Don't Go Chasing Growth Pockets - Chase Growth Platforms
In the middle of a room full of country heads and veterans of the Fresh Meat and Canned Meat industry in Europe, I was faced with the question on what were 3 lessons a company must follow on how to grow sustainably amid change. A question which in essence is not simple, but needs to be delved with, with the precision, steadfastednest and accuracy of a measured and decisive butcher’s cut…
Last year, I was invited to speak in Copenhagen, at a Global Protein Producer’s internal leadership meeting to help inspire the organization to have a more customer/ consumer centric view on Where to Play and How to Win. Like many of our clients, the company, which operates in fresh and canned meats space, faced some endemic challenges across their core categories including disruption from substitutes.
As the organization faced dynamic changes across different markets, and it started to focus on a new B2B and B2C strategy, it needed some ‘food for thought’ in terms of lessons learned from other markets. Their CEO had read our piece on ‘Winning the CPG Zero-Sum Game by Uncovering Hidden Growth Pockets’ and wanted to have the leaderhsip team learn about our methodology and case examples where we had been able to deliver value.
Like the way prized cuts are derived from a whole animal, that at first glance may not be all that delectable, it was imperative that I share with the audience how identifying ‘Growth Pockets’ could be a first step into understanding ‘Where to Play’. This is, how a large, mature category that at first glance may not be attractive, may hold within it interesing growth pockets that warrant investment. Such is the case of the Yogurt Drinks ($730MM, +21% vs YA) growth pocket, within the declining Yogurt ($8B, -2% vs YA) category. More dramatic and compelling for this group was to see the power of growth pockets in protein, particulary the case of Bacon ($4B, +3%) vs Premium Bacon (e.g., Center Cut, higer priced, etc) ($325MM, +11%) or Jerky ($1.6B, +8%) vs BFY Jerky ($1B, +43%)… Both growth pockets growing by more than 3 – 5 times the growth rate of their original category.
But as a client once pointed out to us: “This is all fine… But the last thing I want to do is spend my time chasing after growth pockets…” — our methodology does not stop there. Key to the audience was to learn that once Growth Pockets were identified, ‘themes’ that aggregated several growth pockets were derived to craft ‘overaching Growth Platforms’ that would stand the test of time and provide a broad enough spectrum to center Demand Portfolio Strategy. So for instance, based on the work we’ve done for several clients, Mindful Indulgence is usually an important Growth Platform that represents the convergence of Wellness and Experience. In it we can find products like BFY Ice Cream, BFY Butter, BFY Cookies… Offerings that have traditionally focused on taste and indulgence, but now are offered in a ‘BFY’ way through organic ingredients, alternative sweeteners and/or lower fat. In the world of protein, this may include BFY Pates, Organic Sausage and Plant-Based Burgers.
In addition to Growth Platforms, we demonstrated how identifying ‘common growth pocket themes’ can also lead to key areas for innovation, and as was pointed out to our host, these themes could be at the front and center of R&D concepts. As the organization became more interested in snacking, key areas to explore could include: Jerky, Salami Crisps, as well as ‘on the go’ Bone Broth, for example.
Nothing keeps an audience alert as understanding ‘what’s in it for them’ and these protein examples help bring to life some of the issues and decisions the company continues to face, particularly, how they need to confront substitutes. In the US, the evolution of plant-based alternatives is well known, vis a vis dairy products and vis a vis fresh meat consumption. In Europe this topic was even more relevant, as Europe is the largest market for meat substitutes, representing 39% of global sales[1] Making bets in alternative spaces (whether big or small), that may be impacting demand in the categories we actually play in, is something that a global business should consider as it is better to ‘disrupt oneself’ than be ‘disrupted by competition’.
Our chat then migrated to ‘How to Win’ and how, after vetting Growth Platforms and Innovation Areas through consumer research, it was essential to identify opportunities within met and unmet needs, through differentiated value propostions that best connected to the consumer and/ or the customer. So for instance, if BFY Jerky is a growth pocket within the ‘Nutrient Rich’ platform, and much work is done to understand consumer motivations behind consuming nutrient rich snacks (e.g., Nuts, Seeds, Jerky, Yogurt Drinks, etc), what opportunities exist to craft a differentiated positon in the market? Off the bat, some ideas we discussed were new targets – e.g., BFY Jerky targeting women or children; or new channels – eg., BFY Jerky sold exclusively in airports, were on the run commitments sometimes requires a filling on the go snack.
The organization also had an appetite to understand if our methodology could impact B2B. That is one key question we often address, and the insights that we can derive through this process are a core driver of B2B relationships, including channels and restaurants. We recently had concluded work with a dairy organization that was going to leverage our key findings to craft innovation joint-efforts with restaurants to increase their use for dairy. For this company, understanding Growth Platforms can be at the crux of driving both B2C and B2B strategy… If they are in the business of Pizza Toppings, and BFY Sausage and BFY Salami are essential growth pockets; understanding the nuances will help them gain leverage when helping channels and restaurants offer those products to clients, including offerings that are organic, non-GMO, pasture raised, lower in nitrates… or dare we say – plant-based alternatives!
Going back to that room full of executives, and walking with them through the Where to Play and How to Win journey, the three lessons to take away from the presentation boiled down to:
- Have an outside-in perspective, not inside-out… Myopia can kill an organization and learning about Growth Pockets and how to win by participating in them is conducive to sustainable growth
- Follow a rigorous, analytical approach to strategy… Even the best minimal artists first need to learn the foundation of classical art before they reach their highest conceptual breakthroughs
- Be proactive, not reactive… Acting on an impulse, based on all the changes around us, which are magnified with this age of information does not carve a long term path to were we want to be
These lessons are simple, but their execution complex and their impact significant.
As information becomes perfect, accelerating the speed by which we can identify Where to Play will be most relevant. Acting effectively and efficiently has become a ‘must have’ and to recognize this, we are now leveraging Artificial Intelligence to identify Growth Pockets, while also looking at unstructured metrics to figure out which sub-categories will become the Growth Pockets of the near future. We have recently published this POV, titled: The Next Frontier: Leveraging Artificial Intelligence and Unstructured Metrics to Identify CPG Growth Pockets and Outperforming Brands
[1] Datmonitor (2017)