost you placement. I’ve seen great products turned down because the packaging didn’t fit the shelf planogram or the shelf life was shorter than the retailer’s standard. Understanding and meeting these expectations early saves a lot of pain later.
How to Avoid It:
Ask each retailer for their category requirements and product guidelines before pitching. Build compliance into your production process from day one so you’re always ready to meet expectations.
7. Not Building Buyer Relationships
In year one, every relationship matters. Some brands focus solely on selling and forget to nurture connections with retail buyers. Without ongoing communication and performance updates, you risk being replaced by the next shiny new brand. One founder I know kept a monthly buyer update with sales numbers, promotions, and shopper feedback. That simple habit helped them expand from five stores to fifty in less than a year.
How to Avoid It:
Treat buyers like long-term partners. Send regular performance updates, respond quickly to requests, and look for ways to make their job easier. Building trust now pays off in expanded placements later.
8. Overlooking Unit Economics
Velocity feels great, but if you’re losing money on every unit, growth will eventually crush you. Many first-year brands don’t fully understand their true cost per unit, including distribution and promotional expenses. Without that clarity, it’s easy to scale into unprofitability. Understanding your economics early prevents dangerous growth traps.
How to Avoid It:
Calculate your unit economics early and revisit them regularly. Include every cost — ingredients, packaging, labor, freight, and promotions. Use this data to decide where and how to grow sustainably.
9. Underestimating Operational Complexity
Year one often reveals just how challenging production, inventory management, and logistics can be. Missed deliveries, out-of-stocks, and spoilage can kill momentum with both retailers and consumers. According to NetSuite’s report on CPG industry challenges, supply chain inefficiency is one of the biggest hurdles new brands face.
How to Avoid It:
Build relationships with reliable suppliers, invest in inventory management tools, and plan for delays. The more you can smooth out your operations, the easier it will be to keep shelves stocked and buyers happy.
10. Trying to Do It All Alone
CPG is a relationship-driven industry, and the best brands lean on mentors, brokers, and industry experts to shorten their learning curve. I’ve worked with many founders who tried to manage everything themselves, only to burn out before the end of year one. Working with experienced partners can save you from costly trial-and-error. My own background, which you can read more about on our About page, is rooted in helping brands skip those expensive missteps.
How to Avoid It:
Build a network of advisors early. Join industry groups, attend trade shows, and seek out experienced partners who can fill your knowledge gaps. The right relationships can save months — or years — of frustration.
Avoiding the First-Year Trap
Your first year in CPG is about building a strong foundation. If you can avoid these ten mistakes, you’ll give yourself a far better chance of not just surviving, but thriving. It’s about being intentional with your strategy, disciplined with your spending, and proactive with your relationships. When you start with a clear plan and a realistic view of your category, you can focus on what really matters — building a brand that grows year after year.