More and more consumers are choosing to buy products from smaller companies. Why are Innovation brands so attractive? What strategies do they use to appeal to consumers and differentiate themselves from market leaders? In this article, we explore the techniques used by Innovation brands to stand out in the ultra-competitive FMCG market.

Innovation brands are thriving

 

Innovation brands are increasingly popular with British consumers. According to the UK data from the IRI European Shopper Insights Survey, when buying packaged food:

  • 10% of UK consumers prefer national/local brands
  • 48% of UK consumers say they strike a balance between big and local brands
  • 43% of UK consumers favour big/international brands

McKinsey research shows that Millennials are almost four times more likely than baby boomers to avoid buying products from “the big food companies.”

As such, Innovation brands are being given more shelf space in supermarkets. By doing so, retailers hope to differentiate their proposition and increase their margins as Innovation brands are often premium, sold at a higher price than large FMCG brands.

Chris Green, co-founder of the Young Foodies community, explained in a guest article published by Food Navigator: “Small brands are thriving giving their easy access to consumers, strong fit with Millennial preferences, and pull from mass merchants seeking to differentiate themselves”.

Innovation brands are committed

 

One of the reasons Innovation brands appeal to consumers is because they tend to have a clear purpose. According to the Accenture Consumer Pulse research, 64% of consumers are now belief-driven buyers who want brands to deliver on societal issues, as well as products. Bill Theofilou, Accenture Strategy Senior Managing Director, said: “Many companies have neglected to convey purpose due to complacency, lethargy or the fear of polarizing people, which has allowed smaller players to rise.”

Doisy & Dam for example defines itself as a sustainable confectioner. Its products are made from ethically-sourced chocolate with natural ingredients only and no palm oil. The brand is a B Corp, committed to being a force for good. It says it strives for “better ingredients, better ethics and better chocolate”. The brand has recently secured a £750k cash boost to drive new product development and point of sale marketing.

The peanut butter brand Pip & Nut also prides itself on being a responsible business. It says its works with ethical suppliers who invest back in their local community through infrastructure, social and agroforestry projects. Its employees also regularly volunteer in their community, giving back to people in need. The brand has been experiencing steady growth and has recently expanded its range with nut butter cups.

Innovation brands are digital

 

In addition to being committed, Innovation brands are smart at marketing. As Jenny Frazier, BASES Global Commercial Leader at Nielsen, points out in an article: “Small brands know they’re up against a lot. They’re trying to break through in a crowded marketplace and so they use whatever tools at their disposal to create personalized, targeted, buzzworthy marketing. While small brands often have smaller budgets, they’re more likely to invest in the right level of marketing support for their brand.”

Many Innovation brands are capitalising on digital marketing to advance their reputation. The brand of fresh plant-based food The Meatless Farm for example has been leveraging digital channels to grow its customer base. It developed a comprehensive content strategy to offer recipe inspiration across all mealtime occasions. The brand has a strong social media presence, with 56,000 followers on Instagram and nearly 10,000 followers on Facebook. The Meatless Farm also partnered with Shopmium to encourage consumers to try its fresh plant-based burgers and drive sales in-store.

Another example is The Snaffling Pig. The pork snacks brand has been using digital to change product perceptions and grow its audience. It is very active on social media. In December 2019, the brand asked followers on Twitter to help find a name for its new Warehouse. The Snaffling Pig also recently teamed up with food influencers to promote its British gammon steaks range.

Innovation brands are fun

 

Many Innovation brands are also fun, friendly and engaging. The crisp brand Popchips applies these principles to its online interactions and conversations with its fans. Helen Bromley, Popchips Marketing Manager, told Netimperative: “We believe that ‘better for you’ doesn’t have to be boring, and leverage our light-hearted and positive brand personality to create feel good, uplifting experiences for our snackers that set us apart from other bland and serious snack brands.

This is also the approach taken by the granola brand The Paleo Foods Company, which says it doesn’t take itself too seriously. Claire Dinsmore, Paleo Foods Company Founder and Director, shared with FoodBev: “We’re not too high and mighty about the paleo diet itself. We believe in down-to-earth, healthy eating with a friendly and fun approach.” She added: “Hopefully our strap line, ‘established 10,000BC’, gets this sentiment across”.

Innovation brands are local

 

Innovation brands also put forward their local footprint. A growing number of UK consumers prefer to buy local brands to help support local and small producers. Olly Abotorabi, Senior Regional Insights Manager at IRI, said:We’re seeing local and national brands starting to win consumers’ hearts and minds. In the UK in particular we have a vibrant and innovative ‘local scene’ where challenger brands are emerging as winners, driven by huge amounts of creativity and a desire for authenticity and provenance.”

The brand Billy Franks has given a British twist to an American classic. Billy Franks says it makes “craft British beef and turkey jerky”. The brand only uses British beef and natural plant-based ingredients. Its packets clearly state “British beef jerky”. Billy Franks is sold in an increasing number of stores across the country.

Country Life butter also claims it is “proudly British”, displaying the Union Jack on its packaging. All of its products are made from British milk, coming from dairy farms across the country. Emilie Grundy, Country Life Senior Brand Manager told FoodBev: “British provenance is increasingly seen as a signifier of quality, which is a key driver choice within the butter and spreadable category.”

As a conclusion, Innovation brands are attracting more and more consumers by being committed, digital, fun and by claiming a strong local footprint. Millennials in particular favour Innovation brands as they believe there are more in tune with their values. While Innovation brands generally have greater freedom than big brands, the latter can learn from their marketing techniques.

As reported by The Financial Times, Jorge Paulo Lemann, the Brazilian investor behind both AB InBev and 3G Capital, which partly owns Kraft Heinz foods, told the Milken Institute conference that he felt like “a dinosaur”. He shared: “I’ve been living in this cosy world of old brands, big volumes, nothing changing very much. You can just focus on being efficient and you’ll do OK. And, all of a sudden, we’re being disrupted in all ways.”

The paradigm shift has encouraged several major groups to acquire Innovation brands, such as Lipton, which acquired the Innovation tea and supplement brand Pukka, and Heineken, which now owns the craft beer brand Lagunitas. Another option for large groups is to develop their own Innovation brands in-house, as L’Oréal did with its new organic brand La Provençale. By combining both large and Innovation brands, FMCG leaders will ensure that they cover mainstream needs while maximising small pockets of growth. Small is the new big!