How to Set Realistic ROAS Benchmarks for Emerging Food Brands

I’ve seen how setting the right return on ad spend (ROAS) benchmarks can mean the difference between a thriving brand and one that’s needlessly burning through ad spend. When I first analyzed ROAS for food brands, I realized that many founders lacked clear benchmarks, leaving them unsure whether their marketing investments were paying off. 

Keep reading, and I’ll guide you through the process of setting realistic ROAS benchmarks. You'll get a clear definition of ROAS, industry insights, financial breakdowns, and practical tips to help you make informed decisions about your advertising budget.

Understanding ROAS and Why It Matters

ROAS measures how much revenue your business generates for every dollar spent on advertising. If you spend $1 on ads and make $5 in revenue, your ROAS is 5:1. This ratio helps you determine whether your campaigns are profitable, sustainable, scalable, and conducive to long-term brand strength.

Here’s the formula:

Revenue from ads ÷ ad spend = ROAS

While a high ROAS is great, profit margins, customer acquisition costs, long-term brand equity, and operational efficiency all play a role in determining whether your advertising strategy is financially sound. I’ve seen brands assume that a 10:1 return is the industry standard when, in reality, food and beverage advertising benchmarks are often in the 3:1 to 8:1 range. 

Without clear metrics, you could be spending inefficiently, missing out on growth opportunities, or worse, misallocating budget resources that could be used elsewhere. Understanding these nuances is vital to optimizing ad spend for emerging brands, and establishing ROAS benchmarks for food brands that truly reflect their market realities.

Industry Benchmarks for ROAS in Food and Beverage

ROAS benchmarks vary by industry, and food and beverage brands face unique constraints. 

Advertising Channel Average ROAS

Direct-to-consumer (DTC) 3:1 – 6:1

Amazon ads 4:1 – 8:1

Paid social (Facebook, Instagram, TikTok) 2:1 – 5:1

Google search ads 5:1 – 9:1

Influencer marketing 2:1 – 4:1

Trade shows and sampling events 1:1 – 3:1

For example, a boutique winery might see a 6:1 return from Google Ads but struggle to break even with influencer partnerships and trade show promotions. Your ROAS will depend heavily on your marketing mix, audience preferences, and brand positioning. 

Reviewing historical data and assessing performance benchmarks can help identify where to allocate your ad spend for maximum efficiency. A process of continuous refinement is necessary to optimize ad spend for emerging brands, and achieve realistic and sustainable returns on ad spend for food brands.

Setting Realistic ROAS Goals for Your Brand

A strong ROAS benchmark should be based on real business data. To set practical goals:

Assess Your Current Performance

Start by calculating your ROAS from previous campaigns. If your current ratio is below 3:1, focus on refining your targeting, adjusting budget allocation, improving ad creative, and optimizing your conversion funnels before increasing spend.

Factor in Business Stage and Brand Awareness

Early-stage brands often have a lower ROAS while building awareness and brand equity. A 3:1 or 4:1 benchmark may be reasonable, whereas established brands might push for 5:1 or higher as they refine their marketing strategy, scale their operations, and strengthen market positioning.

Align With Industry Benchmarks and Competitor Performance

Research how similar brands perform. If competitors in your space average 5:1 but you’re seeing 2:1, that should signal a need to reassess your strategy.

Consider profit margins, customer lifetime value (CLV), and retention rates. If your margins are thin, you’ll need a higher ROAS to remain profitable. Likewise, if repeat purchases are common, a lower ROAS may be acceptable if it leads to long-term customer retention, upselling, referral-based growth, and improved customer loyalty.

Set Phased and Scalable Goals

Instead of targeting a static number, set incremental goals. For example, aim for 5:1 over the next quarter, analyze performance, and then refine your approach based on real-time data, emerging trends, campaign effectiveness, and market shifts.

Over time, as you gather more data, consider experimenting with microtargeting and A/B testing ad creatives to further refine your benchmarks. Using advanced analytics tools can reveal subtle shifts in customer behavior, helping you adjust ROAS goals dynamically. Taking an iterative approach improves efficiency and positions your brand for sustained growth.

And remember, establishing realistic ROAS goals is an evolving process that should adapt as your market and operations scale.

Adjusting ROAS Targets as Your Brand Grows

When you first launch, you might accept a lower ROAS to acquire new customers. Over time, refining your marketing mix should improve efficiency, reduce acquisition costs, enhance overall profitability, and push your ROAS higher.

For example, a wine brand has a 2:1 ROAS while building awareness. After 6 months of optimizing product-market fit and reallocating ad spend to high-performing channels, the brand's ROAS increases to 6:1. This shift was achieved by improving audience segmentation, A/B testing ads, using email remarketing, and expanding high-performing campaigns.

Regularly reviewing your ROAS metrics keeps your marketing investment scaling in-line with business objectives. As you expand your distribution channels or enter new markets, adjust your ROAS targets to reflect these changes. Strategic tweaks, guided by data, can drive performance improvements even as customer acquisition costs evolve.

Maximizing ROAS for Food and Beverage Brands

If your ROAS isn’t where you want it to be, I've got some tried and true strategies to help you improve performance:

• Refine your targeting. Use data analytics to segment your audience, refine customer personas, focus on high-converting demographics, and optimize ad scheduling to maximize engagement.

• Optimize copy. High-quality visuals, compelling copy, and streamlined landing pages can significantly boost engagement and conversion rates, while intuitive design elements further enhance user experience.

• Reallocate budget. If paid search is driving a 6:1 return while social ads lag at 2:1, shift your budget accordingly. Test ad placements, bid strategies, timing, and creative variations to find the optimal mix.

• Lean on financial data. Tie your advertising spend to key financial metrics and use attribution models to understand which channels are driving conversions.

• Iterate regularly. The best-performing brands continuously test, analyze, refine, and optimize their campaigns to maximize efficiency, minimize waste, reduce customer acquisition costs, and improve overall marketing ROI.

Setting and Optimizing ROAS Benchmarks for Success

Setting realistic ROAS benchmarks for food brands is an essential part of building a sustainable marketing strategy. Aligning your goals with industry benchmarks, business objectives, and financial data means every marketing dollar is working to grow your brand efficiently and effectively.

If you’re unsure whether your ad spend is optimized, now is the time to review your numbers. Are you hitting your target ROAS, or is there room for improvement? Continuously evaluating and adjusting your strategy helps you position your brand for long-term success and scalable profitability.

For expert financial guidance, check out our resources on How to Calculate Breakeven for a CPG Company, and How Much Should You Spend on Trade Spend? For personalized advice, reach out through our contact page.

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.