With pressure at an all-time high and investors losing patience, it’s time for brands to take control of their destinies. Although there’s no single way forward, the mission remains clear: Disrupt your business before someone else does.
On the whole, the fast-moving consumer goods (FMCG) sector continues to face headwinds to growth. Many longstanding brands within the sector, while once prosperous, have found it challenging to repeat yesterday’s success. At the root of these challenges is the rapid pace of change in the world, which has forever altered the way consumers engage with brands. While this dynamic has certainly challenged traditional conventions, it has also presented many new opportunities. The brave brands that have capitalized on these opportunities are finding success and are seeing a clear path back to growth. Those who haven’t proactively embraced today’s pace are finding themselves vulnerable to a new generation of fearless entrants intent on bringing disruption.
It’s time to bring the fast back into fast-moving consumer goods. We offer four ways that brands can bravely seek to disrupt their businesses, as well as examples of brands that have taken the leap, in an effort to jumpstart their business, and returned the fast to FMCG.
1. Disrupt by Thinking Like a Startup
Innovation is the lifeblood of any brand. It always has been, and always will be. But innovating at scale has posed a challenge for large brands within large corporations. Applying established growth methods to established brands is, by definition, counter to the innovation they seek. To achieve mass disruption, brands need to think like a startup.
This is a strategy into which many FMCG companies—including Nestlé, Procter & Gamble, Coca-Cola, General Mills, and Mondelēz—have leaned, forming startup/venture funds or incubators to find their next innovation. These organizations are finding success by isolating themselves from the typical constraints and KPIs of their larger businesses and acting like entrepreneurs, working with lean innovation philosophies built to nurture a startup mentality and disruption.
Within this year’s Best Global Brands ranking, there are several standout examples of brands fostering mass disruption by thinking like a startup. All of these companies have demonstrated strong commitment and responsiveness:
- Nestlé started an internal innovation project consisting of a digital acceleration for the company. Called DAT and inspired by Facebook and Google, the project is an entrepreneurial space, located in Nestlé’s global headquarters, where employees work for periods of eight to 12 months at a time. DAT members undertake immersive training and work on strategic business ideas, often participating in hackathons and intensive problem-solving activities. For Nestlé, the overarching goal is to “loosen the screws” of a large and hierarchical corporate company in order to permit flexibility and experimentation, e.g., the values of a successful startup.
- Pampers found success in its Pure Protection line, which is an example of its lean innovation process, developed by a 10-person team over approximately 18 months—roughly half the amount of time and staffing resources of a typical rollout.
- Lancôme launched Le Teint Particulier, a cosmetic foundation that was created by L’Oréal’s technology incubator. The foundation is customizable to specific skin tones: the Lancôme staff take a full scan of a customer’s skin and then use a diagnostic tool to calculate the precise formula that matches that skin. The foundation is then mixed in-store, before being placed in an identifiable bottle, with all the skin-type and color-preference information kept on file for the consumer’s next visit.
Want more inspiration on thinking like a startup? Explore the Breakthrough Brands that are driving disruption across sectors.
2. Disrupt through new business models
The rise of e-commerce has certainly transformed the landscape for FMCG brands forever. Brands that have relied on traditional business models, built on the shoulders of brick-and-mortar distribution, must continue to look for new ways to develop consumer-centric propositions—from product development to branding to distribution. Brands that haven’t sought new business models have found themselves being disrupted.
For instance, we’ve seen how FMCGs have been disrupted by the direct-to-consumer (DTC) challengers that are taking control of their value chain, capitalizing on shifting consumer purchasing behaviors. It wasn’t long ago that propositions like Dollar Shave Club, Warby Parker, and Allbirds were not considered serious competitors by the category’s elite. However, these brands recognized that the DTC business model has many benefits: the ability to be nimble, leveraging the opportunity to get much closer to consumers, innovating in real time in the marketplace, controlling the entire value chain, and pivoting with agility.
In response, some large FMCG brands are taking a page out of the disruptors’ playbooks and exploring alternative channels and business models as a means of innovating at mass scale. From this year’s Best Global Brands list, we highlight the following examples:
- PepsiCo launched DTC product Drinkfinity, as the company responds to consumer preferences that are shifting from fizzy beverages to alternative territories. This innovation features a reusable water bottle with disposable flavor pods.
- Kellogg’s launched a key innovation initiative, Joyböl, a “ready-in-seconds smoothie bowl,” targeting the hyper-convenience trend. In doing so, they also launched DTC, forgoing traditional distribution.
- Gillette, fighting back against category disruptors, began receiving orders through the company’s new online DTC service, Gillette On Demand. This new service offers the traditional subscription-only option and an additional flexible on-demand purchase option, with an industry-first reorder process that is as simple as sending a one-word text message.
3. Disrupt through acquisition
With organic growth continuing to be a challenge, FMCGs should look to grow through acquisition, either to boldly enter new categories (to capitalize on shifts in consumer desires) or to bravely double down on categories where they already play.
Interbrand’s Brand Strength methodology comes into play when considering an M&A strategy, as data shows that this is a viable approach to jumpstart a stagnant category. M&A activity among the top FMCG companies, including P&G, L’Oréal, Nestlé, and Unilever, has seen an increase for 15 years running, driving the highest revenue jump for this group since 2011.
Examples from this year’s Best Global Brands:
- Kellogg’s acquisition of RXBAR for USD $600 million was a bold move to capitalize on shifts by consumers to more health-conscious offerings with simpler ingredients.
- L’Oréal acquired Modiface, a leading-edge VR technology player, signaling its commitment to evolving consumer experiences with cosmetic brands.
- Colgate purchased two of the fastest-growing professional skincare brands, PCA SKIN and EltaMD, in an attempt to elevate the brand into the global skin-care category.
- Danone completed its USD $10 billion acquisition of WhiteWave, bringing together businesses and brands to better meet consumers’ diverse preferences in high-growth categories.
4. Disrupt by bravely taking a stand
Disruption can take many forms, including casting your brand in a new light and creating new relevance and engagement opportunities with your audience. More and more, people are not merely buying your brand but rather buying into your brand, as they seek those that align with their values.
This is playing out as brands go beyond the traditional approach of simply pushing their product’s benefit messaging. Instead, brands that stand out engage in true brand activism, driving home a stance that bravely tackles topics that matter to consumers. Some examples of brand activism from this year’s Best Global Brands:
- P&G announced a partnership with advocates, including journalist Katie Couric, aimed at driving gender equality. P&G announced the partnership during its #WeSeeEqual Forum and noted that some of P&G’s best-performing brands have the most gender-equal campaigns: Always’ #LikeAGirl, SK-II’s “Change Destiny,” and Olay’s “Live Fearlessly,” along with Tide, Ariel, Dawn, and Swiffer ads that show men sharing the load in household chores. Chief Brand Officer, Marc Pritchard, noted, “It’s clear that promoting gender equality is not only a force for good, it’s a force for growth.”
- Danone is another brand firmly taking a stand when it comes to “One Planet. One Health.”—a campaign that reflects its vision that the health of people and the health of the planet are interconnected. What makes this successful is the internal commitment and external authenticity with which Danone leverages this brave brand stance.
The future belongs to the brave
Brands need to take bold action to achieve growth. The path forward can take many shapes. Opportunities are out there, but to find them, brands need to have the bravery to disrupt themselves before someone else does. This isn’t a sector for the timid. The future belongs to the brave.