Tariff Survival: Three Big Pivots for a $25M Consumer Brand

Background: A $25M Consumer Brand in Crisis

Imagine a $25M consumer product company that’s been running a solid business for years—selling across Amazon, Walmart, Home Depot, and DTC. They’ve got a strong supply chain, in-house fulfillment, and a well-known brand.

• Sells through big retailers and online
• Handles its own warehousing and shipping
• Historically maintains 40–50% gross margins
• Profitable, but reliant on Chinese sourcing

Now, tariffs are jumping to 45%, retailers won’t accept price increases, and costs are rising across the board. This company can’t easily move production overnight and can’t just eat the cost increases without going underwater.

Their business needs a reset. Instead of just cutting costs, they need new revenue streams—ones that give them more control, margin, and pricing power.

Here’s how they can do it.

1. Build Direct-to-Consumer (DTC) Sales

DTC isn’t just an e-commerce strategy—it’s a lifeline in a world where retailers own too much control over pricing and margins.

Why DTC Works:

• Higher Margins – By selling direct, this company can recapture 20–30% in margin that retailers take.
• Control Pricing – No more waiting on Home Depot or Walmart to approve price increases.
• Customer Ownership – Build a direct relationship with buyers instead of being dependent on Amazon.

How to Scale DTC Quickly:

1. Targeted Digital Advertising – Invest in Facebook, Instagram, and TikTok ads. Build a real brand story that drives direct sales.
2. Influencer & Affiliate Partnerships – Collaborate with YouTubers, bloggers, and niche influencers who drive high-intent traffic.
3. Subscription & Recurring Revenue – Sell accessories, replacement parts, or extended warranties to increase customer lifetime value (LTV).
4. Exclusive Online-Only Products – Offer premium SKUs that can’t be found in big-box stores.

Projected Impact:

• If DTC goes from 3% to 20% of sales, that’s $5M+ in higher-margin revenue.
• With a 25% higher margin than retail sales, that’s $1.25M+ in extra profit annually.

Key Takeaway: If this company can’t pass costs to retailers, they need to own their customer base instead.

2. Develop Premium & High-Margin Product Lines

Selling cheap, mass-market products isn’t a winning game when tariffs and costs are rising. Moving upmarket solves this.

Why Premium Works:

• Premium buyers aren’t as price-sensitive – They care more about quality and features than price alone.
• Higher margins mean tariffs hurt less – A $500 wine fridge with smart features can still be profitable after a 45% tariff, while a $150 budget unit gets wiped out.

Exclusive, well-branded products can command a price premium – Customers pay more for design, branding, and status.

How to Build Premium Products:

1. Move Upmarket – Focus on higher-end designs with smart features, premium materials, or unique technology.
2. Create Exclusive Collaborations – Partner with influencers, chefs, or designers to create co-branded products that feel high-end and limited edition.
3. Better Packaging & Branding – High-end branding, packaging, and positioning allow for higher price points and better margins.

Projected Impact:

• If just 30% of the product line moves upmarket, this could increase total revenue by $3M–$5M.
• Premium margins could boost profits by $1M+ annually, absorbing much of the tariff impact.

Key Takeaway: The cheapest products get hit the hardest by tariffs. Moving to premium, high-margin items creates pricing power and protects profit.

3. Brand Licensing: Monetize Brand Equity Without Inventory Risk

If this company has a recognizable name in its industry, there’s another powerful move—licensing.

Instead of just selling products, they can sell the brand itself to partners who will pay royalties for using the name on complementary products.

Why Licensing Works:

• It’s cash flow with no inventory risk – The company gets paid without having to manufacture or warehouse anything.
• Expands brand reach into new categories – If this brand is known for appliances, why not license into grills, kitchen gadgets, or outdoor products?
• Celebrity & Co-Branding Deals Can Drive Premium Pricing – A wine cooler endorsed by a famous chef could justify luxury pricing.

How to Monetize Licensing:

1. License the Brand to Complementary Products – Think outdoor grills, smart home gadgets, or kitchen tools.
2. Celebrity & Influencer Partnerships – A wine cooler endorsed by a top sommelier could be sold at a premium.
3. Charge Royalties on Every Sale – Typical licensing deals range from 5–10% of revenue, meaning zero cost but pure profit.

Projected Impact:

• Licensing deals typically generate $500K–$3M+ annually with little overhead.
• Margins are nearly 100% profit, making it a powerful cash flow source.

Key Takeaway: If retailers squeeze margins and inventory is a burden, licensing is a way to make money off the brand without the risk.

Which Pivot Wins?

Each of these strategies offers a different path to survival and growth:

Final Takeaway: Reinvent or Risk Irrelevance

The old model—importing from China and relying on retail partnerships—is breaking down.

The consumer product companies that survive and thrive will:
✔ Sell more direct and own the customer relationship
✔ Shift to premium products that aren’t price-sensitive
✔ Monetize their brand beyond physical products

This $25M company is testing all three. If you ran this business, which move would you bet on?