Coke. Mars. Kellogg’s. Nestle. There was a time not too long ago when FMCG was almost entirely dominated by giant blue-chip brands. While these companies are still successful and titans in their respective categories, now they have to deal with a new previously unforeseen adversary: emerging niche brands that rival innovation, choice and differentiation.
You may be wondering, how a small company can even dream of competing with the massive brands. The simple truth is that they compete by staying true to who they are. The big players have to worry about shareholders and worldwide brand perception, whereas these new niche brands’ main focus is to deliver their product & passion to as many people as possible. As a result, these companies have greater agility, freedom to experiment, innovate and make emotional connections by tapping into health and lifestyle trends - much to shoppers’ and retailers’ delight.
Lifestyle habits and shifts to a healthier ways of living have resulted in a new generation of NPD, considered niche a mere decade ago, but now becoming very much mainstream. There is a growing demand for healthy, quality products and the large retail chains are starting to take note. Earlier this year Tesco began selling vegan-friendly meals in over 600 stores. What’s more Tesco is not only marketing their vegan products at vegans, but also to ‘Flexitarians’ looking to cut down their meat intake.
Sainsbury’s have also put their support behind start-up brands with an incubator scheme to support the rise of the Gen Y brands. With successes with brands such as Pip & Nut and Mallow & Marsh, there has never been a better time to launch a food or drink start-up. The retailer has recently changed its checkout counter snack selection from household brands to niche ones offering a wide range, such as chickpea snacks and natural energy bars. With these changes, Sainsbury is not only aiming to appeal to customers with an eye on their health, but also the millennial market as a whole, who are interested in making more emotional connections in their purchasing decisions.
A recent study on millennials and brand appeal found that 72 % believe that quality products make a brand stand out the most. Interestingly enough, only 50 % of those surveyed singled out price as the most important factor. What do these numbers tell us? Well, the main takeaway is that millennials are willing to spend a bit more money if they think that the product they are getting is high in quality. Couple that with an emotional connection, and you have a stronger pull with potential customers.
A great way to cash in on the emotional connection is through brand exclusivity. In Sainsbury’s case, many of the smaller brands that they work with, sign exclusive contracts with the chain. So, if a customer really enjoys Brand X they will be on a destination purchase mission to find their preferred choice because of their connection to a lifestyle range.
The fact is that every store has access to the big mainstream brands, but it is the smaller more exclusive brands that have the power to differentiate and engage. Emerging brands are already making industry waves, stealing retail space along with shopper loyalty. What’s next for the big players… Watch this space.
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