Innovation in FMCG today more than ever causes brands to cross traditional category dividing lines. Whereas before, there was room for new competitors to offer innovation within existing category boundaries, today’s innovation blurs the boundaries between these divisions.

Oatly is a prime example of this new type of innovation. Having grown as an oat based milk over the past decade, the brand are now expanding to a different portion of the dairy market; spreadable. The launch of their new spread offers a dairy free alternative to cream cheese, which they promise tastes great atop a bagel. The impact this will have on consumer choice may impact the whole spread category. Consumer choice (particularly at shelf level) is relative, not definitive, meaning expectations of a brands product are directly influenced by the alternatives on offer.

This new blurred boundary brings with it a whole set of new questions for traditional dairy brands in the spreadable market. If there are now dairy-free alternatives to traditional spreads, could claims focused around the creaminess of the milk used in production remain relevant if some competitors don’t even use cream?

These sorts of questions are important when it comes to defining a strong go-to-market strategy, as category definition is a cornerstone for any positioning. If a new market entrant can come along and undermine this foundation, is the proposition built on it still relevant? If you have a brand based around the goodness of dairy, for example, how do non-dairy alternatives impact the strength of that claim? Can it even still stand in the market?

Hou Sweet Hummus offer another interesting example of category shifting innovation. This new start-up have launched a range of sweet dips made of hummus, offering a range of flavours including mixed berry, chocolate and Banoffee Pie. While they are made of hummus, the products are designed to compete with spreads such as Nutella and jam, using their base ingredient to dramatically lower their saturated fat content vs their competitive set. How will this have an impact on the way consumers perceive existing spread options? Will their claims of delicious indulgence become tainted now there are healthier options in the market?

These sorts of innovations could cause a rethink in consumers’ minds about the competitive set they are in, making brand an ever more important tool for owning a place in the market.  As it becomes more prevalent, this new form of innovation may require well established brands to fundamentally rethink the way they communicate their benefits.

Categories: Premium FMCG

BY ENGINEER Oliver Ronaldson

oliver.ronaldson@thevalueengineers.com