How to Build GTM Channels Into Your Financial Model for an Emerging CPG Brand
Steep competition, rising costs, complex supply chains, and changing consumer behavior can make it difficult to get a secure foothold in the CPG market. As such, emerging CPG brands need to invest strategically in go-to-market (GTM) channels.
In my years providing financial services to CPG Founders at Cultivar, I've found that choosing channels is just the starting point. Understanding how each one flows through to your bottom line is what shapes sustainable growth.
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 walk through the process of integrating your GTM strategies into your financial models, including the channel-specific nuances that make all the difference.
GTM Channels and Their Role in Financial Models
Brands often model three common GTM channels first: retail, DTC, and food service.
Retail
With a retail GTM strategy, you sell your products directly to retail outlets or partner with a wholesale distributor, such as United Natural 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 prices even further, so to stay competitive, you'll need to sell items at lower prices 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, and building brand visibility in a crowded retail setting requires real investment.
I've seen many new CPG companies underestimate the impact these expenses have on 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 through a Shopify site or an 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 have less of an impact as order volume increases and demand forecasting improves.
Food Service
In a food service GTM, you sell products directly to companies that serve food, such as restaurants, airlines, and hotels. With this strategy, brand visibility is less important, as the end consumer may never see your brand. Buyers tend to be more price-sensitive and less brand-loyal as a result.
To stay competitive and scale efficiently, your company needs to focus on adding value and building strong partnerships. For example, if you’re working with an airline, you might develop single-serve packaging that’s easy to open during pressurized cabin service. Cutting costs and building a more efficient operation can also help boost profitability as you build 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.
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, such as consumer behavior, economic conditions, and 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 around labor, inventory, and marketing
Consider both fixed and variable costs. 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 and 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 monthly spend may vary based on seasonal shifts in demand.
The price you charge distributors in a retail GTM will be lower than what you charge customers in DTC, and promotions are likely to affect order volume differently across each channel.
Differences in Cost Drivers
As you're evaluating each channel, consider differences in cost drivers:
Retail: Your costs will vary based on "stores and doors," meaning how many stores your products are in and the total number of locations. The higher these numbers, the higher your trade spend. For CPG brands, trade spend typically runs at 20-25% of gross sales, and it may be higher for new brands. You should also consider velocity, which measures how fast your products sell in units per store per week. 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 average order value (AOV). Two key metrics to model are reorder rate and cost of acquisition, which is how much you spend in advertising and marketing to get one person to make their first order.
Food service: Costs are often driven by account count, location count, order volume, pack format, logistics, and any custom requirements the buyer may have.
Modern financial planning tools, such as Fathom, Jirav, and Cube, can make channel-level tracking easier to manage as you scale. For most early-stage brands, a well-structured spreadsheet with a dedicated tab for each channel works just as well and keeps the model accessible to your whole team.
Strategic Investments for Scaling GTM Channels for Emerging CPG Brands
To scale your CPG business effectively, use your financial models to make strategic investment decisions. Start by identifying areas with a high ROI for growth, and 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 right 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, and bonus points if it's cheaper or more sustainable.
Cash flow deserves careful attention before any investment decision. In my work with emerging CPG Founders, I find this is particularly challenging in retail channels. Long payment terms, chargebacks, and surprise returns can reduce available cash quickly. Before you invest, make sure your incoming and outgoing payments are aligned.
At Cultivar, we recommend scaling one 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, and treat reorders as the upside.
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.
Cultivar helps emerging CPG brands achieve financial stability and sustainable growth. Contact us today for personalized support.
GTM Strategy FAQs
How many GTM channels should an emerging CPG brand start with?
Most emerging brands should start with one or two GTM channels, then prove the unit economics before adding another.
What percentage of revenue should CPG brands expect to spend on trade spend in retail?
Many CPG brands spend about 20-25% of gross sales on trade spend, although newer brands may spend more while they’re still earning shelf presence.
How do I know when my DTC channel is ready to scale?
A DTC channel is usually ready to scale when acquisition costs are coming down, reorder behavior looks steady, and the first order reaches a positive contribution margin. At that point, additional ad spend has a clearer role because you’re funding a working engine rather than paying to find out whether it works.
Do I need separate financial models for each GTM channel?
You need separate channel sections, not separate documents. A dedicated tab for each channel gives you a channel-level view while keeping one consolidated model for overall decision-making.
