Tomorrow’s Consumer: A fickle friend for consumer goods brands

Millennials like new things. They especially like the new things that their friends like, but not if too many of their friends like that new thing, because then it’s not new. 

This is the confusing future that consumer goods brands will have to navigate. Tomorrow’s Consumer wants a lot from them. They need to be environmentally friendly, ethically sourced, convenient, healthy and, the trickiest of all, new. Millennials equate new brands with better brands and they are four times more likely than baby boomers to avoid buying from the “big food companies”. This means that both the incumbents and the emerging crop of FMCG challenger brands need to start planning now if they are to stay relevant and retain their customers once their secret is out.

To do so, brands large and small must build a culture of innovation. And this needs to be way more than just lip service. Never has this been truer than now. Brand-consumer relationships and routes to market are being fundamentally altered by the coronavirus.

Rapid and responsive reinvention will need to be every brand owner's modus operandi, supported by truly agile manufacturing and operational processes. Constantly evolving and increasingly tailored product and service offerings will allow brands to maintain interest and inspire loyalty. How is this enacted in practice?

When we are speaking about product innovation, this means becoming less a brand owner, and more a brand platform. Rather than trying to centralise innovation and control it from the top down, big consumer goods firms can work locally with entrepreneurs as venture building partners. Small guys and independent teams bring the agility, and the big guys leverage their capital, scale and network to rapidly grow the new products / services that founders bring to them. McKinsey advocates more devolved / decentralised operating models as the future of FMCG.

The corporate venture approach in FMCG is becoming increasingly popular. Diageo's offering, Distill Ventures focuses on product. Eighteen94 from Kellogg and AbInBev's ZX Ventures are brand and e-commerce focused.

Companies like Pernod Ricard, Kraft-Heinz, and Coca Cola European Partners (CCEP) look at things slightly differently. If you don't want to outsource product innovation and increase brands in your portfolio - which makes a lot of sense from a complexity perspective, especially coming into a coronavirus-induced recessionary period, where many of these small brands will struggle and marketing spend will be cut back - your innovation efforts need to focus on building a platform that creates new and interesting ways to reach, serve and understand the consumer. This means you focus on driving loyalty via the enabling technology sitting between brand owners and consumers. Broadly speaking, you want new routes to market, better customer experience, and more data.

Take, for example, the recent Kraft-Heinz investment in Fabric, CCEP's stake in Teleretail or Pernod's investment in the Guild. The three tech companies are very different, but the interests of their investors are similar - it's about defending your brand by keeping it easily within reach and creating a novel, positive brand experience.

Big brand owners have the advantage of decades of loyalty and deep-seated emotional memories, but in order to drive loyalty in the digital age they too must, in the words of Ezra Pound, "make it new".