With adjacencies in vogue, attention is being diverted from other promising growth opportunities

Despite the enormous buying clout of mega-merchants like Wal-Mart, Target and Carrefour, fast-moving consumer goods (FMCG) companies have actually outperformed retailers in the capital markets over the past decade. How did they do it? Through massive cost reductions and disciplined product portfolio pruning. The products and brands that survived have the strongest consumer franchises and the largest appeal to retailers.

Today, however, as investors look increasingly for top-line growth, many consumer goods makers seem to be reversing themselves by adding costly new products to their portfolios. In addition to developing line extensions for product categories they already participate in, FMCGs are increasingly introducing new products into "adjacent" categories – product categories that are similar to the ones they already cater to and that are often sold in the same supermarket aisle.