This Beverage Spectrum article by Debbie Wildrick interviews Kalypso's Mike Friedman and Helayne Angelus on collaborative innovation in the beverage market.
Retailers know they need to keep consumers shopping at their outlets. Suppliers understand the importance of being category managers. They have learned that it’s sometimes as important for them to help retailers drive overall category volume as it is to build their own brands.
It’s a way of working together that has been productive, but lately, I’ve started thinking that it’s not enough. I’ve started exploring a new idea for retailers and suppliers: Collaborative Innovation. It makes retailers and marketers partners in growing our businesses through targeted products and programs they develop together.
I had the opportunity to discuss Collaborative Innovation with Kalypso, an innovation-oriented consulting company. In a white paper titled “Best Practices in Collaborative Innovation” the group pointed out ways retailers and suppliers can use this method to please the consumer and gain greater market share.
It’s a way to fight uncertainty in sales outlooks by using consumer insights to create new products that increase our engagement with our consumers, the authors say. “Retailers are hungry for total solutions that are driven by shopper insights that impact the category, department and the entire store,” said Helayne Angelus, a principal with the firm. “To the degree that a manufacturer can really maximize the shopper insights along with a process and metrics that are agreed upon and easy to execute, they will win with the retailers.”
So let’s see how it works on the ground through the example of Shadow Beverages, a new company staffed by industry veterans who recently worked with Ironclad Gloves and Quik Trip to establish a brand presence that would enhance the overall beverage category as well as target an untapped consumer base. Shadow developed a beverage, Ironclad Energy + Hydration, based on the successful Ironclad brand name using research from Ironclad Glove consumers – frequently workers on construction job sites. Shadow and Quik Trip understood that the Ironclad consumer was also a core Quik Trip consumer, and they launched a promotion that offered an Ironclad work glove – with a real $15-$20 value – that could be awarded with just a modest purchase hurdle, six cans of Ironclad Energy + Hydration at a $2.39 ring. So the net spend of $14.34 brought a $15 value to the consumer.
“The merchandising targets a core consumer with an authentic brand that drives a strong basket ring for the retailer and provides a great value to the consumer,” says Mike Joyce, the VP of Marketing at Shadow Beverages.
While I was working at 7-Eleven, I had many opportunities to partner with the big beverage companies like Coca-Cola on unique all-store merchandising programs. But today, retailers want and need even more than merchandising in their store, they need product innovation. Kalypso’s consensus was that the increasing diversity of shoppers requires changing retail and product experience. Retailers need to differentiate based on the experiences consumers have of their stores.
To Angelus and her co-worker, Mike Friedman, that need can be addressed with changes in product offerings that are actually enough to change the entire retail environment. It’s a neat idea, but can we get it done? Can we all, regardless of our size, play a part in the necessary innovation in today’s marketplace? I believe the answer is “yes” to both questions.
For many retailers, beverages are a destination category. Developing a strategy for collaborative innovation – one of Kalypso’s key recommendations – means that retailers and marketers alike must look at the beverage category jointly for opportunities including brand, products, and shopper experience. At 7-Eleven, we once tested a change to the vault, adding a colder portion to suggest that we had the coldest beer in town. When I took on a project to change the way the consumer shopped proprietary beverages, I pulled together a team of partners both internally and externally, from beverages and fresh food, as well as merchandising, marketing, store planning, and external brand partners like a coffee roaster and fountain partner. By getting together teams that had traditionally not talked to each other or worked together, you can collaboratively build new products enough to change the feel of a store.
2010 looks to be the “new normal” in so many ways. We’re coming out of the economic issues we’ve suffered over the past couple of years, we have a more diverse demographic shopper than we’ve ever had, and they’ve made some real changes in their habits. It’s becoming apparent that we’re going to have to work together to implement our own changes to meet theirs.
Debbie Wildrick, the SVP of Sales and Marketing for Equa Water Corporation, is a sales executive and channel strategy specialist in the CPG industry. The former Senior Director of Vault and Proprietary Beverages at 7-Eleven, Inc., she has extensive experience in retailer, supplier, and technology aspects of the consumer packaged goods business.