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Last Updated: Sep 25th, 2006 - 11:36:04 |
Innovation in the Food Industry
Learning Some Lessons
A highpoint of the Food Marketing Forum in Dubai was the opportunity to hear Brian Urbick of the Consumer Knowledge Centre in London. His presentation “Innovation – Food for Thought” was based on the extensively researched report of the same name, looking at the challenges facing the European F&B industry.
Successful innovation is an elusive beast. 50% of all R&D projects die before they reach the shelf; and of those that make it that far, 90% never see their first birthday. So what are the characteristics of success?
Innovation, first of all, is not just about something new; it could be an old idea presented in a new – and relevant – way, as in these two examples:
• A single product. A cup of coffee. Starbucks, (which was, let us remember a one-shop coffee outlet for thirteen years before embarking on global domination) have turned the ancient habit of drinking coffee into a three-dollar experience that changed the way we drink coffee.
• A market sector. Wholefoods have gone from the hippie fringe to the consumer mainstream in the last 3 decades, showing that ‘how it used to be’ can also be the new new thing.
There are two interesting points here. Firstly, the espresso revolution was based on consumer experience. A good shot of caffeine helps, but it is not so much about the coffee, it is more about what the experience represents, that moment in your day, a reflection of a set of values that you identify with, and which makes you feel good. Understanding consumers and intelligent branding have turned an ancient habit into the benchmark of the urban coffee experience.
Secondly, the natural and organic food sector has demonstrated that people do actually like what is good for them, and they are prepared to pay for it. What began as an ideology expressed as a dietary preference has turned into a section that no supermarket can afford to be without. These long slow tidal currents have proved to be highly profitable for those who got in at the beginning and held their ground.
This deserves our attention because the halal food industry is in the throes of innovation. It is a 1,400-year-old industry that has emerged as a global market of 2 billion people. Astute and well thought out innovation strategies will define the winners and losers.
So what makes for a successful innovation strategy? The Food For Thought report specified key pointers that had proven track records among successful innovators:
o Understand consumer/client needs. Those companies that make break-throughs in consumer understanding are likely to lead the way in innovation.
o Committed leadership and effective team management. Everyone has to be onboard for innovation to work.
o An innovation with a clear unique selling point (USP). A vague me-too is not going to be good enough to succeed in the long run.
o A clear strategic plan. Innovation is more likely to be effective if it is based on a clear objective and a good working methodology. Don’t just react. Understand the problem and then lead the way.
o Innovations will have to be in line with current health and safety trends.
For companies in the Halal food industry, these pointers offer not just guidance; they should also offer hope. The Halal market is part of a market paradigm shift in which ethics and decent human values also have commercial value. Halal is the wild card in this race that many players have not seen coming. This is the time to really understand the consumers needs and preference as well as the market dynamics.
Those companies with clearly committed leadership and good team management will make the real successes. Convinced is convincing. The vision has to run from the top to the bottom for innovation to really work, and this will be the great challenge for a) non-Muslim companies in the halal sector who had better understand that this is not just about making a buck; and b) Muslim companies who somehow feel that it is their right to succeed anyway, even if they have not got the best products and services.
Top brand managers know only too well that a truly successful brand has to be a genuine reflection of the company’s core values, values that permeate the whole company all the way down the line. The brand manager at Starbucks knew they were on track when he heard that one of the baristas had remarked, “We are not in the coffee business serving people – we are in the people business serving coffee”. The core values were penetrating down to the front lines, and were being embodied by the people who were actually serving the customers.
Halal is a global brand poised to make a major impact in world markets over the next five years. Halal is safer, healthier, more ethical. It represents the deep unshakeable core values of billions of consumers and businesses all over the world; one person in every four…and counting.
Those companies – big or small, offering consumer products or business services – who make the effort to understand this shifting market paradigm, to summon the will power to inspire their teams, to embark on a well thought-out strategic plan for innovation…they will reap the rewards.
The Food For Thought report gives further incentives: innovations with a strong USP and clear consumer benefit provide a return on investment that is up to three times higher. And of these, the first-to-market products provided double the margin compared to the second-to-market products.
As the former Chairman of BMW Europe once said, “The strong do not always eat the weak. The fast always eat the slow.” For the Halal food industry, it is time to get moving.
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