CPG & Retail Glossary

Third-Party Logistics. A company that provides outsourced logistics services including warehousing, fulfillment, and transportation. Examples: ShipBob, Flexport, XPO.

A method of recording trade spend obligations before actual payment, allowing brands to match promotional costs to the period in which they are incurred.

All Commodity Volume. A measure of distribution that represents the percentage of total retail sales that carries a specific product. 80% ACV means the product is in stores that represent 80% of total retail sales.

US FDA requirement to clearly declare the presence of the nine major food allergens (milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, soybeans, sesame) on food product labels.

Two Amazon selling models: Vendor Central (1P) means Amazon buys inventory wholesale; Seller Central (3P) means the brand lists and sells directly on Amazon's marketplace, retaining more margin and control.

A product that has been officially approved and listed by a retailer's buying team for placement in their stores. Authorization is required before orders can be placed.

A promotional allowance where a retailer invoices the supplier after a promotional event has occurred, deducting agreed amounts from supplier payments.

US law (NBFDS) requiring food manufacturers to disclose if a product contains bioengineered (GMO) ingredients. Effective since Jan 1, 2022, enforced by USDA.

A sales agent or agency that represents a manufacturer's products to retailers and distributors. Brokers typically earn 3–5% commission on sales and provide market access and relationship management.

A supplier designated by a retailer to help manage an entire product category, including recommending assortment, pricing, and shelf placement strategies.

A periodic review by a retailer of all products in a category to assess performance and determine which items to add, retain, or delist. Often happens annually.

A document issued by a quality control laboratory confirming that a product meets its specifications. Retailers and distributors increasingly require COAs, especially for health and supplement products.

A deduction taken by a retailer from a supplier invoice, typically for compliance violations such as incorrect labeling, late shipments, or packaging that doesn't meet retailer specs.

Cost, Insurance, and Freight. A shipping arrangement where the seller pays for the cost, insurance, and freight to bring the goods to the destination port.

A cost-sharing arrangement where a supplier contributes funds to a retailer's promotional or advertising activity featuring the supplier's product.

A manufacturing company that produces and packages products for another brand. Most early-stage CPG brands use co-packers to avoid capital-intensive production investment.

Cost of Goods Sold. The direct costs associated with producing a product, including raw materials, manufacturing labor, and packaging. Excludes overhead, marketing, and sales costs.

Revenue minus all variable costs (COGS, trade spend, freight, broker commissions). The amount each unit contributes toward covering fixed costs and generating profit.

A US requirement to disclose the country where certain food products were produced, grown, or manufactured on the product label.

A financial guarantee required by US Customs and Border Protection (CBP) for importing goods into the US, ensuring duties and taxes will be paid.

A periodic inventory audit method where a subset of products is counted on a rotating basis, rather than a full inventory shutdown.

Distribution Center. A warehouse facility used by retailers or distributors to consolidate, sort, and redistribute products to individual store locations.

Delivered Duty Paid. A shipping arrangement where the seller is responsible for all costs including duties, taxes, and delivery to the final destination.

The internal process of tracking, validating, and disputing retailer deductions from invoices. Poor deduction management is one of the largest sources of profit leakage for CPG brands.

When a retailer removes a product from its assortment, typically due to poor sales velocity, compliance issues, or a category reset. Suppliers have limited recourse once delisted.

Product demonstrations or samples offered to consumers at the point of sale. One of the highest-ROI tactics for trial generation in natural and specialty retail.

A company that purchases products from manufacturers and resells them to retailers. Distributors take ownership of inventory, unlike brokers. Examples: UNFI, KeHE, McLane.

A fulfillment model where the manufacturer ships products directly to the end consumer on behalf of a retailer or marketplace, bypassing the retailer's warehouse.

Direct Store Delivery. A distribution model where a manufacturer or distributor delivers product directly to individual retail stores, bypassing the retailer's distribution center.

Dietary Supplement Health and Education Act. The US law that defines and regulates dietary supplements, setting labeling and claims requirements for the supplement industry.

A sales channel where brands sell directly to end consumers, typically via their own e-commerce website, bypassing retailers and distributors. Often used as a validation and brand-building channel before retail.

European Article Number / Global Trade Item Number. A globally unique product identifier used for retail scanning. A GTIN-12 is the US UPC; GTIN-13 is the international EAN used outside North America.

Electronic Data Interchange. A standardized format for exchanging business documents (purchase orders, invoices, shipping notices) electronically between trading partners. Required by most major US retailers.

Price elasticity of demand. Measures how sensitive consumer demand is to price changes. Highly elastic categories see significant volume swings with small price changes.

Display space at the end of a retail aisle, typically used for promotions or featured products. Highly visible and commands a premium placement fee.

A retail pricing strategy where a retailer consistently offers products at a low price rather than running frequent promotions. Associated with Walmart's pricing model.

Ex Works. A trade term where the buyer assumes all costs and risks from the moment goods leave the seller's premises. Common in international CPG sourcing.

US FDA requirement for domestic and foreign food facilities to register with the FDA before manufacturing, processing, packing, or storing food for US consumption.

The number of product units visible from the front of a retail shelf. More facings typically indicate higher sales velocity or retailer confidence in a product.

Food and Drug Administration. The US federal agency responsible for regulating food, beverage, dietary supplement, cosmetic, and drug labeling and safety standards.

The percentage of a customer's order that is fulfilled completely and on time. A fill rate below 98% is often penalized by major retailers through chargebacks.

Free On Board. A shipping term indicating when ownership and risk transfers from seller to buyer. "FOB Origin" means risk transfers when goods leave the factory; "FOB Destination" means at delivery.

Front-of-Pack Labeling. Nutritional or claims-based information placed on the front panel of a package. The FDA has been developing mandatory FOP nutrition labeling standards.

Free product provided to a retailer to fill shelves when a new SKU is initially placed, often required as part of the sell-in process.

Food Safety Modernization Act. Landmark FDA legislation signed in 2011 that shifted focus from responding to foodborne illness to preventing it. Imposes strict requirements on food manufacturers and importers.

Federal Trade Commission. Regulates advertising claims and marketing practices. Responsible for enforcing truth-in-advertising laws for CPG products.

FDA regulations outlining the minimum standards for the manufacturing, processing, and packaging of food, dietary supplements, and other consumer goods sold in the US.

A freestanding double-sided shelving unit found in most retail stores. The primary shelf fixture where most CPG products are merchandised.

Generally Recognized As Safe. An FDA designation indicating that an ingredient is considered safe for its intended use in food products based on scientific evidence or history of use.

Revenue minus COGS, expressed as a percentage of revenue. For example, if you sell a product for $10 and your COGS is $4, your gross margin is 60%.

The global standards organization that manages UPC/EAN barcode assignments and product identification standards. Brands must register with GS1 US to obtain legitimate UPC codes.

Hazard Analysis and Critical Control Points. A systematic preventive approach to food safety that identifies and controls potential hazards in the production process. Required for many food manufacturers.

A retail pricing strategy involving frequent promotional price swings between a high regular price and a deeply discounted promotional price. Common in grocery.

In-Demand Listing. A fee or requirement from some retailers to be listed in their system before a product can be ordered — separate from slotting fees.

A temporary or seasonal product placement in a retail store, not a permanent shelf position. Common in club stores like Costco.

Additional merchandising space given to a product beyond its normal shelf position, such as an endcap, floor display, or secondary placement. Usually tied to promotional funding.

The intermediate packaging layer between individual consumer units and the full master case. Retailers sometimes order by inner pack rather than full case.

Formerly Information Resources Inc. A major market research firm providing retail sales data and consumer insights to CPG manufacturers and retailers. Now rebranded as Circana.

Consumer purchase panel data tracking buying behavior of a representative sample of US households. Used to measure brand loyalty, purchase frequency, and basket size.

A leading US distributor of natural, specialty, and organic food products. Serves thousands of retail locations including independents, regional, and national grocery chains.

A retail pricing method where the retail price is set at double the wholesale price, resulting in a 50% gross margin for the retailer.

Third-party certification verifying that a product meets Jewish dietary laws. Highly valuable in US retail as many non-Jewish consumers use Kosher certification as a quality proxy.

The total cost of a product once it has arrived at the buyer's location, including purchase price, transportation, insurance, customs, duties, and handling fees.

The total time from placing a purchase order to receiving the goods. Includes production, quality inspection, and shipping time.

A formal meeting between a supplier and a retailer's buying team to present new products, review current performance, and negotiate shelf space for the upcoming season or year.

Minimum Advertised Price. A policy set by a manufacturer that prohibits retailers or distributors from advertising a product below a specified price. Protects brand value and retailer margins.

A discount given by a supplier to compensate a retailer for reducing the retail price of a product, often used during promotions or when clearing inventory.

The outer shipping carton that contains multiple individual retail units or inner packs. Case dimensions and weight directly affect shipping costs and retailer compliance.

A deduction taken from a supplier's invoice by a retailer to recover promotional allowances or compliance penalties. Distinct from trade spend authorized in advance.

Minimum Order Quantity. The smallest number of units a supplier will produce or sell in a single order. Critical for cost management and inventory planning.

Manufacturer's Suggested Retail Price. The price a manufacturer recommends a retailer charge consumers. Retailers are not legally required to follow MSRP.

Gross revenue minus all trade deductions, returns, and allowances. The true top-line revenue recognized after accounting for all retailer and distributor deductions.

Payment terms on an invoice, e.g., "Net 30" means payment is due 30 days after invoice date. Major retailers often demand Net 60 or Net 90, impacting a supplier's cash flow.

A document submitted to a retailer or distributor to formally request listing of a new product. Includes product specs, pricing, UPC, case dimensions, and lead times.

A global data analytics company providing CPG retail sales tracking, market share, and shopper insights. One of two dominant syndicated data sources (alongside Circana).

A voluntary claim indicating a product does not contain genetically modified organisms. The Non-GMO Project provides the most recognized third-party verification in the US market.

The standardized nutrition information label required by the FDA on most packaged food and beverage products sold in the US, including serving size, calories, and nutrient values.

The percentage of time a product is physically available on the shelf for purchase. Poor OSA leads to lost sales and can trigger delisting by the retailer.

USDA certification verifying that a product meets National Organic Program standards. Products must be certified to use USDA Organic seal or make organic claims on US labels.

On-Time In-Full. A retail compliance metric measuring whether suppliers deliver the correct quantity of product by the required delivery date. Walmart's OTIF standard is among the strictest in the industry.

A flat transport structure on which goods are stacked and secured for storage and shipping. US standard pallets are 48" x 40". Most retail DCs require pallet-level deliveries.

A metal or plastic hook mounted on a pegboard or shelf fixture used to hang products in retail stores. Common for small hardware, personal care, and impulse items.

A fulfillment process where individual items are selected (picked) from warehouse inventory and packaged for individual orders. Standard in e-commerce and DTC fulfillment.

A visual diagram or schematic showing how products should be arranged on a retail shelf to maximize sales, including product placement, facings, and spacing.

Plan-O-Gram. Another term for a planogram — the schematic layout that dictates how products are placed on a shelf, including shelf positions, facings, and spacing.

A strategic framework for designing a portfolio of product sizes and price points to target different consumer segments and retail channels at optimal price-value ratios.

The incremental increase in sales volume attributable to a promotional activity compared to baseline (non-promoted) sales. Used to evaluate ROI on trade spend.

Documentation confirming that a shipment was received by the buyer. Required to dispute retailer deductions related to short shipments or non-delivery claims.

California's Safe Drinking Water and Toxic Enforcement Act. Requires businesses to provide warnings about significant exposures to chemicals that cause cancer or reproductive harm. Applies to products sold in CA.

A partial refund paid by a supplier to a retailer or distributor, typically based on achieving volume purchase thresholds. Common in big box retail agreements.

A group of independent sales representatives who cover a geographic territory and represent multiple non-competing product lines to retailers and distributors. Often the first step in building out a sales team.

A periodic reorganization of a retail shelf or section, often aligned with seasonal changes or category reviews. New products can be added and underperformers delisted during a reset.

Point-of-sale data captured when products are scanned at checkout. Used to track sell-through velocity, measure promotion lift, and inform retailer category decisions.

A promotional discount captured at the point of sale when a consumer purchases a product at a reduced price. The supplier reimburses the retailer for each unit scanned.

A document providing detailed information about a product's chemical composition, hazards, safe handling, and emergency procedures. Required for hazardous materials in commerce.

A one-page sales document used by manufacturers to pitch products to retail buyers. Typically includes product images, key benefits, pricing, and contact information.

The process of selling products from a manufacturer or distributor to a retailer. Distinct from "sell-through," which is what the retailer sells to end consumers.

The percentage of inventory that has been sold by a retailer to end consumers within a given period. High sell-through indicates strong consumer demand.

The period during which a product is expected to remain at peak quality. Retailers often have minimum shelf life requirements (e.g., 2/3 remaining shelf life) at time of receipt.

A small sign or card attached to a retail shelf edge that draws attention to a product — often highlighting a promotion, award, or key claim.

Marketing directed at consumers at or near the point of purchase. Includes in-store displays, endcap features, shelf talkers, digital coupons, and loyalty program promotions.

Stock Keeping Unit. A unique identifier assigned to a specific product variant (e.g., a 12oz bottle in red). Each size, flavor, or color is typically a separate SKU.

A fee paid by a supplier to a retailer to secure shelf space for a new product. Can range from hundreds to tens of thousands of dollars per SKU per store or chain.

A retail analytics company specializing in natural, organic, and specialty product data. Widely used by brands and retailers in the natural grocery channel.

Total Addressable Market / Serviceable Addressable Market / Serviceable Obtainable Market. A framework for sizing market opportunity at different levels of realistic access and capture.

Refers to the number of cases per layer (TI = tier) and the number of layers per pallet (HI = high). Critical data required by retailers and distributors for warehouse slotting.

A short-term promotional price reduction funded by the manufacturer. One of the most common forms of trade spend in grocery retail.

Marketing activities directed at retail buyers, distributors, and the trade channel rather than end consumers. Includes trade shows, sell sheets, buyer presentations, and promotional programs.

The total budget a manufacturer allocates for promotional and retail partnership activities, including slotting fees, scan allowances, co-op advertising, and free fills. Typically 15–30% of revenue for CPG brands.

United Natural Foods Inc. The largest publicly traded wholesale distributor of natural, organic, and specialty food in the US. A key gateway to natural grocery retail.

Universal Product Code. A 12-digit barcode used to identify retail products in the US. Required by virtually all US retailers for inventory scanning.

The rate at which a product sells at retail, typically measured in units per store per week (UPSPW). Retailers use velocity data to make stocking and reorder decisions.