The Most Valuable Gap in CPG

Why does Coca-Cola spend less than 3% of its revenue on advertising while challenger brands are forced to burn 10-20% just to stay afloat?

It’s not because Coke's marketing team is lazy. It’s because 138 years of consistent brand building does the heavy lifting for them.

Recent estimates show the stark reality of this divide:

• Oatly: ~8% of revenue on ads

• Liquid Death: ~6% of revenue on ads

• The Coca-Cola Company: ~2-3% of revenue on ads

That gap between the challenger's burn rate and the category leader's cruise control? That's pure, unadulterated profit margin. It's the most valuable moat in business, and it’s built on one thing: brand equity.

What Brand Equity Actually Buys You

When you're thirsty at a gas station, you don't need a Facebook ad to remember that Coke exists. The brand is already seared into your brain. But that new mushroom-infused energy drink? They might have to spend $8 just to get you to try one can.

Investing in brand isn't about fluffy feelings; it's about buying tangible, long-term advantages that performance marketing alone can never deliver.

1. Retail Real Estate

Strong, trusted brands get the best, eye-level shelf placement. Weak or unknown brands have to fight for the bottom shelf and often pay double the slotting fees for the privilege. Brand equity buys you distribution leverage.

2. Mental Availability

When someone says "grab me a Coke," they might mean any cola. That's the power of becoming the default choice in a category. This "mental real estate" is worth billions in free marketing, as your brand becomes the shortcut for a consumer's need.

3. Pricing Power

A can of private-label cola costs $0.99. A can of Coca-Cola costs $2.49. The ingredients are nearly identical. The difference isn't the sugar water; it's the century of trust, consistency, and emotional connection baked into the red can.

Building the Moat Today

The real insight is that every dollar you invest in genuine brand connection compounds over time. Ads get you today's sale. But delivering consistent quality, creating memorable packaging, and relentlessly keeping your promises? That gets you the next decade of sales at half the marketing cost.

Look at Liquid Death. Sure, they're spending ~6% on marketing now. But every skull-covered can, every irreverent video, and every "Death to Plastic" message is a brick in their brand equity wall. They are spending money today to build the trust that will allow them to spend less tomorrow.

In 10 years, they'll likely be spending 3% while a new wave of challengers burns cash just trying to break through the noise they created.

The strongest brands aren't built on the biggest budgets. They're built on the smallest details, delivered with obsessive consistency, until trust becomes automatic.

Because when trust becomes automatic, marketing becomes a choice, not a tax.