By Michelle Hayward, founder of Bluedog
When consumers hunkered down in their homes during the pandemic, food industry executives no longer asked, “How do we grow?” but, rather, “How do we execute?” With the pandemic’s passing, there’s a new force acting on food manufacturers. Let’s call it big ambition.
What defines big ambition? A focus on making early bets and being dimensional in what is defined as innovation. Companies are right-sizing packaging, adjusting price-pack architecture, and removing costs to boost profitability. But while reformulation or changing a pack architecture are good choices and can make a business profitable in the short term, they won’t grow the business. Growth comes from creating and delivering new value to consumers.
Food manufacturers with “big ambition” see their brands differently
For starters, companies with big ambition pinpoint consumer-informed opportunities. Innovation executives map territories that will drive value for their teams to think about growth and how they’ll deliver on big ambition. Companies like Hormel and Kraft Heinz are examples. According to Hormel’s 2021 corporate responsibility report, “15% of sales in 2021 were generated from new products.” And Hormel has challenged itself to continue achieving 15% of sales from new products every year through 2030.
Kraft Heinz recently launched its Homebake 425°/:30™ brand, a combination of individually packaged main dishes, sides, and vegetables to mix and match while each one bakes at the same temperature, for the same amount of time. A news release that Kraft Heinz issued in May 2023 notes that most Americans (61%) prefer a nightly, homemade dinner. So, the consumer’s job to be done is, “I want to get my family around the table for a home-cooked meal, but I don’t have time tonight to cook.” Companies like Kraft Heinz also realize their big ambition depends on manufacturing, margin structures, and distribution to innovate, which the company touched on at the 2023 CAGNY conference. Mindful of that, Kraft Heinz created an innovation within the company’s sweet spot.
A consumer’s eye view of innovation
The Economist reported in April that shoppers are still willing to stretch their wallet for quality food offerings. Specifically, the magazine noted “20- and 30-somethings in particular seem readier to spend larger shares of their income on food and are less likely to trade down than their elders.” Big ambition, in part, must reflect current and future consumer expectations. Executives can gain that insight by co-creating with consumers through conversations about:
- the “jobs” consumers are trying to solve for;
- the barriers that keep them from buying a particular product or brand;
- positioning, food, packaging, and brand design, holistically; and
- how consumers select and use brands over time.
Armed with that, executives can conclude whether meeting certain consumer needs will grow their business. Co-creating with consumers can even unlock granular details like in which part of the store (or shelf) shoppers would expect a product innovation. That thinking, in turn, helps management teams assess capabilities, resources, relationships, and gaps. For instance, does the business have the R&D, manufacturing, or distribution capabilities to deliver on a big ambition today? Is there an internal manufacturing capability or a network of partners to help test big ambition?
Accelerating innovation in a changing landscape
Indeed, big ambition has spurred another change: rapidly taking more at-bats to test products with consumers, earlier. Think of that as many small bets in the direction of a big wager. A great many new products that go to market at scale, ultimately, fail. Food companies can spend tens of millions of dollars to launch one product. If a new product fails in the market, it’s expensive and can create friction with the retailers. As a response to this, many product managers are now figuring things out with smaller groups of consumers, in non-traditional ways.
And while food manufacturers are still very much looking at whether a concept is safe, legal, and represents the brand well, several of them no longer spend millions to launch it at-scale. For instance, companies adopting the small-bets-big-wager process can learn months ahead of launch if a product’s cost structure will work for the business. Companies tapping this approach are seeing their success rate for new products reach as high as 95% when they ultimately launch at scale. That’s when big ambition pays off.
