Supply Chain Insight: Innovation And Distinction In Crowded Categories 

Denise Purcell
Growing competition for retail shelf space drives creativity, say members of the supply chain who were interviewed as part of the SFA’s latest State of the Specialty Food Industry research. But companies are going about innovation strategically—remaining open to feedback from key retail and distributor customers as well as consumer end users.

As costs rise, some manufacturers are also innovating new products with key retail partners in mind. This strategy helps gather feedback early in the development process, as well as test out a new product or line extension. Products that are deemed successful in these retailer test markets are then targeted, promoted, and rolled out to national accounts. 

Several companies noted how important it is to them to innovate holistically within their respective categories, with the goal of elevating the category’s perception by consumers overall, and not just with their brands. 

Makers are also increasingly aware that non-traditional food retailers might be a good place for their products, since other retailers may already have a glut of similar brands and products. 

Here is some of what the makers interviewed in our annual research had to say:

“We’ve typically done our innovation as a partnership with [a key retailer] and they would take in our products. We still have to spend a decent amount on the innovation, but where we’re saving money, or spending it more wisely, is with things like slotting or other new item launch [related activities]. So, if we’ve introduced four new SKUs and we saw two of them rise to the top very quickly, we would only spend against those top two in the remaining market. That is much better research than anyone would ever get in a focus group or with panel data.”
Executive VP, natural/specialty food brand 

“As with any manufacturer of an innovative product, it’s more important for me to get our products into the mouths of consumers. We know that many of the non-traditional channels we’re in allow for more of these taste opportunities than the traditional retailers: either they’re more customer service-oriented or the nature of the channel lends to sampling. We’re seeing that many, but not all, of the traditional retailers are set in their old ways of thinking regarding sampling. To many, sampling is primarily only done through the traditional demo programs.” 
Co-founder and CEO, premium condiment company

“Usually [a company] would start with a wholesale line, and then branch out with trucks or brick-and-mortar retail locations. It’s rare that you start with trucks [as our company did] with a grassroots start, and really test the market and flavors. You figure out who it is that’s your target consumer. Before we even started wholesaling [to supermarkets], we had two to three years of data and sales just in the event space … vending, catering, brand activations, festivals. For the consumer, it’s all about tying things together, and understanding that our brand is the same brand that consumers saw at a truck or in our brick-and-mortar.”
Director, specialty channels and analysis, dessert brand

“Innovation is central to what we do, and so far, we’ve manufactured everything ourselves. But for the future, in the interest of growth and innovation, we are open to opportunities beyond our production facility. Consumers, buyers, and chefs tell us all the time, ‘We’d love to see you produce this or that product!’ Our answer is that if you trust us to do R&D and produce it for you, then we’ll do it. We’ll find a manufacturer, or we’ll do it ourselves. So, nothing is off the table.”
Founder and CEO, plant-based food brand

“Our primary focus right now is getting into distribution. It’s all about who are the anchor accounts for the UNFI and KeHE warehouses, and let’s get in there first. After that, we’ll focus on some of these smaller accounts or different classes of trade that may also utilize those same warehouses. At the end of the day, [our subcategory] lacks trust, and our whole goal is to just take the mystery out of it, and just build a brand that people can trust right from the start.”
VP of sales, natural & specialty, RTD beverage brand

“We’re helping manufacturers and small producers navigate the market all the time. Our buyers are oftentimes refining the development of the product, the product packaging, and pricing. It’s an important part of what we do. We want to help incubate and launch good products all the time. Many small startups come to us first, often when the product is still in prototype, which is great, as we can help them refine it before they get it to a final stage. Because we are so selective and have such limited space, getting their product in our stores is a badge of honor for producers who can then use that placement to expand into other retailers.”
Founder/co-owner, urban, independent, full-service natural/specialty food supermarket

SFA members can purchase the 188-page State of the Specialty Food Industry Full Report and 5-Year Category Tracking and Forecasts here at a discounted member price to learn more.
Posted by Denise Purcell on Oct 14, 2019 11:30 AM America/New_York