Opinion

What the Davids of business innovation can bring to FMCG Goliaths

6 min read

18 September 2017

When it comes to innovation in FMCG, it’s easy to get trapped in the belief that it’s the big brands who are running the show.

Scratch beneath the surface, however, and it becomes clear this is not a true representation of what’s really going on in FMCG.

From edible six-pack can rings to bottles of wine that can be delivered through your door, there’s a creative revolution underway in FMCG that is encompassing everything from product development to packaging, and it’s being driven by nimble startups and SMEs.

These smaller, agile companies are leaping at the emerging opportunities presented by consumers’ growing desire for new experiences with food and drink brands.

Although they might be looked upon as small fish by larger corporate players, they are, in fact, opening up new growth, and even new markets, by applying creativity in areas such as delivery, personalisation and product development for today’s consumer-on-the-go.

Take myBaker, for example, an innovative company that has cleverly tapped into the UK’s reignited passion for baking inspired by The Great British Bake Off. It has created an online marketplace where consumers can order unique cakes, desserts and cultural specialities, all handmade by local bakers. Whether as a seller or buyer, myBaker delivers a means for these #GBBO fans to explore their passion further.

Big food stores such as Waitrose and Sainsbury’s have offered online cake ordering and personalisation for years – but this personalisation only goes so far as the writing, and perhaps colour if you’re lucky.

If you want a truly unique baked item you traditionally had to go to an independent baker. That’s where myBaker has you covered, streamlining this service so you don’t have to move from your sofa, and in the process it is taking revenue share from larger corporate competitors.

Another example is Garçon Wines. Rather than tapping into a consumer passion, this innovative company has found a cure to a point of pain by creating the world’s first full-sized postable wine bottle. The product aims to soothe the immense frustration we all share at arriving home to find yet another missed delivery note in place of the eagerly-awaited product.

Garçon is launching the UK’s first wine-by-post club this year, and the global growth potential for the concept is so high that it has already patented the bottle design in 35 countries.

Currently in partnership with online wine retailers and wholesalers, there is no reason why the innovative design couldn’t expand to bricks and mortar too, helping supermarkets and wine sellers fit more bottles on each shelf, optimising valuable FMCG space on both the shop floor and in the warehouse.

Further examples of innovation show how SMEs are keeping step with the fast-moving consumers of today, who increasingly expect their high standards not to be restricted by factors such as time-of-day or location. Fancy wine on the go?

Entrepreneurial companies including Intrepid Fox Wine (UK), Wine in a Glass (Australia) and Copa di Vino (US) offer cups of wine with lids designed for the picnics and festivals when you fancy a ‘proper’ glass of wine but don’t have a bottle, glass, corkscrew or straw.

And there is evidence of smaller companies achieving success by responding to the increasing appetite among consumers for products and services better suited to modern lifestyles, tastes and choices.

This is something that could be seen in the wake of Hugh Fearnley-Whittingstall’s War on Waste, where the celebrity chef and campaigner exposed the fact that 2.5 billion “paper” coffee cups, previously considered recyclable, are sent to British landfill every year.

In doing so, Hugh shone a light on the innovation emerging in the area of sustainable packaging, drawing attention to companies including Delipac and Frugalpac who offer 100 per cent recyclable, biodegradable and compostable solutions.

The strength of these SMEs’ innovation has not only bagged them several awards but also helped them secure conversations with major drinks retailers along the way. Delipac, for example, after winning the Ecopack Challenge 2017, was awarded the chance to develop its product with food and drink giant Marks & Spencer.

And it is through such partnerships that SMEs and larger FMCG brands can best leverage the opportunity. Less a case of dog-eat-dog, the world of innovation is based on partners recognising and maximising their relative strengths and coming together to deliver mutual benefits.

For larger, slow-moving companies, it can be a simpler route to filling a difficult R&D gap in their business; for the innovator, it is potentially a route to growth and the application of their valuable ideas.

In the case above, for example, Delipac’s business is strengthened and credibility underlined, while Marks & Spencer invests in a new offering that can drive its heritage brand forward.

Whatever the application, a successful FMCG partnership is ultimately dependent on both sides doing their due diligence and ensuring the value exchange is attractive to both parties.

Shilen Patel is co-founder and CEO of Independents United

[rb_inline_related]