Innovating for growth
With challenge comes opportunity
These are competitive times for FMCG companies searching for growth. Smaller companies, being closer to individual sectors and capable of more agility, are finding success where many large brands are struggling. Low-calorie ice cream brand Halo Top, for instance, grew by 2,500% percent in 2016, leaving more established competitors trailing.
But there is no need for larger companies to be disheartened. With challenge comes opportunity, and innovation remains a favoured tactic of brands seeking growth.
The emphasis brand marketers place on innovation has been growing since Kantar’s 2017 study. In that time, Nestlé has created Nestlé Research in Lausanne – staffed by an 800-strong team – while Kraft Heinz is investing €90 million into its Global Centre of Excellence in Amsterdam.
For all the investment that goes into new product development, it is still true that – of those eventually launched to market – only a small proportion will go on to make a real impact. In fact, only 1.7% of new product launches that have been in the market for at least a year have exceeded 1% penetration or 500,000 households.
Many of these innovations have helped drive growth. In Kantar’s Brand Footprint report, how some of the fastest-growing global brands were using innovation as a key tool were identified. Dove is one of the few global brands adding CRPs (consumer reach points) year-on-year, in large part thanks to its Baby Dove innovation. The skin lotion was launched first in Brazil, India and select South American markets in 2016, and then successfully rolled out the UK and the USA in 2017.
Meanwhile, Três Corações became Brazil’s third-fastest-growing brand, helped by innovations in flavoured milk, powdered chocolate and a new cappuccino range including single-serving sachets. When successful, innovation has the power to propel growth – but problems of efficiency remain.
Kantar's Innovating for Growth publication is designed to carry the conversation forward, and to demonstrate that sales alone are not the sole measure of success. In fact, bigger launch sales do not necessarily mean a bigger category benefit – they can also lead to higher category losses.
To truly understand the value of innovation, you need to understand its category impact – and that means measuring incremental innovation.