Alternative Channels, Real Growth:
Where CPG Brands Should Be Placing Their Bets

Alternative Channels, Real Growth: Where CPG Brands Should Be Placing Their Bets

As traditional growth channels get more crowded and competitive, more CPG suppliers are looking to alternative retail to expand distribution, build share, and grow profitably in the places where shoppers are already buying. For brands looking to unlock new demand and make alternative retail a true strategic growth engine, understanding where the biggest opportunities are emerging, and how to navigate the complexity of these channels, has never been more important.

For this edition of Smart Pulse, we sat down with Kay Halbrook, Vice President of Sales Operations, Telmark by MPG, to explore where CPG brand suppliers should be placing their bets as alternative channels take on a bigger role in total commerce strategy. Telmark is widely recognized for driving profitable growth for brands and retailers in channels such as convenience, inner-city retail, downstream customers of master distributors, hospitality, gift, campus stores, beauty/barber, bakery, and sporting goods.

1) As traditional growth channels mature, where should CPG brand suppliers be looking for their next wave of incremental growth across alternative channels, and what separates the brands that scale successfully from the ones that stall out?

I think the biggest shift is moving away from the idea that alternative channels are just extra distribution. The real opportunity is to treat them as growth platforms with their own shopper missions, economics, and execution needs.

The brands that scale well are usually the ones that build a real channel plan around the product, not just around the account list. We advise clients to start with the role the channel plays for the shopper. Is it an immediate-consumption mission in convenience? A value-driven stock-up mission in military retail? An operational need state in hospitality? Once you understand that, you can build the right assortment, pack and price architecture, and go-to-market approach around it.

Where brands tend to stall out is when they try to use a one-size-fits-all playbook from a larger traditional retail environment in channels that work very differently. In alternative channels, the item matters, but so do the format, the price point, the route to market, and the execution model. The suppliers that win are the ones that adapt early and treat those differences as part of the growth strategy, not as an afterthought.

2) Value remains the dominant shopper mindset in 2026. How can brand suppliers build a winning value equation in channels like convenience and military retail without defaulting to margin-eroding price cuts?

One of the biggest misconceptions right now is that value simply means lower price. In reality, value is about giving the shopper the right mix of affordability, relevance, convenience, and format fit. We advise clients to think about value by channel, because it does not look the same everywhere. In convenience, value may come from hitting the right opening price point in a single-serve format and supporting immediate-consumption occasions. In military retail, value is tied much more closely to savings and trust. The Defense Commissary Agency has made clear that protecting shopper savings remains central to the channel, with military families currently saving an average of 23.7% compared with other food retailers.

The answer here is usually not to push deeper discounts. It’s to build a more disciplined value equation by channel. That may mean better pack architecture, better entry-price options, or a clearer good-better-best ladder. The brands that do this well tend to protect margin more effectively because they are creating channel fit, not just cutting price. Often these complex channels can be more profitable than mass retailers as their advertising or costs to serve are less, even with multi-step distribution models.

3) Convenience has evolved well beyond a fill-in trip. How should suppliers rethink innovation, pack-price architecture, and activation for a channel increasingly shaped by loyalty and immediate-consumption missions?

Convenience is becoming much more occasion-driven, and suppliers need to respond to that. It’s not just about being present on shelf. It’s about understanding the mission and making sure your product earns its place in the basket.

We advise brands to rethink innovation through that lens. Does the pack fit the mission? Does the price point feel accessible in the moment? Can the product attach to foodservice, beverages, or other high-frequency categories? And on activation, are you showing up in ways that support conversion at the point of decision? The winners in convenience are the ones that translate product strength into occasion relevance.

Case Study: Success in OTC Alternative Channels

4) Some of the most interesting growth opportunities are showing up in highly specific, non-traditional outlets. How should CPGs think about identifying the right product-channel fit in those environments?

One of the biggest missed opportunities for suppliers is assuming growth only comes from expanding into larger or more familiar retail channels. In reality, some of the best opportunities come from thinking more creatively about where a product fits in the context of how shoppers live, travel, work, and solve everyday needs.

That starts with understanding adjacency and use case. We often advise clients to look beyond the category’s traditional home and ask a different question: where else might this item naturally fit based on shopper need? Lip balm at a restaurant, poison oak remedy at a sporting goods store, charcoal in an urban bodega, or canning jars at a farm stand are all examples of products showing up in places where they are relevant to the shopper and the setting.

This kind of expansion only works when the product, the channel, and the mission line up. But when they do, it can unlock meaningful incremental growth. We have seen that across a wide range of outlets, including college bookstores, urban stores, DSW, Cracker Barrel, Nordstrom Rack, campground stores, Amish stores, smoke shops, and oil rig commissaries. For suppliers, that can mean incremental distribution, stronger productivity in overlooked outlets, and a more practical path to growth than waiting for whitespace in already-crowded channels.

5) How can CPG brands avoid thinking too narrowly about where their products belong, and instead uncover new growth by aligning items to shopper need states in unexpected but highly logical channels?

I think this is where some of the most exciting work is happening right now. Too often, brands define channel opportunity by historical distribution patterns instead of by actual shopper behavior. But shoppers do not think in those terms. They are simply in a place, trying to solve a need, and if the product is relevant, well placed, and appropriately priced, they are open to buying it.

We encourage clients to think less about where the item has always sold and more about where it naturally fits. That means looking at the shopper mission, the setting, and the adjacency. A personal care line may have a strong fit in a footwear or lifestyle environment like DSW. A convenience-oriented item may work in a college bookstore. A seasonal or utility product may belong in a farm stand store or campground outlet. Those are not random extensions. They are strategic ones when grounded in how people shop. Getting to these locations often happens through a niche distributor, not directly – understanding those complexities is key.

For suppliers, that mindset can open up channels that competitors may be overlooking. It also creates a more practical way to think about innovation and expansion. Instead of asking only, “What channel should we enter next?” the better question may be, “Where else are shoppers already in the right mindset to buy this product?” For brands, that can open up new points of distribution, create more relevant occasions for purchase, and unlock growth that would be easy to miss through a more traditional channel lens.