Disruption in the food marketing space has become something of an annoying constant to food marketers over the past decade. With trends – from organic and local to gluten-free or low-carb – ebbing and flowing at an oftentimes dizzying and perplexing pace, established marketers appear to be struggling against plucky up-and-comers.
Chobani, which popularized Greek yogurt in America, overtook General Mills Inc.’s Yoplait last year to become the country’s biggest yogurt brand. That a 12-year-old upstart could overtake a powerhouse in so short a time illustrates how shifting consumer trends are catching the established food giants flat-footed. They’ve become, their critics say, too complacent about perennial product lines and too plodding to react with innovative, moneymaking products of their own.
“There’s a deer-in-the-headlights phenomenon,” said John Grubb, managing partner at Sterling-Rice Group, a food consulting firm. When big food companies try to match competitors’ fashionable new products, “they suffer from a lack of culinary distinction.”
…and in business, distinction is everything. Author and noted speaker Scott McKain published a best-selling title a few years back on the critical importance of creating distinction in business: “…this question should keep you tossing and turning at night: how can your customers distinguish you from your competition?“
Yoplait, it seems, missed the memo. As Bloomberg notes, Yoplait accounted for 25% of the U.S. yogurt market as recently as 2011, and as recently as 2015, it was the country’s leading brand. It’s share has collapsed over the past year, to just 19%, and sales are off 11%. Chobani, meanwhile, became a $2 billion brand.
As to the question of distinction, consider this: do you buy Yoplait yogurt? We do at our house… for our 4-year-old daughter. What do the adults in the household consume? Chobani.
Consider the key food trends at play in recent years, and it’s not hard to understand this dichotomy. Adults are increasingly concerned about increasing protein intake and reducing consumption of added sugars, neither criterion a consumer would likely apply to Yoplait, but both of which apply to Chobani.
Take the situation a step further, and look at the advent of Fairlife milk, a high-protein, low-sugar fluid milk product distributed by Coca-Cola. The first innovative product in the fluid milk space since who knows when, the product led to double-digit growth for Coke in the milk space last year, helping the legacy marketer hedge its bets against stiff headwinds for its “billion dollar brands” in the sugary soda space. For a product that did $87 million in 2015 (it’s launch year), that’s pretty good growth.
Full disclosure: I’m a huge fan of Fairlife. We have two bottles in our fridge right now, in fact.
Why is this brand working, when fluid milk has been essentially in crisis my entire adult life? Marketing blogger Michal Clements explains:
For those who aren’t familiar, fairlife offers multiple health benefits, including higher protein, reduced sugar, and no lactose. Specifically, lactose-free fairlife provides 50% more protein, 50% less sugar, and 30% more calcium than typical milk. These benefits are achieved through a patented cold filtration process. And fairlife sells for a premium, about double the price of conventional milk and slightly more than organic.
Clements correctly notes that Fairlife has to work to own its niche rather than trying to be all things to all people, but the company has done a reasonably good job of creating its own distinction, as Chobani has done in the yogurt space. But, so far so good, at least according to Coke’s latest quarterly results.
…and so back to the issue of innovation and distinction in the food space. Major food marketers like Yoplait “tried to capture these trends,” according to Jared Koerten, an analyst at Euromonitor International quoted by Bloomberg. “But they’re late to the game.”
They can develop and distribute products similar to popular offerings from hipper competitors, but the brands don’t necessarily resonate with customers.
Being late to the game with innovation violates one of the oldest maxims in marketing – be first or be biggest – but in the modern food marketing world, the consumer doesn’t necessarily buy the biggest any longer.