2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

Introduction

As has become tradition, we are sharing our annual top 10 revenue growth ideas with our network. This year we are using our platform to focus specifically on the role that Insights can play in unlocking growth.

We believe that the Insights function has the mandate to play a more transformative role in a company’s growth strategy. Insights should be a growth function, acting as an inspiration generator and conviction creator that empowers teams to make bold decisions.

With that in mind, we are highlighting the top 10 ways to leverage Insights for revenue growth. These concepts span all levels of the growth strategy framework, further reinforcing how Insights should be involved in every step of creating and updating a firm’s demand-generation strategy.

Top 10 Ideas: Growth Strategy Framework

Where to Play

Map for tomorrow
Develop a proprietary, predictive view of where to play that defines the consumer frame of reference, addressable market, and best opportunities to commercialize strategic choices.

Why it Matters:
A common insights foundation guides innovation and brand strategy, allowing brands to stay ahead of tomorrow’s opportunities and anticipate where to play in the future.

Role of Insights:

  • Develop a proprietary consumer definition of the category that combines learnings from leading-edge consumers, emerging trends, and other industries
  • Update and evaluate annually as a key input into annual business/strategic planning

Result:
This forward-looking market map empowers the team to plan ahead and creates the right to win.

Assess your job prospects
Expand thoughtfully by regularly assessing and re-assessing which jobs your brand can win.

Why it Matters:
Breakthrough revenue growth comes when brands successfully expand their reach into new spaces.

Role of Insights:

  • Build a deep understanding of brand resonance and consumer benefits to identify which jobs your brand will be “hired” for
  • Reconcile these potential jobs with the firm’s capacity to support expansion based on category and company dynamics

Result:
An effective insights foundation identifies the brand’s repeatable growth model and enables smart and sustainable expansion.

Create conviction
Know where to play – and just as importantly, where not to play.

Why it Matters:
As organizations grapple with big choices on how to prioritize multiple opportunities, they need the clarity to make difficult decisions, especially when that means challenging convention.

Role of Insights:

  • Actively seek new lenses of insight to inspire different outcomes
  • Arm the organization with these insights to enable teams to make, communicate, and defend difficult decisions
  • Use insight to create the case for change and future-proofing

Result:
Insights-driven decisions that build widespread support for broader organizational direction.

How to Win

Champion your leading edge
Inspire disruptive innovation by learning from the leading-edge consumer—that is, consumers other than your category’s mainstream core consumer.

Why it Matters:
Research based on today’s core results in close-in line extensions and product modifications, not forward-looking innovation that creates the right to win.

Role of Insights:

  • Identify what “leading-edge” means for your business. It may be lapsed users, ultra-heavy shoppers, younger shoppers, or the most informed shoppers
  • Understand how these shoppers use, avoid, or “hack” your focus categories
  • Connect these leading-edge behaviors to unlock growth from mainstream shoppers

Result:
Understanding the leading edge allows the team to disrupt by better meeting unmet or emerging needs.

Embrace omnichannel
Think outside the traditional channel structure when researching or planning go-to-market efforts.

Why it Matters:
The siloed “channel-first” approach fails to account for the increasingly cross-channel nature of shopper journeys. As methods to engage consumers and shoppers become more fragmented, it is critical to understand shopper journeys and key trigger points from an omnichannel perspective.

Role of Insights:

  • Reinforce a “consumer first” mindset, instead of a “channel first” approach
  • Map the end-to-end consumer journey to understand where consumers want to discover, learn and buy
  • Assess the most critical inflection points for reaching your target shopper

Result:
Insights functions can enable organizations to make go-to-market decisions and integrated demand plans through the lens of the consumer.

Spark digital transformation
Reimagine your organization’s approach to digital by placing the consumer and shopper at the center of your strategy.

Why it Matters:
Your shopper’s path to purchase increasingly involves fragmented digital touchpoints, and she expects a seamless brand experience across these points – on her terms.

Role of Insights:

  • Build the fact base and vision required to orient strategy and justify investment in digital transformation
  • Infuse digital and ecommerce perspectives into all research initiatives

Result:
Organizations can transform to align with this new consumer reality, justifying their investment with a solid fact base.

Activate the 4Es
Elevate the value equation from the traditional 4Ps to the new 4Es: Experience, Exchange, Evangelism, and Everywhere.*

Why it Matters:
Today’s consumer has more choices than ever, requiring brands to work harder to win trial and build loyalty. Consumers want to engage with brands on their own terms before “rewarding” them with a purchase.

Role of Insights:

  • Understand the consumer and shopper beyond their interactions with your product.
  • Elevate your brands’ value proposition with broader cultural and lifestyle contexts
  • Spark a mindset shift from “marketing against the 4Ps” to “providing consumer experiences”

*In the digital age, a successful brand must engage consumers through the 4Es. The Product becomes an Experience that delivers memorable moments. Price evolves to an Exchange that goes deeper than a transactional relationship with the consumer, offering value beyond price. Promotion turns into authentic, consumer-led Evangelism. And Placement becomes Everywhere: a consistent product and brand story available everywhere your consumer expects to see it.1

Result:
Mindset shift equips brands to authentically deliver against new growth levers and strengthen consumer loyalty.

How to Action

Prioritize packaging
Reimagine packaging to enable the 4Es and elevate the brand value equation.

Why it Matters:
Packaging is often under-utilized for growth but plays a vital role in unlocking new consumer engagement and distribution opportunities.

Role of Insights:

  • Consider the role of packaging in research initiatives such as leading-edge consumer research and price-pack architecture
  • Understand packaging’s ability to deliver multiple benefits, such as ecological credibility, functional benefits, new need states, superior storage, seamless fulfilment, and badge value

Result:
Full leverage of a critical growth lever.

Leverage e-commerce learning for rapid iteration
Use digital as a learning channel in addition to a sales and marketing channel.

Why it Matters:
The rapid acceleration and “failing fast” needed to win in eCommerce can fuel success in other channels, too; this is a critical part of the challenger brand playbook.

Role of Insights:

  • Use digital learnings to optimize product mix, refine messaging, and more deeply understand the consumer
  • Own coordination of insights and application across the demand landscape

Result:
Better-informed omnichannel planning and successful retail launches.

Unlock the value equation
Drive revenue growth by better elevating the consumer value equation and proactively addressing ecommerce-driven pricing challenges. If not already existent, establish a Strategic Revenue Management leadership function to guide decision-making.

Why it Matters:
Among global top-50 CPGs, two-thirds of revenue growth is driven by pricing and mix, not by volume gains. ecommerce-driven price transparency makes revenue and profit growth even more challenging.2

Role of Insights:

  • Understand consumer jobs, shopper missions, and customer needs to identify incremental opportunities
  • Pair these insights with knowledge of current price-pack architecture to build consumer-driven architecture
  • Offer unique, customer-specific architecture that delivers and captures more value

Result:
Brands can thrive across retail environments even as price transparency issues increase.

We’d love to hear from you! To discuss any of these ideas further, please contact us at [email protected]

 

 

1 Brian Fetherstonhaugh, Ogilvy & Mather.

2 BCG: How Net Revenue Management Boosts the Top and Bottom Line.

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Challenger Brand Leadership Series: The Honest Company

Challenger Brand Leadership Series: The Honest Company

Challenger Brand Leadership Series: The Honest Company

Challenger Brand Leadership Series: The Honest Company

Nick Vlahos, CEO of The Honest Company, explains how the company maintains its challenger mindset as it scales

At Seurat, we have well-documented the rise of the challenger brand within the CPG industry.
We believe that a “challenger mindset” is not defined by a specific company size or maturity; rather, it is a willingness to challenge convention. We can all learn from this ethos. To that end, we are profiling successful challenger brand leaders to better understand how they cultivate and maintain their position as challengers.

We focus on 3 main questions:

  1. What space, practice or convention are you challenging?
  2. How are you challenging it?
  3. What has challenged you along the way?
Introduction
When Jessica Alba founded The Honest Company in 2012, she set out to challenge the idea that new parents had to choose between safety and efficacy in their household essentials. In doing so, she and her team built an explosive-growth household products business using a direct to consumer model to delight new parents and disrupt established categories. The result was a company that was reported to be valued at over $1B in 2015, just 3 years after its launch. In the years since, the organization has experienced its share of growing pains: item proliferation and a handful of product issues threatened its position in the market, leading to leadership changes at the company and the need for a next generation growth plan.

Nick Vlahos, formerly COO of The Clorox Company, joined The Honest Company as CEO in 2017 and was responsible for many of the shifts in strategy that are driving The Honest Company’s resurgence, including a focus on core product categories and improved R&D practices. After spending time at other values-based organizations (including building the Burt’s Bees brand at Clorox), Vlahos was personally intrigued by The Honest Company’s mission to empower people to live happy, healthy lives. We sat down with him to learn about how he has helped the brand further its purpose while evolving its Challenger mindset over the last 18 months at its helm.

 

What space, practice or convention are you challenging? How are you challenging it?

Vlahos: From the beginning, it was all about empowering people to live happy, healthy lives. And that mission resonates in an even bigger way today. The beauty of this mission is that it isn’t in a specific category, rather, it’s bringing the idea of “wellness” to life in the things that go on you, in you and around you. With my experience building brands domestically and internationally, I play a crucial role in helping to further our brand mission. We are fortunate to have so much room for growth given that the company is only 7 years old.

A fundamental way that we challenged the industry is around accessibility – we want
to provide products for consumers in exactly the places where they want to find them.

At its inception, the company was disruptive in that it was e-commerce first, thanks to our direct to consumer model. Traditional companies had built supply chains and retail distribution with brick and mortar retailers that were dependent on shoppers taking a car ride or a walk and navigating the store to access their products. Jessica’s vision around empowerment was not only around transparency and wellness, but also ease. How do we do things better to really help you live a happy, healthy life? Maybe you are happier without having to take a trip to the store to get the solutions you need. We disrupted an industry that was built around retail distribution and made it easier for consumers to get products delivered to their homes.

At that time, we were challenging the convention that you have to go to the store to buy household essentials. We took this convention and said no, not necessarily. We will provide those items directly to you and create a subscription model where you don’t have to think about it anymore. That model seriously disrupted traditional go-to-market norms.

Today we are challenging the conventional wisdom that is “you can be good in DTC, but can you actually be good at omnichannel presence?”.

Can anyone execute with excellence in DTC, dot coms, and brick and mortar? And do that in a way that remains authentic to the company’s mission? And can you do that consistently? And can you do that in international markets?

We believe we can. Today, we provide products wherever people want to procure them. If you’re interested in online, we are there. If you are interested in going to a store and walking, you can find us at major retailers. That’s how people want to shop today, so we need to be in a position to really disrupt there. The big players are of course trying to do this too, but we believe we can do it better by offering the right value proposition at each access point. Many of the big players started as retail businesses and now are becoming DTC. We started as DTC – with that comes the best data and authentic consumer connection. We are using these assets to our advantage as we expand into brick and mortar.

Our direct to consumer DNA gives us an edge with innovation. For example, we did a Major League Baseball diaper collection. We created unique diapers for 8 teams/cities. We introduced it through our DTC platform, and in just 60 days were able to learn which products sold, and which didn’t, and why. In 2 cities, the product just didn’t sell as fast. That enabled us to better manage our own supply chain. It also helped us with our retail partners by not putting those cities’ product on the shelf because the turns weren’t there.

By being digital first and consumer first, we can access and use consumer insights better than larger companies that were built off of a traditional model.
What has challenged you along the way?

As we continue to grow, our competition takes notice and looks to us for inspiration. There are more competitors trying to get into the natural, better for you space, so our categories get more crowded. The positive is that they raise consumer awareness – and we want people to know about better products and ingredients so that we can change the CPG industry together for the better.

As we scale, we need to maintain the performance, quality and efficacy of our products. We wanted to raise the bar in order to compete with the larger players that have robust capabilities around formulation and development. We needed to rise to meet those standards by providing products with really strong designs and by maintaining the highest levels of safety and efficacy. Finally, we needed to bring our products to market faster. To do so, we built product labs for both our beauty and personal care businesses. Now, we do product development in-house, then work with the right partners when it comes to manufacturing the product. This sets us apart and allows us to stay nimble.

There’s always been a belief that as you scale a business, quality is negatively impacted. We say “no”.

As we scale, we are looking to improve the quality of our products. At the end of the day, our customers’ health, safety and satisfaction is our highest priority, so we need to continue to provide the highest quality products on the market. Every day we are continuing to work on earning our consumer’s trust. It’s hard to gain and easy to lose. Our mission is more resonant than ever when it comes to transparency and raising the bar on safety. We want to scale our business and maintain trust by ensuring that there is never a trade-off when it comes to the efficacy, quality, safety and goodness of our products.

The Seurat Group is an insights-driven consumer packaged goods consulting and private equity firm whose mission is to create the clarity to act and invest in the future. We help our clients and portfolio companies sell more, more profitably, in more places, to more people by challenging convention.

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Future of Omni-Channel Planning

Future of Omni-Channel Planning

Future of Omni-Channel Planning

Future of Omni-Channel Planning

The End of Channel Management

Grouping similar retail customers into “channels” to organize go-to market efforts has been a hallmark of the CPG industry. This organizing construct exists because it has enabled more scalable, efficient and effective routes to reach consumer markets. The channel model was built on the premise that shoppers exhibited similar trip behavior within a retail format, thereby enabling manufacturers to use that medium to capture shopper value. This gave rise to organizations with teams and planning cycles structured around Grocery, Mass, Club, Drug, Dollar and more recently, Ecommerce.

While shoppers still think about outlets to fulfill trips, the availability of offers has blurred and people are shopping across more outlets than ever. Evidence that shoppers think less in terms of outlet is present everywhere you turn. Take, for example, Google Express, an online

platform that aggregates products available to be delivered based on your location. A search for “pea crisps” in our neighborhood returned above-the-fold results from Target, Walmart, Costco, Boxed.com, Fairway and Whole Foods Market – each featuring a product image, price, rating and convenient “Add to Cart” button. With 98% of US adults with internet access going online at least daily, and three-quarters using a smartphone, opportunities abound for shoppers to pick up their device the instant a need arises and receive instant gratification, whether through a nearby store, an online merchant or a third-party delivery service. With the rise of voice-activated search, social shopping solutions and text shopping enablement, this trend will only accelerate. The channel construct no longer reflects how shoppers fulfill CPG needs, creating an unsustainable tension between how shoppers behave and how companies go to market.

Traditional CPG go-to market model

Traditional CPG go-to market model elevates channel as an organizing construct

Media Transformation Highlights the Path Forward

Consider the transformation the media industry has seen in the last half century. Long gone are the days when brand managers could build a media plan by placing percentages of their budget across TV, print and radio mediums. Today, the integrated communications planning process (ICP) starts with a robust understanding and targeting of the end user, telescopes out to map the total consumer journey, and finally identifies where in the fragmented media landscape to invest to reach those end users.

In line with the media transformation, customer channel as an organizing construct must also transform for manufacturers to win with consumers in today’s environment. Rather than start the go-to market

process through established channel management and customer segmentation schemes, manufacturers must reorient their total demand planning to build relationships directly with shoppers who shop anywhere and anytime on their own terms.

Consider this in light of how most manufacturers go to market today. Despite their best efforts to implement omni-channel planning, most organizations are still woefully siloed, filtering staffing, budgeting, planning and marketing activation decisions through the lens of customer segmentation models that are misaligned with where consumers are fulfilling their CPG needs.

Being Consumer-First

What’s a company to do? In short, follow the consumer through the full consumer-shopper journey. This is not to say the future is all about direct to consumer. Rather, the imperative is be consumer first – then determine how to build and segment capabilities to reach target consumers, working effectively with customer partners (or DTC) across the demand landscape. Through our research and experience, we’ve identified three distinct behaviors to help organizations transform.

Map insights across the consumer journey.

The best products today are doomed to fail without a strong understanding of the end-to-end consumer journey and ability to insert the right messages at the ideal touchpoints. Consider a successful challenger brand that in addition to identifying a white space in a category, is able to use it’s understanding of the consumer’s journey and the “job to be done” at each inflection point (e.g., finding recipe inspiration, planning a social gathering, stocking the pantry) to build go-to market plans without struggling to force fit its planning into a legacy customer session. The most successful brands are ones that not only uncover powerful consumer insights but also map the end-to-end journey and invest at the right inflection points. This enables go-to-market decisions to be made through the lens of the consumer, rather than a default channel structure.

Omnichannel Consumer Journey: Illuminates triggers & barriers across the shopper journey, which is no longer linear

Integrate total demand planning.

Integrated Communications Planning and traditional “customer planning” must evolve from being compartmentalized and department-driven to a cohesive, coordinated, cross-functional capability. The goal is to apply a common view of the consumer journey that connects all relevant mediums and packages decisions about how to reach, educate and influence purchase into a truly integrated demand plan.

By being hyper-focused on demand moments and mediums in concert, manufacturers can develop more effective tactics. Proctor & Gamble recently launched a highly compact, concentrated Tide liquid detergent to meet the underserved needs of urban shoppers living in tight spaces. Priced the same as its ubiquitous 96-load jug, the so-called “Eco-Box” is about the size of a shoebox and weighs less than eight pounds. Most notably, the product is sold exclusively through online retailers like Amazon, Walmart.com and Target.com , where its carless city-dwelling shoppers are already turning to stock up on groceries and household goods. This type of innovation is more easily facilitated when go-to-market strategy is dictated not by an antiquated customer segmentation but by a rich understanding of the consumer and her journey.

Rethink your customer segmentation.

A large manufacturer recently conducted a study on where, how and why shoppers fulfill CPG needs online. What’s striking about the research is not what it uncovered about barriers to buying perishable items or openness to impulse purchases – valuable content in its own right – but rather the implications for the company’s customer segmentation.

As part of the study, the team looked at how shoppers engage with various fulfillment models (e.g., 2-day shipping, same-day delivery, buy online and pick up in-store). At first the team found a messy and fragmented landscape, with different groups of shoppers making different types of trips across a broad set of online and offline retailers. However, looking at shoppers based on how they fulfill unlocked a whole new way to think about customer as an organizing construct. Through the lens of fulfillment, the team conceived a new shopper segmentation that could be overlaid with customer segmentation. For example, the study found that high-value shoppers frequently used “click & collect” to bridge online and offline behavior. With that insight, the company could prioritize customers offering an omni-channel experience and rethink how it organized resources to service those customers.

The pathway to rethinking customer segmentation can lead to being able to prioritize differently. An example is RXBAR’s first sales call wasn’t to Whole Foods or the nearest health store but rather to the founder’s own CrossFit community – which became the company’s exclusive channel. Only after four years did they open the doors to mainstream channels, starting with Trader Joe’s, based on their understanding of the target consumer’s journey.

New go-to market model starts with the consumer journey for integrated demand planning with customers

Conclusion: Future of Omni-channel Planning

While upending the way companies have organized and created go-to-market strategies for decades can feel like a daunting task, fortune favors the bold. Tomorrow’s successful CPG firms will be those that are truly consumer first. As a starting point, here is what we recommend:

  1. Map a strong insight foundation across your consumer shopper journey
  2. Build an integrated approach to total demand planning that integrates consumer touchpoints with customer needs, strengths, and strategies
  3. Adapt customer segmentation to facilitate integrated communication planning and ultimately yield stronger, more cohesive business plans

To discuss how we can help you rethink your consumer journey, demand planning or customer segmentation, contact us at [email protected].

 

 

1 “The Rise of the Empowered Customer.” Forrester, 2017

2 “P&G introduces new concentrated Tide box for e-commerce only.” Cincinnati Enquirer. Nov 2018

Future of Packaging:  Re-thinking Plastic  Solutions

Future of Packaging: Re-thinking Plastic Solutions

Future of Packaging: Re-thinking Plastic Solutions

Future of Packaging: Re-thinking Plastic Solutions

Overview

Core to unlocking disruptive growth for manufacturers is identifying new consumer trends and quickly moving to innovate against them. Identifying these trends is often grounded in understanding your leading-edge consumers. For example, Blue Buffalo built a dog food brand that tapped into burgeoning needs of pet parents underserved by established brands. The idea: meat should be the first

ingredient in the ingredient panel. By curating the brand in channels where pet parents relied on store associates for nutritional advice and fueling social media mavens, they were able to accelerate the meat-first trend and disrupt the dog food space – leading to General Mills’ acquisition of the brand last year for $8 billion.

The Next Leading-Edge Trend & Why Now?

Listening to leading edge consumers and social media conversations, it is clear to us that the volume around the environmental impact of plastic packaging has turned up a few notches. We believe one of the next leading-edge trends primed to transition into the mainstream is alternative packaging solutions.

Manufacturers tapping into the alternative packaging trend is not a new concept. Water filtration systems (Brita, Pur, etc.) have grown over the last 20 years and were predicted to make bottled water obsolete. Yet, today bottled water remains the fastest growing beverage category in the US at 9%.

We believe this time is different.

The negative impact of plastic among leading-edge consumers is at a tipping point. Consumers are more invested than ever in brands that demonstrate a conscious effort to support sustainability. Social media disseminates this message and connects consumers that share this sentiment like wildfire.

 

At the same time, Big CPG’s efforts to connect with these consumers – and social pressure accelerating around reducing plastic waste entering the oceans – is ushering this concern into the mainstream.

 

Eliminating plastic is quickly becoming a standard, with company after company coming out with their own sustainability pledge.

Plastic Disruption is Already Occurring

Big CPG can only go so fast. Supply chain complexities and profitability concerns require them to pick their spots and manage against longer time horizons. This opens the door for Challenger brands to strike quickly, putting the consumer first. We’re already seeing brands succeed in positioning alternative packaging solutions as a core piece of their consumer value equation:

Lush Cosmetics

 

Boasts minimal, 100% recyclable packaging on all its products; it is one of the fastest-growing beauty retailers in the U.S., with North American sales increasing 25% in 2017 and reaching $550 Mil.

LOLI

Educating consumers that most beauty products are >95% water and use more plastic than necessary is a core focus. The brand minimizes its packaging footprint by removing water from beauty products, using glass and offering consumers a unique “blend it yourself” experience.

Carlsberg

Danish brewing company introduced new pilsner six-packs held together with adhesive rather than plastic rings in a bet that the eco-friendly packaging will attract younger consumers.

We believe the manufacturers that can act quickly and short-circuit the time horizons of big CPG will create advantage by appealing to consumers and customers that desire plastic alternatives.
What to Do

Be truly consumer-first
Core to the DNA of Challenger brands is an understanding of your leading-edge consumers’ values and a commitment to use packaging to better meet their needs. Manufacturers must identify the role packaging plays in consumption occasions and shopping trips and bring to market a solution that makes sense. Lush & Carlsberg represent examples of this in action. Lush defined minimal packaging as a core principle of its brand to connect to its millennial consumer base, while Carlsberg’s desire to attract these same consumers led to a solution to reduce plastic rings as a key component of their packaging.

Get to know your leading edge
Define the key consumer segment that will lead change within the category and identify the triggers to mainstream the experience. Banza commercialized leading edge food value insight in dry pasta to disrupt traditional boxed pasta – millennial moms rely on pasta as a dinner staple for their families, but value the carrier aspect of the meal (fresh vegetables mixed in with tomatoes) and want to replace the starchy carbs. Brands should speak to and learn from their leading-edge consumers, use these insights to fuel their solutions to reduce packaging within their categories and most importantly message how they are participating in this shift.

Map demand occasions more broadly
While the core of your business may be grounded in traditional brick & mortar occasions, there is an opportunity to re-think how demand occasions are mapped for your business. Channels such as foodservice and on-premise offer opportunities to reduce your packaging footprint while still accessing your core consumers. For instance, growth of WeWork locations have increased awareness and consumption in the absence of packaging for Kombucha, while Pepsi’s purchase of SodaStream highlights how brands think about accessing new consumption occasions outside their core plastic package.

Lead the way with eCommerce
Estimates show that roughly 165 billion packages are shipped in the US annually, using cardboard equal to more than 1 billion trees. The tremendous growth of eCommerce will only increase CPG’s contribution to this number. Move beyond transactional goals for ecommerce and use the platform as an insight tool for rapid testing and learning, to refine innovation and the value equation before launching across B&M channels. While packaging changes may require a price increase, test consumer demand online to determine what drives the most value for your consumers while positively impacting the issue of packaging waste online.

Price Pack Architecture:
Given today’s omni-channel environment and the realities of radical price transparency (see growth paper), companies are in constant struggle with customer partners to manage their price pack architecture. Leading companies have used reduced packaging solutions and smaller sizes to access unique consumer needs, such as Coke’s introduction of 7.5-ounce mini cans. Not only do these products meet new needs, they also offer manufacturers the opportunity to reduce overall packaging – and margin up – through smaller, opening-price-point items. Consider offering reduced sizes to both participate in this trend and meet consumer needs that may exist for your product portfolio.

Conclusion

We are at a tipping point for alternative packaging solutions. This trend should be an opportunity to reimagine packaging as both an outsized influencer for core consumers and a positive difference-maker on the sustainability front. Manufacturers must evaluate their own brand priorities and consumer set to find areas in which they can participate and lean in to be at the forefront of this change.

As always, we want to hear from you! If you’d like more information on how to re-think packaging, or want to share how your company is addressing this issue, please reach out at [email protected].

Challenger Brand Study 2018: The Magic of the Moat

Challenger Brand Study 2018: The Magic of the Moat

Challenger Brand Study 2018: The Magic of the Moat

Challenger Brand Study 2018: The Magic of the Moat

The competitive landscape for challenger brands has rapidly intensified.

Not so long ago, the challenger brand story most closely resembled that of David and Goliath. New brands entered mature, sleepy categories and used their guile and resourcefulness to disrupt the leaders. Their agility, transparency and consumer intuition allowed them to unlock the lion’s share of growth across categories. Back then, challenger brands had only to concern themselves with standing out against the large category incumbents.

Today’s landscape looks different. Lower barriers to entry, greater access to production, distribution and growth capital, and more

efficient ways to reach and build relationships with consumers have led to greater proliferation of brands and products in attractive spaces. The result is that challenger brands must now stand out not only against large category leaders, but also against a growing number of other challengers who have recognized the potential to disrupt. As this dynamic plays out across nearly every ‘hot’ category today – think cold brew coffee, kombucha and natural pet food, to name a few – challengers have recognized the need to further insulate themselves from competition.

What this means for challenger brands:

Enter the concept of the “moat” – an intentional competitive edge that raises barriers to competition, ideally developed early on in a company’s or brand’s life cycle. Successful challenger brands now need to start building their competitive “moats” early. When the Seurat Group identifies promising challenger brands, we tend to prioritize those that have deliberately dug their moats early in the development of their business model. An example of this is Q Mixers,

a premium natural mixer brand based in Brooklyn, NY. By aligning with the nation’s largest distributor in the majority of US states, they effectively established a “protected” route to market, enabling them to introduce the brand to Millennial consumers on and off premise, challenging flat-footed incumbents like Canada Dry and Schweppes and insulating against premium upstarts in the local/artisanal mixers space.

What this means for this year’s Challenger Brand Study:

This year we highlight 10 challenger brands that are not only disrupting existing categories but also using a “moat” to establish a clear edge for growth. These moats are a little different from the ways established brands have traditionally created competitive advantage. (Spoiler: it’s not about

defending shelf space, production and distribution scale, or paying for share of voice anymore). These days challenger brands are employing a host of moat-building techniques, from exclusive channels to social reach and proprietary technology.

TOP 10 CHALLENGER BRANDS 2018
Brand
Background and Moat
Bright Farms

Produce

Bright Farms is changing our food system by producing healthier and more sustainable local produce. The company finances, builds and operates hydroponic greenhouses near retail distribution partners, allowing the stores to reliably carry locally-grown, high-quality packaged vegetables.

The greenhouses are financed by long-term retailer agreements, effectively barring competitors from entry once Bright Farms gains distribution. Having already established successful partnerships with major retailers like Kroger, Ahold, Albertsons and Walmart, and posted 890% growth over the past 3 years, the brand is poised for continued expansion in the coming years.

Tony’s Chocolonely

Chocolate

Tony’s Chocolonely, a Dutch-based chocolate company that entered the U.S. in 2017, is challenging the industry to produce chocolate made totally without any unjust labor practices. By trading directly with farmers, paying above fair-trade rates and helping farmers grow profitable, long-term businesses, Tony’s is showing big players and consumers alike that it’s possible to produce affordable chocolate that meets a higher standard.

By changing the conversation around chocolate production and setting the new bar for quality, Tony’s has carved out a niche as a brand uniquely positioned to deliver delicious chocolate that consumers can feel good about eating. The brand has maintained a 50% annual growth rate since 2005.

New Wave Foods

Plant-Based Seafood

New Wave Foods co-founders Dominique Barres and Michelle Wolf knew there had to be a better way to give consumers the seafood they want while protecting the ocean’s finite resources. In 2015 they developed their first product: algae-based “shrimp.” The proprietary product story allowed them to enter leading-edge foodservice locations like Google’s campus.

New Wave Foods is an example of how a challenger brand can use new technologies, processes and ingredients to build a breakthrough product story that creates a moat even at start-up stage. Their early commitment to identifying, sourcing and processing the specific algae to recreate shrimp’s color, taste and texture will give them a significant head start as other brands start to bring plant-based trends to seafood.

Kylie Cosmetics

Cosmetics

Kylie Jenner is shaking up the beauty industry with the launch of her Kylie Cosmetics line. After earning $420MM in sales after only 18 months, Kylie Cosmetics is projected to hit $1B in total sales by 2022, just 7 years after launch. (By comparison, it took Lancôme 80 years to do the same.)While celebrity has always been a way to create an edge, today’s celebrities are using their social media reach to market directly to fans, further leveraging their fame to build the brands that bear their names. Jenner uses her social media pages (she has over 115 million Instagram followers!) to connect consumers with her brand. The instant consumer pull from Millennials and Gen Z creates a moat that is difficult for others to emulate.

Vital Proteins

Supplements

Vital Proteins has become a leading brand in the collagen space by using digital marketing and partnerships with “endorsers” from values-based groups. For example, the brand’s clean ingredient list won it “Whole30-approval.” (Whole30 is an increasingly popular eating plan focused on whole, unprocessed foods.) The brand has roughly tripled in sales the past three years, using these values-based endorsements to build a moat in the highly competitive supplement space.

From the Seal of Good Housekeeping to celebrity chef recommendations, brand endorsements have been around forever. What has changed is the source of these endorsements and their ability to act as challenger brand moats that help consumers navigate a sea of confusing food choices.

Four Sigmatic

Mushroom-based Drinks

Although “adaptogens” have become an industry buzzword over the past few years, they remain a mystery to most consumers. Adaptogens, or medicinal mushrooms, provide functional benefits like sleep aid and stress management – and Four Sigmatic is bringing them to the mainstream market. To do so, the brand makes it easy to understand and access mushrooms’ benefits. Their packaging pairs unfamiliar mushroom types (“reishi”) with familiar benefits (“chill”), and the products are powders that are simply mixed into water.

While others may jump on the bandwagon (Starbucks just announced an adaptogen latte), Four Sigmatic has made the ingredient synonymous with its brand by making an unfamiliar ingredient widely accessible. The brand continues to launch new products and geographies.

Oatly

Dairy Milk Alternative

Oatly, an oat-based milk free from dairy, soy, GMOs, gluten, or nuts, entered the U.S. market by eschewing mainstream retail and going directly to coffee shops. In doing so, they won over influential baristas and leading-edge coffee enthusiasts. This influencer channel continues to be a moat for Oatly to reach new consumers and generate demand and momentum to fuel its entry into mainstream retail and into new geographies.

Perfect Bar

Protein Bar

Years ago, Perfect Bar disrupted the bars market by targeting placement in refrigerated spaces, before a category for fresh bars even existed. This unique location not only harnesses the freshness halo of the refrigerated case, but also insulates the brand from the rest of the crowded ambient bar category.

In-store location is still the #1 medium for building brands in most categories. Perfect Bar demonstrates the moat-building power of a distinct location that communicates, educates and reaches new shoppers.

 

Bevi

Healthy Beverage Dispensers

Bevi is unique on this list in that it’s not a packaged good. In fact, Bevi has forsaken packaging altogether. This Boston-based company places digital healthy beverage dispensers in offices around the U.S., providing employees with healthy, tasty beverages that generate less waste than traditional canned or bottled options. The machines also track consumption, allowing Bevi to proactively restock machines and build a database of consumption insights. The brand says it has reduced office beverage costs by 50%, and Bevi itself posted 1000% revenue growth in 2016.

Bevi’s “moat” comes from the way in which it developed a complete solution model with distributors to help with the sale, delivery and maintenance of machines to offices.

Urban Remedy

Fresh RTE Meals & Snacks

Urban Remedy is bringing consumers ready-to-eat fresh meals and snacks whenever, wherever. Their omni-channel model, which spans home delivery, owned retail storefronts and branded kiosks inside of other forward-looking retailers, allows them to win a greater share of in-home and out of home occasions. The proof? Urban Remedy has experienced 100% growth over the past two years.

The company tracks data from owned points of sale, using the insights to tailor its assortment in real time (a kiosk’s assortment on a given day is determined by analysis of yesterday’s sales). Furthermore, Urban Remedy uses kiosks and branded stores to incubate and identify the 2-3 SKUs that are worthy of being rolled out to larger accounts like Costco. This “always-on insight strategy” provides a better chance of success when launching new products in mainstream retail channels – and creates a moat to stave off other brands considering entering the fresh packaged space.

10 moats that create an edge within the challenger brand model:

1. Supply chain as consumer benefit
2. Raise the bar on production standards
3. Proprietary product story
4. Commercialized social reach
5. Values-based endorsements

6. First mover with a unique ingredient
7. Influencer channels
8. Stand-out in-store location
9. Complete solution model
10. Always on insight strategy

As always, we want to hear from you! If you’d like more information on any of our challenger brand studies, or want to share a brand of your own, please reach out at [email protected].

Check out our previous challenger brand studies here, here, and here.

Sources:

Bright Farms

  1. https://www.brightfarms.com/app/themes/brightfarms/assets/pdf/Series%20D%20Press%20Release%20-%206.28.18%20FINAL.pdf
  2. https://www.inc.com/profile/brightfarms
  3. https://www.inc.com/magazine/201709/coeli-carr/2017-inc5000-brightfarms.html

Tony’s Chocolonely

  1. https://www.forbes.com/sites/oracle/2018/06/05/tonys-chocolonely-delivers-on-fair-trade-high-growth-virtues/#739343d91223
  2. https://www.confectionerynews.com/Article/2017/08/31/Tony-s-Chocolonely-targets-US-mainstream-retail-after-going-national
  3. https://tonyschocolonely.com/us/en/our-story/annual-fair-report/map

New Wave Foods

  1. https://www.forbes.com/sites/michaelpellmanrowland/2017/03/20/female-leaders-food/#54045dd12184
  2. https://www.newwavefoods.com/about-us
  3. https://www.livekindly.co/vegan-shrimp-set-to-be-the-new-wave-in-ethical-seafood/

Kylie Cosmetics

  1. https://www.cnbc.com/2017/09/14/how-kylie-jenner-turned-kylie-cosmetics-into-a-420-million-empire.html
  2. https://www.forbes.com/sites/forbesdigitalcovers/2018/07/11/how-20-year-old-kylie-jenner-built-a-900-million-fortune-in-less-than-3-years/
  3. https://www.elle.com/beauty/makeup-skin-care/news/a47259/kylie-jenner-kylie-cosmetics-earnings-billion-dollar-projectory-wwd/

Vital Proteins

  1. https://www.prnewswire.com/news-releases/vital-proteins-secures-19-million-investment-from-cavu-venture-partners-to-push-collagen-nutrition-into-the-mainstream-300547801.html
  2. https://whole30.com/2016/09/vital-proteins-faq/

Four Sigmatic

  1. https://www.fastcompany.com/40511575/the-shroom-boom-will-trendy-medicinal-mushrooms-go-mainstream-in-2018
  2. https://uhp.com.au/blog/how-four-sigmatic-is-popularising-functional-mushroom-drinks/

Perfect Bar

  1. https://perfectbar.com/2018/05/08/perfect-bar-increases-wholesale-business/
  2. https://perfectbar.com/2017/11/21/entrepreneur-day-perfect-bar/

Bevi

  1. https://www.xconomy.com/boston/2017/07/13/bevi-slurps-16-5m-to-bring-smart-water-cooler-to-more-offices/
  2. https://www.bevi.co/blog/smart-beverage-platform-bevi-raises-16-5m-series-b-make-disposable-bottles-obsolete/

Urban Remedy

  1. https://www.nosh.com/news/2018/urban-remedy-plans-escape-kiosk-california
  2. https://urbanremedy.com/locations/

Oalty

  1. https://www.inc.com/betsy-mikel/this-439-cult-swedish-drink-is-poised-to-disrupt-a-16-billion-industry.html