CHICAGO — Artificial intelligence is rapidly reshaping the competitive dynamics of the consumer packaged goods industry, narrowing the advantage long held by large national brands and opening new pathways for challenger and niche players, according to a new analysis released Tuesday by NielsenIQ in collaboration with Kearney.
The report, The New Growth Frontier, finds that over the past three years established niche brands increased U.S. market share by 1.5 percentage points, while large and mid-size national brands collectively declined by 2.1 percentage points, based on NIQ retail measurement data across all categories from 2022 to 2025.
The shift signals what NIQ describes as a structural change in how brands compete.
“We are entering a precision era in CPG,” said Marta Cyhan-Bowles, chief communications officer and global head of marketing at NIQ. “The growth levers that larger brands have come to rely on — like mergers and acquisitions — are no longer reliable paths to sustainable, long-term growth. Consumer-led innovation and agentic discoverability now matter more than historical scale.”
AI Democratizes Innovation
According to the analysis, AI is leveling the playing field by giving emerging brands access to capabilities once reserved for larger organizations with significant R&D budgets. Tools for concept testing, formulation optimization, creative iteration and scenario modeling are now more broadly available, accelerating speed to market.
NIQ data shows emerging brands gaining ground in categories where AI-led innovation and discovery are moving fastest, including pet care, personal care and health and wellness.
At the same time, consumer behavior is shifting quickly. NIQ research cited in the report indicates that 74% of shoppers are using AI for some form of product discovery, 54% for research and 20% directly for shopping.
As AI increasingly mediates research and purchasing decisions, discoverability is becoming as critical as distribution, the report concludes.
Rise of Agentic Commerce
The analysis points to the growing influence of “agentic commerce” — AI-powered retail and large-language model environments that filter options, generate recommendations and shape purchasing decisions.
AI assistants embedded in retailer websites and shopping platforms are changing how products are surfaced and ranked. Structured product attributes, contextual alignment, reviews and trust signals are playing a larger role in visibility, particularly when AI systems interpret consumer intent.
“AI systems prioritize clarity and relevance,” said Katherine Black, a partner at Kearney. “Brands that ensure their products are legible to AI with structured data, defined need states and credible signals are better positioned to surface in these new discovery pathways.”
Traditional Levers Under Pressure
The report also underscores mounting pressure on traditional growth strategies. Line extensions often redistribute share rather than expand categories, and acquisitions have become more complex amid shifting consumer expectations and AI-accelerated competition.
While M&A can complement innovation, NIQ said it is no longer a reliable standalone engine of durable growth. In an environment where early traction and algorithmic visibility can determine success, brands must build relevance organically.
The implications extend beyond manufacturers. Large brands must modernize innovation pipelines, emerging brands can use AI to accelerate experimentation, and retailers must adjust as AI integrations influence traffic, assortment and monetization.
With operations spanning more than 90 countries and visibility into approximately $7.2 trillion in global consumer spend, NIQ said that sustainable growth in the AI era will depend on grounding innovation in validated unmet needs, optimizing product content for AI-driven discovery, integrating AI across ideation and activation, and closely monitoring early-launch signals.
In short, the report suggests that while scale still matters, precision may matter more.
