Small brands are the new black. At the start of 2017, Euromonitor reported that 25% of CPG growth came from brands with 2% market share. Obviously, big brands still grow in value terms but a small percentage of a lot is still more than 50% of next to nothing! Whilst scale used to be a fundamental source of competitor advantage, we are witnessing a fundamental shift of some of the key success factors of brand performance.
We, as always, put this down to the fact that small brands have found new ways to deliver MEANINGFUL DIFFERENCE. We also believe these, often serendipitous, success factors can be built into future approaches to drive success for brands, both large and small.
It was a virtuous circle. Access to resources to invest in advertising/marketing, innovation helped maintain a premium/category leadership and economies of scale drove supply chain efficiencies to defend margins. These advantages could then be leveraged to increase and defend mass distribution/retailer relationships which, in turn, created more resources. Even the 3rd brand in a category was constantly fighting for air time and as for a small start-up brand it was usually stuck between a rock and a hard place.
In health and wellness, the innovation and regulatory hurdles make scale, or at least resources, critical to success and the ability to manage low success rates, clinical data needs and long lead times before any sales emerged. This is still hard for small companies in this space.
So, apart from some interesting VMS/naturals brands or niche skincare products (usually ones with a strong heritage narrative or a powerful ingredient story) small brands still have to fight hard.
We are spending a lot of time thinking about 3 things:
1. How bigger brands use current learning to enhance their relevance and authenticity.
2. How small brands can maximise their opportunity by building their MEANINGFUL DIFFERENCE to manage the move from niche to ‘mainstream’ – in sales, not necessarily marketing.
3. How smaller brands in health and wellness – even OTC – can succeed like they are in food – especially tackling the credibility challenge.
Every situation is different, but here are a few key success factors:
Big brands REALLY struggle here. Consumers know big brands come from big [faceless] global corporations that churn stuff out of big, efficient factories. Small brands have named people; they ‘make’ the product; they care PASSIONATELY about quality, sourcing, innovation etc. How do bigger brands find a version of authenticity that fits - Yeo Valley did a great job of being relatively large, but authentic/’small’ in taking on the long-established dairy giants.
Strongly linked to this is the purpose. A lot of b&$!!*@! goes on in the world of brand purpose… it can be a deeply relevant input to finding the MEANINGFUL DIFFERENCE, but it’s not a critical input that every brand MUST have. If authenticity can come without it, that’s fine. But, be aware 53% of UK consumers regularly make decisions based on a brand’s values.
Relevance to consumer needs/attitudes.
This is about small details. Provenance, quality and flavour; specific benefits; ingredient stories; backstories full stop. It’s different in every case, but small brands have changed consumer expectations on quality and what they will accept. We consistently see bigger brands failing to be specific enough or producing vanilla solutions in their desire to appeal to everyone or in trying to be different failing to tick the core relevance boxes they need to. We spend a ridiculous amount of time mulling on the R-word.
Big brands generally got complacent. They overrated their marketing and under-estimated their positional power – distribution; ability to roll out NPD; advertising money etc. Small brands were able to challenge this by being niche, disrespectful of the category norms and brave! It usually manifested itself in premium quality and unique and clever details/marketing. Innocent was damn fine marketing in the end but based on a relevant product.
Define your source of credibility early and build and protect it. In health or wellness or skincare, this is hard for small brands in the absence of data or if you are just using generic data. So, we suggest deep interrogation of your relevance story and extra effort to unlock a point of authenticity – personal or historical – to explain why a brand from a small company is a safe and effective choice to deal with an ailment. This is sophisticated marketing and one area where health is different from food, where passion and a personal commitment to quality can win through – with great brands like Gu Puds, The Collective yoghurts, Lizzi’s Granola etc. – in health we believe we are approaching a point where small CAN be beautiful.
Marketing models that build under the radar with ‘low-investment’ – e-commerce/new channels.
The biggest market dynamic is the ability of small brands to get to first base without ever going near a big retailer. We would argue that to get to 2nd or 3rd base still needs some traditional approaches and investment, but… for health brands, this is just starting to open up as Amazon focuses more of its brainpower on health and Europe starts to embrace e-pharmacy/health platforms. You need a clear strategy and expertise to win here. Big brands need to see this as more than a relevant new channel, but also as a key competitive environment where they can learn from and potentially see off new, initially under the radar brands, before they win through. This requires investment, humility and a hunger to embrace change!
This small brand revolution has changed how we think about our MEANINGFUL DIFFERENCE approach for both big and small brands. The desired outcomes are the same – but some of the tools and opportunities are different.
All the variables are important, but in health and wellness, we increasingly find ourselves running hard to find two things… authentic points of relevance for big brands and meaningful points of credibility for small ones. Once the relevance and credibility are in place… distinctiveness and creativity can kick in.
If you are a small brand looking to grow or a big one that is stuck, contact us to see if we can build the MEANINGFUL DIFFERENCE you’ve been looking for.