15 Aug Ingredient suppliers must take over the controls – COMMENT

Ingredient suppliers normally focus on marketing their ingredients to brand owners in the hope of getting them used in their products. And as most ingredient sales and marketing professionals know, it’s a frustrating process. Comment by New Nutrition Business’s founder and editor-in-chief, Julian Mellentin.

Ingredient companies invariably target branded goods companies – Mars, Danone, Nestlé and the like. First you must get the attention of the new product development or R&D teams. They are pressed for time and short of resources and getting their attention for long enough to convince them about what your ingredient does and how it gives value to a finished product is by itself a significant achievement.

And that for many – perhaps most – ingredient companies is as far as it gets. You might be asked several times to present your science, to answer technical questions, but then there’s often a long silence while the potential customer internally processes what to do with the ingredient you are offering. Sometimes, of course, people get lucky and present an ingredient technology just at the moment that coincides with a major need by the client.

Next the potential client’s marketing department needs to be convinced. And this is where the sale usually breaks down. Brand marketers don’t like to take risks with their company’s brand – or their career. Most ingredient companies now identify their client’s marketers – most of whom have no scientific training and may understand nothing about the technology of the ingredient being sold to them – as the key decision makers.

Ingredient companies invest millions of dollars in developing their science, in making their ingredient as process-friendly as possible, as compatible with other ingredients as possible, only to find that the entire commercial prospects of their ingredient rest on a decision by a marketer who may have no technical or scientific training and who may only be at the outset of their career.

The problem is that ingredient companies and marketers do not speak the same language. Often – usually – ingredient companies cannot show what consumer needs their ingredient satisfies, or any other consumer insight. The need to cross that bridge and put ingredients into the context of the consumer is precisely why leading ingredient companies such as Beneo, the Belgian company which is one of the world’s largest fibre suppliers, invest heavily in consumer research.

Many companies also put their ingredient into a beverage or food application and show it to customers.

However, no matter how good your consumer research to justify the need for your ingredient, no matter how good-tasting and good-looking your product concept, the final decision will rest on how risk-averse is the client’s marketing department and senior management. And most are conservative, simply because they don’t want to take any risk that might wreck their brands – and their career prospects.

Proof of concept

To get past this hurdle a handful of farsighted ingredient companies are taking a completely fresh approach. Nothing is as compelling as having a concept that has already been turned into a finished product that is consumer-tested and successful in the market. It’s a “proof of concept” that even the most conservative marketer can’t ignore.

US ingredients company Ganeden Biotech – which supplies probiotics – has done just this. Instead of persuading a brand owner to include its bugs in their yoghurt brand, it cut out the middle-man and worked directly with a retailer – Walmart – to develop and market a finished, branded, consumer-ready product. Ganeden worked with a co-packer to produce the type of yoghurt Walmart was looking for and then offered the retailer exclusive rights to the finished product, which is sold under the brand name enLiven.

The model makes good sense – getting its ingredients into Walmart gives a credibility that makes it easier to open doors elsewhere. It appears that the strategy is working. Launched in March of 2011, the enLiven yoghurts are available in 4-packs with four different flavours and now Walmart is expanding the range; single-serve cups are the latest offering. Although the retailer never discloses sales figures, this suggests that enLiven is working well enough.

Ganeden’s launch of enLiven is part of an increasingly common strategy by suppliers to conceive and develop finished products in order to build awareness and trust for their scientifically-based ingredients and to demonstrate “proof of concept”. When you have that, it’s harder for brand managers to turn you down.

Brand owners are too time- and money constrained to be able to work out how your ingredient might fit into their products, so you can make life easier for them and make yourself look more committed by doing the job for them.

Successful innovation is, of course, dependent on far more than just an ingredient. Creating new markets for new ingredients is critically dependent on innovating in as many ways as possible, including:
• Packaging
• Merchandising
• Brands and marketing tactics

As a result, ingredient suppliers will increasingly find that, in order to differentiate themselves and get a hearing, they will have to deliver a full service that addresses everything – not just the ingredient, but how it should be packaged, what should be on the product label, how it should be marketed – and much much more.

This type of thinking is a discipline that will help you develop a much more coherent and credible message when presenting to prospective business partners. They may not agree with your analysis, but at least you’ll have done enough work to have an informed discussion and establish your credentials as more than just another “I have made this so who wants it?” ingredient supplier of whom there are regrettably still too many.

Ingredient companies are increasingly going to be market experts, branding experts, communications experts and consumer insights experts as well as technology experts. And the ingredient companies who do that first will be the ones who win the competitive advantage.

About New Nutrition Business

New Nutrition Business is a London-based research, publishing and consulting company which specialises in researching, analysing and forecasting developments in the business of food, nutrition and health around the world.

The strategies and success factors it  has identified in the 1990s have become the benchmarks for strategy development and brand positioning in the worldwide nutrition business. It works with companies all around the world, from the United States to Australia and from Sweden to South Africa.

New Nutrition Business is headed by executive director Julian Mellentin (right), one of the world’s very few global specialists in the business of food, nutrition and health.

He is the editor-in-chief of New Nutrition Business and Kids Nutrition Report, the only industry journal in the world on the rapidly developing kids’ nutritional marketplace. See www.new-nutrition.com