Cpg Company

How Profitable Is A Cpg Company? (Updated for 2024)

Pat Walls

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Updated: September 17th, 2024

How Profitable Is A Cpg Company? (Updated for 2024)

So you want to start a CPG company?

And the first question that came to your mind was, “well, are CPG companies actually profitable?”

With a market size of $4.03B - there’s plenty of business to go around.

Especially considering:

You could start a CPG company with as low as $69
Based on our data, CPG companies generate an average of $2.74M per year
You could see gross margins as high as 40% with CPG companies

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a CPG company.

Let’s dive in!

Is a CPG company profitable?

Yes, a CPG company is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $2.74M per year with an estimated gross margin of 30%, you could expect to recover your investment within 24 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your CPG company.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your CPG company is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a CPG company worth it?

If you’re wondering if a CPG company is worth it, the answer is a big YES. With CPG companies, you have the potential to earn $2.74M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $4.03B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a CPG company to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful CPG companies case studies.

Examples Of Profitable Cpg Companies

Here are a few examples of profitable CPG companies, and a few more details about them:

1. Heavy Metal Merchant ($540K/year)

Dave Harrison, the founder of Heavy Metal Merchant, came up with the idea while working in the music industry and realizing the demand for licensed heavy metal merchandise. Starting with just a laptop and his own record collection, he bootstrapped the business and grew it to 6-figure weekly sales, shipping thousands of items per month worldwide. With a focus on authenticity and catering to a niche market, Heavy Metal Merchant has become a successful online retailer in the music merchandise industry.

Is it profitable? Yes
How much money it makes: $540K/year
How much did it cost to start: $500

I Bootstrapped A $45K/Month Music Merch Brand From My Living Room

Heavy Metal Merchant is an online retailer that has grown sales to 6-figures/week and ships thousands of items every month to people around the world with a focus on licensed music merchandise specializing on the heavy metal genre and has been profitable for over 12 years straight.

Read this case study

Read by 4,983 founders

2. Mellow Cosmetics ($240K/year)

Ima, the founder of Mellow Cosmetics, started the online beauty store in her garage during her maternity leave. She wanted to create products that would boost women's confidence and enhance their natural features. With no experience in the e-commerce or beauty industry, she followed her inner calling after watching a makeup tutorial on YouTube and has since grown the business from making $0 in the first year to over $400,000 per year in online sales, with distributors and retailers stocking her products as well.

Is it profitable? Yes
How much money it makes: $240K/year
How much did it cost to start: $50K

How This Mom Started A $400K/Year Vegan, Cruelty Free Makeup Business

The Founder of Mellow Cosmetics explains how she grew her company's online sales from $0 to over $400,000 per year, while also expanding her brand's reach through distributors and retailers, with a focus on social proofing and email marketing.

Read this case study

Read by 5,891 founders

3. Ugly Duckling ($720K/year)

Ishan Dutta, founder of Ugly Duckling Los Angeles, started the hair products company five years ago after noticing the growing trend of women seeking fashionable and bold hair colors. Recognizing the potential of the online beauty market, Ishan decided to provide high-quality hair color and hair care products specifically catered to stylists and colorists. With a conversion rate between 1%-2% and an average cart value of $60, Ugly Duckling Los Angeles receives 600 to 900 orders per month.

Is it profitable? Yes
What's the gross margin? 40%
How much money it makes: $720K/year
How much did it cost to start: $250K

How I Started A $50K/Month Professional Haircare Products Business

Ugly Duckling Los Angeles, a professional haircare products business founded by Ishan Dutta, takes in anywhere between 600 and 900 orders a month, totaling around $50,000 per month in sales, with almost 60% of business coming from repeat orders; their objectives for 2020 include increasing profitability, growing digital traffic, expanding to trade shows and events, and releasing more innovative products.

Read this case study

Read by 8,572 founders

Learn more about starting a CPG company:

Where to start?

-> How much does it cost to start a CPG company?
-> Pros and cons of a CPG company

Need inspiration?

-> Other CPG company success stories
-> Marketing ideas for a CPG company

Other resources

How much can you make with a CPG company?

With a CPG company, you can make an average of $2.74M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $69. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 24 months.

How much does a CPG company make a week?

Based on our data, average weekly revenue for a CPG company ranges around $57K. As such, you could see monthly revenues of $228K.

To know if your CPG company achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your CPG company.

How much do CPG companies owners make?

The income of a CPG company owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established CPG company is about $57K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a CPG company owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Cpg Company Profit Margins

Generally speaking, a CPG company can expect profit margin of around 30%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a CPG company, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, CPG company owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, CPG company owners can ensure long-term sustainability and profitability for their business.

Cpg company owner salary

The salary of a CPG company owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established CPG company, in a prime position, might see an average weekly salary around the ballpark of $17.1K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a CPG company may be a promising business to start - but the success of your CPG company mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable CPG company.

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Starting A Cpg Company: Everything You Need To Know

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