More distribution ≠ More growth: The FMCG myth that refuses to die
In our experience, one of the most persistently misleading beliefs in consumer goods is that increasing distribution equals more growth.
At Globalpraxis, we understand why this belief is so powerful: Distribution is visible and easily measured. It gives commercial teams a clear objective: More outlets, more doors, and more points of presence. Increasing availability, in many categories, is absolutely necessary.
However, over time, we have learned that one of the most dangerous things a business can do is confuse more distribution with better distribution.
They are not the same.
In fact, some of the least productive growth investments we see start with the same directive:
“We need to be in more outlets.”
The real issue should be: Which outlets are actually worth being in?
Distribution only creates value where demand is present
Just because a product is in an outlet does not mean it has a reason to sell there.
This sounds obvious, but it is easily overlooked on a large scale.
A business may celebrate the addition of thousands of new points of distribution while neglecting to reflect on what happens afterwards.
Does the product rotate?
Does it generate incremental category value?
Is the assortment relevant?
Is the price architecture right for the occasion?
Does the outlet attract the consumers we are trying to reach?
And perhaps most importantly: Do the economics of serving that outlet make sense?
At Globalpraxis, we repeatedly see companies with excellent numeric distribution but a surprisingly weak productivity behind it.
The product is there. The growth is not.
The last 10% of distribution can be very expensive
One of the things we challenge the most in route-to-market work is the assumption that every additional point of distribution has equal value.
They do not.
The first outlets you add are usually obvious choices: They are large, relevant, high traffic, and well aligned with the category.
But as distribution expands, the economics often change.
The next group of outlets may be smaller, more difficult to serve, less relevant to the category, located in areas with lower potential, or dependent on a service model that costs more than the incremental margin they generate.
At some point, the business can find itself spending disproportionately more money to chase increasingly marginal volume.
This is where distribution can become an expensive vanity metric.
The organization keeps winning points of availability while the return on those points quietly deteriorates.
We have seen companies simultaneously overdistributed and underdistributed
This sounds contradictory, but it is surprisingly common.
A company can have too much distribution in one part of the market and not enough in another.
It may have presence in thousands of outlets where the category has limited relevance, while missing customers with much stronger underlying potential.
This is often a consequence of managing distribution at national or channel level.
“We are at 85% distribution.” That number may sound impressive, but it tells us very little about whether the missing 15% matters more than parts of the 85% already covered.
This is why, in our work, we increasingly look at distribution through the lens of opportunity, not simply presence.
We want to know where the category matters.
Where the consumer occasion exists.
Where the portfolio fits.
Where the economics work.
And where additional distribution is genuinely likely to create incremental value.
This problem is particularly visible in fragmented trade
In highly fragmented markets, the temptation to maximize distribution can be even stronger.
There are thousands of independent outlets with different formats, consumption occasions, economics, and service costs. Treating those outlets as one homogeneous universe is almost guaranteed to create inefficiency.
A small outlet in a high-traffic location may be extremely valuable while another outlet of similar size may offer almost no realistic growth.
The difference is rarely visible in a standard channel definition.
This is where we believe granularity matters enormously.
At Globalpraxis, we have seen that the more precisely a company understands outlet potential, the less useful broad distribution targets become.
The conversation moves from “how many outlets are we in?” to “how much of the available opportunity are we actually capturing?” That is a much better question.
Productive distribution should be the objective
We believe businesses need to move beyond numeric distribution as the primary success measure.
The objective should be productive distribution.
That means presence in outlets where the product has a real role to play, supported by the right assortment, price point, and service model.
A productive outlet is not simply one that stocks the product. It is one where the product earns its place, it rotates, contributes value, justifies the commercial effort required to serve the outlet, and, ideally, creates incremental growth rather than simply shifting volume from somewhere else.
Once you start measuring distribution this way, priorities change.
Some outlets that looked strategically important become less attractive.
Others that were considered small suddenly become much more interesting.
The quantity of distribution becomes less important than the quality of the opportunity behind it.
More SKUs can create the same problem
There is a similar trap at portfolio level.
If one SKU performs well, frequently the instinct is to expand its distribution.
When a new product launches, there’s pressure to place it everywhere as quickly as possible.
However, not every product belongs in every outlet.
In some cases, adding another SKU increases complexity without adding meaningful demand.
It may reduce rotation, create stock issues, confuse the shopper, or take space away from a product that would perform better.
The result can be more assortment, more distribution, and very little additional growth.
This is why we believe portfolio and RTM decisions need to be made together.
The question is not simply:
“Can we get this SKU into more stores?”
It is:
“In which stores does this SKU have the strongest reason to win?”
Differentiating the two can save a great deal of wasted commercial effort.
AI is making this much easier to understand
Historically, there was a good reason companies relied heavily on broad distribution targets.
It was difficult to assess individual outlet potential at scale. There were too many customers and too many variables.
That is changing.
With richer internal data, external sources, analytics, and AI, companies can increasingly understand which outlets genuinely matter.
They can compare outlets with relevant peers, estimate potential, identify assortment gaps, understand which locations are underperforming relative to their opportunity, and distinguish between an outlet that is small because demand is limited and one that is small because the business has not activated it properly.
For us, this is one of the most important applications of AI in route-to-market.
It allows distribution strategies to become much more selective.
And selectivity is not the enemy of growth. Quite often, it is what enables it.
There is a cost to being everywhere
Every additional point of distribution creates some form of cost.
- Sales time.
- Logistics.
- Inventory.
- Working capital.
- Customer management.
- Distributor complexity.
- Trade investment.
Sometimes those costs are small. Across thousands of outlets, they are not.
Hence distribution should always be viewed through an economic lens.
If we need a costly direct-sales visit, frequent deliveries, and significant trade support to maintain a small amount of low-margin volume, that distribution may not be valuable.
It may simply be expensive.
Conversely, an outlet that currently generates modest sales may deserve much more investment if the underlying potential is strong.
This is why we think RTM should ultimately be treated as a resource-allocation problem.
Where should we be?
Where should we invest?
Where should we serve differently?
And where should we accept that presence does not automatically create value?
One question we like to ask
If you remove the bottom 10% of your outlets tomorrow, what would happen to your profit?
Would it fall?
Would it stay roughly the same?
Could it even improve?
It is a deliberately provocative question. It forces the organization to confront something that distribution targets often hide: Not all volume is equally valuable, and not all presence is worth maintaining.
At Globalpraxis, we find the future RTM will be less about maximizing reach and more about maximizing relevance.
More distribution can create growth, but only when the outlet, consumer occasion, portfolio, and economics make sense together.
Otherwise, the business may be celebrating expansion while quietly diluting productivity.
The goal is not to be everywhere. The goal is to be everywhere that matters.
