Four principles for premium brand renovation
From clean label product formulations to online shopping, we are in the midst of a new evolutionary period in the food and beverage market. Hartman Group research has identified strategic levers and considerations on brand premiumisation that can aid companies looking for pathways to growth within this changing environment. CPG manufacturers, retailers and restaurants are contributing equally to a surge of development that is disrupting and reshaping the landscape and suggesting new business implications for both now and the future.
Within this new era, food and beverage companies of all sizes and types are hunting for pockets of growth. Yet for years, these same companies chasing growth have been largely resistant to the booming premium food and beverage segment, particularly the role of premium product development as portfolios are restructured for growth.
In today’s supercharged competitive landscape, it’s necessary for business leaders to think differently about their existing assets (especially the large, legacy brands that anchor so many food and beverage portfolios).
More importantly, new thinking is needed on how to evaluate the opportunities for premium product development in spaces that have seemed foreign.
Here are three strategic levers that can aid and inspire NPD within a changing food and beverage market. Collectively, we call the approach “Renovate, Build and Buy”.
While Renovate, Build and Buy entail roles in product and brand development, they should be thought of as a concerted strategy toward the broader objective of contemporising food and beverage portfolios for growth.
As implied by the term itself, “renovation” happens within the confines of an existing-food or beverage brand architecture. Renovation ensures that branded offerings continue to confer the objective benefits and symbolic experiences that consumers desire from the brand in a given moment in time.
While it’s true that as weakening revenues and share of sales increasingly plague a number of category captains in established food and beverage brands, the prospect of renovation for legacy brands must now encompass a far more substantial undertaking – we’re calling it premium renovation.
Premium renovation seeks to fundamentally upgrade the perceived quality of offerings and contemporise them by introducing premium product attributes that align with growth.
Having analysed and advised countless brand renovation initiatives over the years, we have identified four key principles and considerations meant to stimulate introspection as to the potential for renovation:
- Premium renovation is not right for every brand: Periodic, incremental renovation to base products is a necessary process that all healthy brands should embrace.
However, when food culture and consumer sentiment evolve faster than a product does, brands often find themselves in need of more aggressive renovation in order to reestablish contemporary relevance, command unit pricing premiums and sustain sales growth.
Legacy brands are tasked with negotiating a delicate balance between delivering against emerging food distinctions and doing so credibly and with transparency.
- Successful premium renovation should not always be pegged to growth: Under normal conditions, a stable base allows renovation to bring incremental growth to a brand.
However, in categories experiencing redefinition of baseline quality expectations and with smaller premium brands growing share, the main business objective of premium renovation may be to arrest revenue declines or, in more dire cases, to simply mitigate losses as the brand charts a new future using the other levers of build and buy.
- Successful renovation does not a premium brand make: While premium product renovation has proved to be a tricky, though often necessary, prospect for legacy brands to undertake, some brands are demonstrating that it can be done to positive effect in terms of both brand positioning and topline growth.
- Marketing premium renovation depends on category dynamics and expert timing: As large CPG companies renovate their brands, the next logical next step is often a discussion around how to market the change.
This is a very important area, considering the time and investment that was likely needed to renovate. It can also be critical to the reception of the product.
Understanding the opportunities for premium requires a cultural, consumer-driven perspective rather than the traditional industry definition largely defined by category pricing tiers.
“The New Premium”, as The Hartman Group has defined it, uses the lenses of modern food culture and consumer perception to assess specific product attributes as well as the symbolic brand meanings ascribed to categories and brands.
When viewed thusly, we have determined that the New Premium is one of the keys for finding growth.
With good brand auditing and category review, you will gain realistic and useful understandings about the strengths and symbolic limitations of your brand — giving the framework that you and your team need to fully leverage renovation.
Smartbrief.com: Authored by Laurie Demerritt, CEO of The Hartman Group.