How to Build GTM Channels Into Your Financial Model for an Emerging CPG Brand

Sustainable growth is often a challenge for new consumer packaged goods (CPG) brands. Steep competition, rising costs, complex supply chains, and changing consumer behavior can make it difficult to get a secure foothold in the industry. In this environment, it's important to invest strategically in go-to-market (GTM) channels for emerging CPG brands.

In my years providing financial services to CPG brands, I've found that choosing channels isn't enough to ensure growth. You must also consider how they impact your finances.

The most popular channels — retail, direct to consumer (DTC), and food service — each come with unique challenges and opportunities. Embedding them into financial models helps you see how they'll affect the business. That way, you can create a strategy that has the best potential for growth and profitability while balancing costs, scalability, and revenue projections.

In this guide, I'll break down the process of integrating your GTM strategies into your financial models while considering channel-specific nuances.

GTM Channels and Their Role in Financial Models

Many CPG brands use more than one GTM channel to gain a foothold in the market. Instead of analyzing each channel independently, I recommend assessing them holistically to build a robust financial model.

In the CPG industry, many brands use three primary GTM strategies.

Retail

With a retail GTM strategy, you sell your products directly to retail outlets or partner with a wholesale distributor such as United National Foods, Inc., (UNFI) and KeHE. Distributors expose your brand to a wide range of retailers, optimize logistics, and provide valuable expertise that can help your company scale efficiently. In return, they sell your products at a markup. Retail stores then mark up the prices even further, so to stay competitive, you'll need to sell items at a lower price than you would in a DTC model.

A retail GTM strategy has various costs that can impact revenue and profits, including trade spend, marketing, chargebacks, and additional fees. The numbers tend to be higher for emerging CPG brands; it's not cheap to build brand visibility in a crowded retail setting.

I've seen many new CPG companies underestimate how these expenses affect profits. If you bring in $25,000 in revenue but need to spend $10,000 on promotions and premium shelf space to get customers to notice your product, profit margins shrink. By building these costs into your financial models from the beginning, you can better understand the full impact and profit potential.

Direct to Consumer (DTC)

With this model, you market your products to customers and sell to them directly, usually via a Shopify site or Amazon store. DTC sales come with high marketing and advertising costs, particularly when you're building brand awareness and launching new products.

Shipping and warehousing costs for DTC tend to be higher than retail GTM channels for emerging CPG brands. Your budget and financial model should account for the fees that fulfillment centers charge to store, pack, and ship orders. These costs can eat into your profit margins in the beginning, but they tend to make less of an impact as order volume increases and demand forecasting improves.

While this channel can scale quickly, it's important to balance growth against production and warehouse capacity.

Food Service

In a food service GTM, you sell your products directly to companies that serve food — restaurants, airlines, and hotels, for example. With this strategy, brand visibility is less important; the end consumer may never see your brand. As a result, buyers tend to be more price sensitive and less brand loyal.

To stay competitive and scale efficiently, your company must focus on adding value and building strong partnerships. If you're working with an airline, for example, you might develop special packaging that's easy to open in pressurized settings. Cutting costs and building a more efficient operation can also help boost profitability while you're building a strong reputation.

Forecasting Revenue and Costs Across GTM Channels

Revenue and cost forecasts are an important part of growth planning for CPG brands. As you build GTM channels into your financial model, remember that each one has its own cost drivers. For the most accurate revenue forecasting, each channel should have its own tab.

When it comes to forecasting for an emerging CPG brand, I always advise clients to be as detailed as possible — it's why I think your accountant needs to be a CPG expert. During my four years at Grupo Peñaflor, one of the largest wine producers in Argentina, I saw firsthand how costs can vary dramatically between GTM channels. The same goes for sales; even a temporary change in pricing can impact your sales volume and revenue.

The more granular you can get, the easier it is to build realistic, achievable goals for each channel.

Revenue forecasts typically consider:

• Revenue streams

• Current and historical sales data

• Seasonal fluctuations

• Pricing strategies

• Promotions and discounts

• Impact of new product launches

• External factors: consumer behavior, economic conditions, market trends

For cost forecasts, consider:

• Upfront investment

• Cost of goods sold (raw materials, labor, packaging, shipping, production overhead)

• Sales, marketing, and trade spend

• Distribution fees

• Warehousing and fulfillment

• Administrative costs

• Rent and utilities

• Scaling costs: labor, inventory, marketing

Consider both fixed and variable costs; your accounting service may already break down each category. Fixed costs might include building rent, salaries, and utilities. Many other operating expenses will be variable, but it's important to note the differences between channels.

For example, DTC has higher warehousing fulfillment costs than retail and food service. It also requires more capital upfront to build a website and a secure e-commerce channel. Retail channels usually require more trade spend than food service, and the monthly spend may vary based on seasonal shifts in demand.

Nuances in GTM channels for emerging CPG brands can also impact revenue. The price you charge distributors in a retail GTM will be lower than the price you charge customers in DTC. Promotions are likely to affect order volume differently for both retail and DTC.

As you're evaluating each channel, consider differences in cost drivers:

• Retail. Your costs will vary based on "stores and doors" — how many stores your products are in and the total number of locations. The higher these numbers, the higher your trade spend will be. For CPG brands, trade spend tends to be 20%-25% of gross sales; it may be higher for new brands. You should also consider velocity, which measures how fast your products sell in units per store. Model this metric using your company's historical data, market data, or trends.

• DTC. For this channel, the main cost drivers are ad impressions, ad conversion rates, and the average order value (AOV). Two key metrics to model include reorder rate and the cost of acquisition — how much you spend in advertising and marketing to get one person to make their first order.

• Food service. As with retail, costs are driven by stores and doors. Make sure to consider your pricing strategy carefully. Building GTM strategies for food service usually involves selling at a lower price point, whether you're working with brands or a distributor.

Strategic Investments for Scaling GTM Channels for Emerging CPG Brands

To scale your CPG business effectively, you can use your financial models to choose strategic investments. Start by looking for areas with a high ROI for growth. Then, determine when your money will make the biggest impact.

Let's say your DTC channel has been seeing a steady rise in impressions and conversion rates. This indicates that you've reached the correct audience, so you might hire a dedicated digital marketing employee to increase momentum.

In food service, you might focus on improving operational efficiency. For a retail channel, you could optimize packaging to attract customers' attention — bonus points if it's cheaper or more sustainable.

Don't forget to consider how investments will affect cash flow. In working with emerging CPG brands, I find that this is particularly challenging for retail channels. Long payment terms, chargebacks, and surprise returns can reduce available cash. Before you invest, make sure your incoming and outgoing payments are aligned.

At Balanced Business Group, we recommend scaling a single channel at a time to focus your energy and cash. This strategy makes it easier to meet the company's immediate needs while growing at a sustainable pace.

Here are some ways to avoid over-investing in a single channel:

• Manage trade spend carefully in retail.

• Aim for profitability on your first DTC order; don't rely on reorders.

• Make changes that have broad appeal for multiple food service clients.

Aligning GTM Strategies With Financial Success

Retail, DTC, and food service GTM strategies can significantly impact your company's finances. By integrating go-to-market strategies into financial models, your brand can develop a realistic long-term strategic plan.

Need help? Balanced Business Group offers financial modeling for retail and DTC brands; we help emerging CPG brands achieve financial stability and sustainable growth. Contact us today for personalized support.

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.