Innovation has always driven growth in the food and beverage business. It can be the foundation of research and development, which gives birth to new products. It can be a dramatic new approach to marketing. Or it can be used to change the direction of a company altogether, steering into new consumer markets.
While startups are often better suited to innovation, larger companies have the resources – if not necessarily the will – to innovate as well.
Coca-Cola, for example, saw the downward trend in soda consumption, which peaked more than 20 years ago. In fact, bottled water surpassed soft drinks in 2016 to become the most popular beverage, by volume, in the United States. The company responded by getting into the juice, water, and energy drink markets to broaden its reach. Most recently, the company sought to get bigger by going small. The beverage giant has seen increased revenue powered by smaller serving sizes.
In hindsight, innovation is easy to spot. It’s much harder to lead the charge, with so many companies reluctant to take the necessary risks.
Conception to Consumption is a new podcast series and brainchild of TraceGains CEO Gary Nowacki. The series features conversations between Gary and influential people in the consumer-packaged-good-world. It covers a variety of industry-related topics, ranging from career advice to new product innovation to regulatory compliance. In the latest edition of the series, Gary talked with Eric Kiker, owner of Digestible Brand. Eric is a food and beverage industry product marketing veteran who joined Gary to discuss “Why Can’t Some Food Companies Innovate?”
“I don’t think they understand people,” Eric explained. “I don’t think they understand what their consumers want. And I think the biggest problem with understanding what people want is they don’t know what they want themselves.”
So, what can food and beverage companies do to innovate and stay relevant in an increasingly competitive market?
Even though Nutrition Facts labels have been around for more than 30 years, consumers have only recently taken a real interest in them. Research from the Food Marketing Institute and Label Insight found that 86 percent of consumers place more trust in companies that provide easy to read access to information on product ingredients.
Simply put, consumers want to know what they’re eating – or drinking. And an increasing number of them want to be able to do that without feeling guilty.
“I think food brands, especially packaged food brands, are in a unique position to do that for people. To remove the guilt,” Eric explained.
Naked Juice, a company Eric worked with, emerged as an early adopter of embracing ingredient transparency, and working that into the company’s brand narrative.
“Naked did a good job of telling people, ‘Hey put something pure into your body,’” Eric recalled. “What great brands do is they have a purpose that transcends ingredients. That’s what we did with Naked and I think in a lot of ways brands can help people – they can inspire people. But it’s still a bottle of juice.”
Eric points to RX Bar as another example of a CPG company doubling down on their list of ingredients as a value proposition by making it a prominent feature of their label.
“I think what RX did was brilliant and the fact that we’re seeing a number of other brands do the same sort of thing, well, imitation is the sincerest form of flattery,” Eric said. “You could get upset about the fact that they’re knocking off what RX did, but in terms of doing something for the consumer, that’s what people need. They need help.”
Innovative companies do more than simply comply with transparency. They embrace it.
Another change companies should consider is how they communicate with their customers. Messages like Super Bowl ads are great – and expensive – but more consumers today rely on social media than traditional advertising when looking for new products.
Eric, however, cautions against what he sees everyone doing already. He urges food and beverage companies to go beyond the product. Forget about the overhead shots of food, or yoga poses or somebody holding a sandwich or a shot of a pile of cookies dripping chocolate.
“Intersperse some of that cool photography of your food brand with some tips on how people could use that food to make a meal or a perfect snack,” he explained. “The light bulb would light up for people and they would be more likely to buy that brand. It would increase loyalty and the customer would say thank you for helping me get out of my own way.”
Eric stressed the importance of brands understanding consumers without boring them – and speaking to them without lecturing. Which dovetails into his next point.
Understand the consumer
Eric explained how important it is for companies to really understand their customers. And that means going beyond old school surveys and focus groups. Instead of getting people in a room, Eric suggested going to them.
“Send a moderator to a person’s home and spend the better part of the day with them,” he said. “If you were doing research for a food brand, you’d start by talking about life in general. And then go look in their pantry or fridge.
Then, Eric continued, take them shopping. Find out how they pick out a brand of peanut butter, for example. What drives them to pick one over another and drop it in their cart.
Eric also warned brands against using language such as “guilt free” when marketing snacks or other foods.
“I think everybody should stop saying ‘guilt-free snack,’ because when you say guilt free, the first thing people think about is, ‘I've got guilt about all these other things’ and I think it's gotten to the point where people are actually afraid of the stuff they put in their mouths,” he explained.
Forget About Trends
Like any other industry, so many food and beverage companies spend a lot of their time chasing trends. Whether its organic, gluten-free, or CBD, it’s always about the next big thing. But real innovation, Eric argued, is about transcending those trends.
“I think ‘trend’ is a bad word because when you jump on the latest trend, if you’re not getting to the higher-order problem the consumer really has, you’ll die when the trend dies,” Eric said.
Case in point, after speaking with Impossible Foods, a plant-based meat products company, Eric discovered the company isn’t targeting vegans with their products – something that could be identified as one of the latest trends. For Impossible Foods, it’s bigger than that.
“There’s always been vegan or vegetarian-based burger patties, going back to Garden Burger or Boca Burger, but Impossible Foods is going after meat eaters,” Eric said. “They’re trying to get meat eaters to switch over to something at least part of the time that’s better for the planet.”
Consumers aren’t going to give up mayonnaise, Eric pointed out.
“But maybe if you’re a vegan, you want a good-tasting mayo option without eggs,” Eric added. “Maybe if you’re a meat eater, you want something that’s really close to a beef burger.”
But for consumers – particularly Millennials – who want to do their part to save the planet and to reduce their carbon footprint, manufacturers must take a stepping stone approach. It’s about getting inside the head of the consumer.
That stepping stone approach, of course, hinges on educating the consumer. More than a third of consumers “rarely seek information about their food and where it is produced,” according to a 2018 Michigan State study.
The experts – whether it’s the media, academics, or regulators – bombard consumers with conflicting information when it comes to food and how it’s produced. They don’t know who to trust.
“There was a study I read about a bunch of people who were asked to identify the difference between non-GMO and organic,” Eric recalled, “and the majority of people thought they were the same thing.
Never mind that roughly 80 percent of all foods are genetically modified to make them impervious to herbicides.
Eric also pointed out that those same people assume GMO is bad and non-GMO is good. But if pressed on the issue, they’re unable to articulate why. That’s why Eric insisted the education process has to occur one baby step at a time.
“How do I give them a little bit of information at a time that doesn’t put a tremendous strain on my marketing budget for one,” Eric said. “Secondly, it has to be presented in a way that’s understandable and usable. So, the next time they’re talking to a friend at a cocktail party or a dinner, my name – my brand – might come up as somebody who gave them a tip that’s helping them.”
Food and beverage companies must connect with consumers, be a problem-solving advocate for them, and worry less about converting them into another customer.