There are significant benefits to be enjoyed by continually refreshing the range and taking calculated risks on new products, writes David Gilroy.
Everyone likes something new, exciting and different. Remember when Dick Fosbury launched a completely new way of high jumping at the 1968 Olympics? Sensational! It changed the sport for ever. The Ramones crashed the rock music party with punk in the mid-1970s. Cleared out the old guard, freshened everything up. Now anyone with chutzpah could pick up a guitar, plug in and give it go. Back in the late 1990s mobile phones were that thing, opening new ways of communicating on the move. Nokia dominated the market. My favourite was the Nokia 7110 with its Star Trek style “beam me up Scotty” slider. I still own it and I’m going to keep it. Next came the “clam shell” type models – mine was a Samsung. So cool flipping the lid, doing the business then snapping it shut. This was the talk and text only phase. Until 2007 when Steve Jobs announced the launch of the iPhone. A pencil thin body and edge to edge screen, it was a thing of beauty. The first mobile to use multi-touch technology, enabling 3G connectivity, web browsing, photos and videos. It continues to be highly profitable. Tim Cook, Apple CEO estimates that there are around a billion iPhones in use across the world.
There have been numerous new, different and exciting food and beverage innovations over the years. I have picked out three classics which have proved to be enduring and consequential.
Coca Cola
Coca-Cola was invented in 1886, and its impact has been felt well into this century. Coca-Cola’s global dominance as a brand has made it not just a drink but a cultural icon. The company’s pioneering marketing strategies, such as the creation of the modern image of Santa Claus, have ingrained Coke in global consciousness. Its formula, heavily guarded and widely imitated, set the standard for carbonated soft drinks.
Kellogg’s Corn Flakes
John Harvey Kellogg started as a physician. He sought ways to improve the health of his patients through diet and exercise. He filed a patent for Flake Cereals in America in 1895. In the first year of production tens of thousands of pounds of flakes were sold under the brand Grasnose. This morphed to Sanitas Toasted Corn Flakes in 1898. He was inducted into the National Inventors Hall of Fame in 2006 for the discovery of tempering and the invention of the first dry flaked breakfast cereal which “transformed the typical American breakfast”.
Heinz Baked Beans
The Pennsylvania based H J Heinz Company started to mass produce canned goods around 1895 in Pittsburgh. Originally marketed as a luxury brand, Heinz Baked Beans’ first UK presence was at Fortnum and Mason in 1896. Over subsequent years baked beans became a staple affordable meal. Between 1941 and 1948 the Ministry of Food classified beans as an “essential food” as part of its wartime rationing system. The slogan “Beans Meanz Heinz” created in 1967 has become an advertising legend.
How would these now well-established brands fare in today’s world? It is exceptionally difficult to get a new line off the ground. I have worked with several new products and the preparedness of the brand owners can vary markedly. One individual had a warehouse full of stock and nowhere for it to go. Nightmare! Many tend to invest financially and emotionally into the product without thinking beyond this stage. First and foremost, is there a market for it and what is the existing competitive landscape? It may be a completely new category such as vape. That’s a whole different ball game. A key consideration is the retail selling price.
Then working back to gross margin for all parties through the value chain. There are the practicalities of production, legal compliance, packaging design, shelf stand out, outer configuration, pallet layouts, distribution and logistics. Finally, and critically, what is the sell in and sell through plan? Getting listings is one thing – securing sell-through is a completely different skillset. Is there a launch budget and does it stretch to advertising, social media and the ubiquitous listing fees? And is there a properly financed marketing plan to sustain growth?
It is all too easy for retailers and wholesalers to keep saying “no” to new products. And I can fully understand that for all the reasons set out above. I guess the question is just how important are new products and which are you prepared to back? I liken it to going to your favourite restaurant but finding that the menu is always the same. It won’t be your favourite restaurant for long. The pandemic precipitated a risk averse attitude to range and service with operators cutting assortments to concentrate on the more “important” core items. Now there appears to be a shift in the other direction. As exemplified by “Aldi’s Next Big Thing” on Channel 4. If you haven’t seen it, it’s a mash up of MasterChef and Dragon’s Den. Small-time food and drink makers pitching their ideas for a chance to get their goods on to the shelves at Aldi. Highly entertaining and instructive, Simon Roberts, Sainsbury’s CEO, attributes their success partly down to new launches and product innovation. He claims to have tripled new launches to over 2,000 in its first year and says it is an engine for driving change and growth. A similar story is unfolding in Iceland which is currently outperforming the market. The launch of their “Brands on Ice” accelerator scheme is aimed at exclusive products to introduce excitement and a point of difference in the range. Both Sainsbury’s and Iceland are taking a fail fast and move on approach to new listings.
To quote a recent football expression, it’s time to take the handbrake off. There is a significant upside to being agile around new ranges. Properly managed, the risks are low. But it does require energy and a partnership attitude to make it work. “Here we are now, entertain us” – Nirvana. New, exciting and different signposts the way.
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