Budget Tips from CPG Finance Pros
When I think back to my early days at Grupo Peñaflor, one of Argentina's largest wine producers, I’m reminded of the financial missteps that can make or break a young brand. Budgeting for a CPG company is a delicate dance—balancing optimism about growth with realism about costs. And after nearly a decade of experience in FP&A and cost management, I've seen a lot of budgets go right.
For founders of emerging CPG brands, budgeting can feel like venturing into a maze. But I'm here to share a few hard-earned lessons, offering a roadmap and CPG budgeting tips to keep you from getting lost in the complexities of financial planning.
Building Realistic Sales and Revenue Forecasts
It’s easy to get excited when projecting revenue and building a CPG budget—after all, we start businesses because we believe in them. But that optimism can lead to overestimated forecasts, which cause more problems down the line than most founders realize. A budget is a tool for discipline, not just wishful thinking.
In my experience, realistic sales and revenue forecasts start with understanding seasonality and market conditions. When I was with Grupo Peñaflor, we saw seasonal peaks tied to holidays, harvests, the broader wine cycle, and promotional events. CPG brands need to get granular: look at historical sales, identify fluctuations during peak months, and analyze competitor behaviors.
Are you preparing for surges that happen in summer or dips that may come during the post-holiday winter lull? Data is your best friend here, but so is gut-checking those numbers with peers who've been through similar situations.
One technique I recommend is using different scenarios—like conservative, moderate, and aggressive growth—to understand the impact each has on your financial stability. It helps prevent building a budget that relies solely on best-case outcomes. That way, even if market conditions surprise you, your budget isn’t wrecked.
Factoring in Cash Flow Timing
Cash flow isn’t just an issue, it’s the issue when budgeting for CPG brands. Balancing inflows and outflows can feel like you're always one step behind if you haven’t mastered your budget. Unlike service businesses, where payments are immediate, CPG founders are dealing with retailers that have long payment terms, production cycles that span months, inventory that ties up cash, and unexpected returns.
I’ve worked with plenty of Napa Valley wineries, and cash flow delays are particularly common for emerging brands trying to make their mark in distribution. When you sell a case of wine to a retailer, the retailer might pay you in 90 days, but you’re paying your suppliers long before that. The key to managing cash flow effectively is to align those incoming payments with outgoing ones as much as possible.
One strategy I like is negotiating early payment discounts with retailers or, on the other hand, extended payment terms with suppliers. Additionally, having a line of credit as a buffer can make a world of difference—giving you flexibility when payments don’t sync perfectly. Consider your cash conversion cycle carefully; it’s one of the most critical elements in maintaining day-to-day operations without unwanted surprises.
Prioritizing Marketing and Trade Spend
Marketing and trade spend can feel like an afterthought when you’re focusing on getting your product out the door, but it’s a huge piece of the puzzle. Trade spend, in particular, can sneak up on you.
I’ve seen brands budget 10% of gross revenue on marketing, only to find that trade spend eats up another 15%—or more. In some cases, it’s closer to 30%, especially when free fills, slotting fees, cooperative advertising funds, or promotional allowances are involved.
I tell my clients to expect that they’re only going to collect 70-80% of what they invoice to retailers. The rest is going to go to deductions, whether it’s marketing allowances, rebates, promotional programs, or trade discounts. Budgeting for these from the outset, rather than letting them take you by surprise, is crucial.
And let’s not forget about measuring the ROI of that spend. The good news is, tracking marketing expenses doesn’t have to be complicated. Start with the basics. Link your spending to sales growth for specific campaigns, identify trends, and see what works best. If you see a 5% lift in sales after a particular promotion, figure out why. Then double down on the strategies that deliver real results.
Planning for Growth and Scaling Costs
Growth is exciting—it’s why most of us got into this business in the first place. But it’s also expensive, and if you’re not planning for those costs, growth can quickly become unmanageable. When you’re scaling up, the costs aren’t just in increased production. There are logistics to consider, potential new hires, expanded marketing, new facilities, equipment, distribution networks, technology upgrades, and compliance costs.
At Grupo Peñaflor, I saw how painstaking future planning made all the difference when scaling production. Even in boutique CPG brands, this level of foresight is essential. Do you have enough storage? Can your current suppliers handle larger orders, or will you need to source new ones? Do you have the necessary technology systems in place to manage increased operations? Budgeting for growth means thinking through all the operational details, not just the immediate costs.
Don’t underestimate the need for working capital either. I always say, “Cash, cash, cash.” Growing brands need cash to keep up with increasing demands—more raw materials, higher payroll, expanded logistics, upgraded systems, and additional marketing efforts. Having a clear understanding of how much cash is required to fund growth can help you avoid getting caught short.
The Costs of Being Unprepared
I’d be remiss if I didn’t emphasize the risks of not planning your budget thoroughly. Over the years, I’ve seen brands go under, not because they lacked a great product or consumer demand, but because they simply ran out of cash. It’s heartbreaking to watch, and often, it’s due to budgeting errors that could have been avoided—failing to account for seasonality, not planning for enough working capital, underestimating trade spend, overproducing inventory, or neglecting unexpected expenses.
A budget is more than a financial exercise—it’s your roadmap to growth, and every detail counts. Missing a key expense here or there, or assuming best-case scenarios across the board, can lead to a precarious financial position that leaves you without options. I’ve learned that the brands that succeed are the ones that view their budget as a living document—something they review, adjust, and use as a tool for strategic decision-making.
Building a Comprehensive Budget for Your CPG Brand
Essential CPG budgeting strategies include:
Realistic revenue projections: Based on historical data, market trends, competitive analysis, retailer-specific factors, consumer insights, and economic forecasts.
Detailed cash flow analysis: Accounting for the timing of cash inflows and outflows, payment terms, inventory turnover, seasonal fluctuations, unexpected expenses, and investment needs.
Marketing and trade spend: Conservative estimates that ensure you’re prepared for retailer deductions and have enough budgeted to drive consumer demand effectively, including contingency funds for unexpected marketing opportunities.
Growth and scaling costs: An honest assessment of the cash, infrastructure, resources, technology upgrades, and additional personnel needed to support growth.
Remember, a budget isn’t static. It’s a living document that evolves along with your business.
If you’re building your budget and feeling overwhelmed, know that you’re not alone. Financial planning for CPG brands is complex, but it’s also one of the most impactful things you can do to set yourself up for success. At Balanced Business Group, we specialize in helping brands like yours navigate the complexities of financial planning.
Let’s connect and build something that supports your growth, together.
For more insights into managing your CPG finances, check out our Finance services, and Accounting Services.
Author: Maggie Ojeda
With 9 years of experience in finance, specializing in Financial Planning & Analysis (FP&A) and cost management, Maggie Ojeda is a trusted expert in delivering actionable financial insights. She spent 4 years at Grupo Peñaflor, one of Argentina’s top wine producers, where she developed a deep understanding of the wine industry’s financial complexities. Currently, as the FP&A Team Lead at BBG, she leads financial strategy for Napa Valley boutique wineries and emerging CPG brands. Her expertise in financial modeling, variance analysis, and cost management enables her clients to make informed, strategic decisions for business growth.
