5 Hard Questions Food & Beverage Brand Leaders Face Now
It’s not breaking news to say that the food and beverage category today barely resembles what it was in February 2020. Everything has been disrupted: Consumer buying habits (what, when, and where they buy); supply chains and operations; even the makeup of your organization.
While these disruptions have raised massive roadblocks for better-for-you food and beverage brands, they’ve revealed opportunities for those brave (or capitalized) enough to seize them. As we wrote in a white paper almost exactly one year ago, this industry was — and remains — poised for a huge boom in innovation. Forced to change their shopping patterns, consumers opened their eyes to different brands, products, and flavors. When brands faced ingredient outages and production slowdowns, leaders explored new formulas and products they may not have considered before.
As I think about our conversations with brand leaders in 2021, I realize how profoundly our industry has changed. And if you’re like the execs we’ve been working with, you and your team are facing strategic decisions unlike any you’ve dealt with before. So let’s address five major questions we’ve been hearing from brands; you’re probably wrestling with them, too.
1. What’s the right channel sequence for our food or beverage brand?
This may be the hairiest question we’ve heard from brands lately, and it comes in a couple of different flavors. Sales and marketing leaders wonder about the best path into the retail landscape, when it’s time to change gears, and why channel sequencing even matters.
Choosing the right channel(s) — direct-to-consumer, big box, specialty grocers, convenience stores, etc. — is not a function of operations or sales. Decisions about where to sell (and not to sell) must be anchored in brand strategy. Your brand strategy guides what you’re going to do, and also what you’re going to stop doing.
Clients with early-stage food or beverage brands come to us all the time and say they want to get on the shelf at Walmart. We have to talk them through the two or three years of positioning and proof of marketability that shows they’ll get traction and velocity before the folks in Bentonville will even take their phone call. Club and big-box retailers are ruthless in dictating terms of pricing and placement, and if you aim for mass distribution too quickly, you risk becoming a low-priced commodity. Relevance at Walmart because you’re selling at a discount will never give you a shot at other distribution channels at a higher price.
Can you shift gears and let go of one channel as you grow into another? Absolutely. When you build relevance in grocery stores, for example, you might consider easing out of convenience retail. Channel strategy is iterative. Launch, establish, and grow before you look to swim in a bigger pond.
2. How do I know that my brand strategy will be actionable?
The first time I encountered this question was a few years ago, I thought it was the smartest thing anyone had ever asked me. Now I hear it all the time.
Often, when CMOs engage outside agencies for brand guidance, they wind up with a giant strategy document that nobody ever opens. There’s no plan for bringing that strategy to life in a way that’s doable or sustainable.
Savvy executives ask, “What should we plan for from a budget perspective in order to implement your recommendations for strategy and go-to-market?” The answer depends on how aggressive the growth goals are, but I generally advise that the budget for execution be at minimum 1X to 5X the strategy fees.
3. What will it take for my brand to be meaningfully different from competitors?
I’m asked this by pretty much everybody we talk with: CEOs, CMOs, sales leaders, and others. The word ‘differentiation’ sounds like marketing-speak, but it’s a concept we’ve written about a bunch lately.
When we talk about differentiation, we mean defensively different. Defensively different is not a marketing campaign; it’s a way of seeing the business, integrating your values into what you make and why, and creating a community with your fans. Your strongest point of differentiation lies in the intersection between your brand’s mission and your consumer’s needs and desires. Focus on that overlap, and you’ll build an audience of true believers who’ll always prefer your brand and create barriers your competitors can’t possibly hurdle.
4. I have this killer new product idea — does it fit into my current brand or does it become a new brand?
This question is totally a function of our times. We predicted a year ago a vomit of product innovation in our category, and I don’t see that letting up. If you’re seeing a whole crop of new products (flavors, trendy ingredients, nutrition claims) among your competitive set, be disciplined about your offerings. As your R&D team churns out lots of promising ideas, let your brand’s relationship with consumers guide your choices. Anchoring your innovation in brand strategy yields new products that offer potential for strong ROI with little downside.
But if you land on a new idea that reaches for a new audience with different needs that your brand currently isn’t meeting, it’s possible to advance that idea under a secondary brand. But this path requires alignment, resources, and discipline in your organization, so take it with eyes wide open.
5. Our company has seen major employee turnover over the past 12 months. How do we get everyone on board with our brand?
While we’re used to advising clients on high-level org chart issues, this question of company-wide alignment is new. Thanks to the Great Resignation, every company is dealing with it, and the sheer volume of new employees has the power to radically reshape organizations.
I look at this as a significant stress test for brand strategy: Is your brand’s mission and vision strong enough — and woven deeply enough into your culture — to indoctrinate a new generation of employees? Is your story clear and concise enough that all the fresh faces get it and buy in?
A strong capital-B Brand — your promise and the way you keep it — allows you not only to connect with a devoted group of consumers; it also attracts the right kinds of employees who are just as passionate about your cause.
You’ve got questions, these and others. We can help you find the answers. Let’s connect and talk about what you’re wrestling with.