The lessons I’m bringing back from my summer internship. By Raphael Patterson, Intern at &us and Trinity College Dublin Business and Economics student.
I’ve spent this strangest of summers back at my parent’s place in London, working as an intern with &us. My main focus has been developing an innovation process for teams to create a product or service in just one week. When I first got the brief, I must admit I thought I was being sent on a fool’s errand. But I soon came to realise it’s not so much about the early idea, but rather in the journey where the innovation lies.
I’ve also had the opportunity to delve into an industry I’ve always been fascinated by, Fast Moving Consumer Goods (FMCG).
When my professors talk about the industry, the case studies are all about Nestle, P&G and Unilever. But I’m far more interested in Brewdog, Oatly, Distill Ventures, and La Croix — smaller companies on massive growth trajectories that are punching well above their weight, despite not having nearly the same resources..
It got me thinking — what could the Unilevers of this world, and in turn my Professors, learn from them?
Everyone can be a brand ambassador
Big brands pioneered the use of what we now call ‘influencers’ decades ago. Athletes, actors and adventurers alike have become the face of products on billboards, in magazines and on TV. But whilst Pepsi spends millions splashing football stars all over blockbuster ads, smaller brands, from La Croix Sparkling Water to Boohoo, use micro-influencers — people with much smaller individual followings, of sometimes just a few thousand people — to promote their brands all over the relevant social channels.
The model works because it’s cheaper than hiring a big star, it’s flexible, and it’s driven by a targeted reach that can spread far and wide. The beauty is the engagement level of micro-influencers is said to be four times higher (when the company gets its digital marketing strategy right) and a whole lot cheaper and quicker to market compared to hiring, say, Serena Williams.
Ultimately, this approach gets the right messages to the right people, for a lower price all day long. My feed knows what I want before I even know it, making finding and buying from these brands part joy, part ‘bragging right’.
Investment is through the roof
Any prudent investor will go where the yields are highest, and none are sweeter right now than the ‘ready to drink’ space.
One area I’ve been learning about is the growth of the once loved seltzer, which is making a nostalgic comeback in boozy form. The category is now experiencing explosive growth thanks to a 240% YOY increase that has seen it reach a $2.5bn annual turnover.
To paint a picture, White Claw Hard Seltzer, a leading US alcoholic brand founded just four years ago, is already boasting sales in the hundreds of millions, and this summer hopped across the Atlantic to launch in all major UK and Irish supermarkets. Sales have been slow, largely attributed to COVID, but investors and big brands alike have seen the boom in the US and are rushing to get a piece of the action.
[Real] authenticity sells
The “taste for authenticity is disrupting powerful food brands” declared the Financial Times late last year. The younger generation, who have a higher lifetime value to brands, are more health conscious, environmentally and politically aware, and we put our money where our mouth is (I still have a year of Uni left so am not contributing hugely to sales).
My generation, and those a few years older than me, are more adventurous — we’re not wedded to the same products and brands our parents bought for us. If anything it’s the opposite: ‘rebelling’ against the big brands we grew up with is a form of crafting our own experiences and finding our own way in the world. I love stories like those of Fritz-Cola, founded by two 20-somethings in Germany, who are taking $10m a year out of Coke and Pepsi’s European sales, and I actively support them and others like them where I have the choice.
The trend started 10 years ago with craft beer — locally made, unique and with a story to tell, but those stories are everywhere now — from Spirulina Oat Milk to Seedlip to Impossible Burgers, to the local gin distillery under the railway arches — and big brands are getting hit.
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So what does the future hold for the FMCG industry? I see it continuing to be frenetic whilst becoming ever more fragmented. The little guys no longer need the muscle of the big brands to become successful; rather they need to innovate everywhere whilst staying true to who they are. Those who don’t just capture, but dictate the mood will ultimately emerge as winners.
In all, I’ve had a really fascinating summer with &us, diving deep into the world of FMCG and working on some of the challenges their clients are facing. I’ve learned a lot, but nothing more important than this simple mantra: innovation lies in the journey, not the starting point or the destination. And if I ever find myself talking to an FMCG boss, I’m covered for at least 10 minutes chit chat.
Become a better innovator — download the &us exercise book: Faster Moving Consumer Goods, for free here.