18 September 2018

Our 5 Key FMCG Brand Innovation Principles

What lessons can we learn from Coca-Cola's Life U-Turn?

Just over 4 years ago Coca-Cola launched its first new drink in the UK for over 8 years. You may remember it as the ‘green one’ and probably thought WTF!? As with all NPD innovations it was launched with great intent. A new low-calorie Coca-Cola variant which contained less sugar and calories than regular Coke, with the power of the stevia leaf. However, there was simply no room for another Coca-Cola brand in our lives. Coca-Cola Zero already performed the same job in people’s minds with zero sugar and no calories.

Last week Coca-Cola refreshed its core brands in the UK, bringing Coca-Cola Zero even closer to the Original core to align them more closely with their iconic red colour that we all know and love. Coca-Cola Zero is now a simple choice of whether you go no sugar or if you prefer the full-sugar original version. The lesson in all this is that brands need to look to the human need when extending and creating new products. Coca-Cola is no doubt fighting a losing battle to a large degree, as the wave of global health and wellness takes hold here in the UK. But it’s got to do something to stem the tide other than buying Innocent and Costa. The challenge was that there is no human need for a new Coca-Cola Life as people were quite happy with Zero fulfilling that role. Coca-Cola went back to the drawing board and empowered their core brand and then took Zero further than that. Smart move in my book.

It got me thinking - what can established and iconic brands learn from this in terms of innovation moving forward? We know that the majority of the UK’s Top 100 FMCG brands have been in our lives and our families lives for over a 100 years, but they must continue to evolve in the constant fight for our attention. The fight for relevance means they need to evolve from the core out, or invest in new brands and bring new products to our lives that meet a human need or want or tempt us with something new that we didn’t know we needed in our lives. Finding a gap isn’t always easy and the additional challenge of the major multiples range rationalisation continuing at a pace means there is simply less shelf space to fight for.

Brands have to evolve with the times to survive and add value, so here are our 5 FMCG innovation principles:

1. Nothing Beats a Great Idea

Understand what made you famous from the outset and build from there with a new idea that people can understand quickly and buy into. Driving into that human need and finding a gap that you can exploit with something new and exciting is critical. Test the product concept with consumers in research, refine it from their feedback and go back and test it again. Don’t just get a listing and then start praying for success.

2. Build an Amazing Product & Brand

Creating an amazing product is hard work and may require sweat, blood, tears, plus a good dose of NPD investment. But that is only the start, too many businesses then short-change the brand and simply extend the design from their core brand without enough thought or innovation. Explore whether the current brand can hold the innovation as an extension from its core, or if it needs to move further out to become a sub-brand or a stand-alone brand. More often than not the instant route to innovation is to simply create a more premium version of the core to drive stronger value for the business, but do consumers always want a more premium version? What human need is that premium version meeting? A new occasion, something more exciting to the norm, or a combination of both.

3. Patience, Patience, Patience

There is no quick-win holy grail to FMCG brand innovation success. Investing in innovation awareness and understanding is vital to give you any chance of traction and success. You can’t simply launch a brand on shelf (now more often online!) and then leave it to die, you’ve got to invest with all you’ve got to drive trial and repeat purchase. Investment in that first 12 months is key as you need to cement a role in people’s minds and hearts to ensure that they buy into your product. That takes time to drive the trial and repeat purchase, only the brave will survive.

4. Focus

Is the organisation set up for innovation success? I sit in the privileged position of working with many different FMCG businesses and there appears to be a common trait for those that win in innovation. They have a clear innovation strategy and approach, with the right team of people and processes to help them have a fighting chance to succeed. In certain categories we often see tactical innovation at the request of the buyers and it’s a never ending cycle of innovation as the majority of it fails, the shotgun approach. The sniper ‘less is more’ approach is much more focused on fewer innovations but investing more time and money in them to grow into new brands that people love. If Coca-Cola can’t afford to let sub-brands distract it, should you?

More often than not we see too many FMCG businesses carry proliferated portfolios filled with semi-successful sub-brands that only did well when launched with a strong investment campaign to support them. It’s all too tempting to chase the shiny and new extension capitalising on new white space but forget that it’s the integrity of your core that defines your long term success.

5. Act Like a Start-up

The opportunity for challenger brands to begin to take a slice of the pie from their bigger FMCG brethren icons has never been stronger. I can’t recall a time in my life when challenger brands were welcomed in with open arms by the buyers, probably all striving for relevant differentiation beyond own label. That entrepreneurial spirit is however buried in each and every one of us, so harnessing innovation spirit in the bigger multi-national conglomerates is key.

Some of these bigger branded players are now looking to invest and launch their own new brands in the hope of hitting a home run with one that takes off. As opposed to having to invest millions in buying a challenger brand that has started to become part of the establishment.

The hard truth of the matter is that the majority of FMCG new product innovations will fail, it’s a case of survival of the fittest. Our 5 innovation principles give you a fighting a chance for success and a good performance metric by which to measure yourself. It’s a constant fight for survival and brands have to evolve by extending from their core or creating new fresh brands that meet a human need. Either way innovation is at the heart of any FMCG business looking to grow, you either play the game or slowly die.