by Cindy Sorensen/founder and CEO, The Grocery Group
Today’s consumers are looking for products that fulfill their need for value, have nutritional and physical benefits, are in preferred packaging and, most importantly, taste good. Beverage manufacturers have responded by developing products that deliver on these consumer requests.
In fact, in today’s marketplace there are more than 50,000 beverage SKUs. They all make a plethora of promises to consumers that their products will fulfill their needs. Beverage manufacturers conducted and responded to consumer research and developed these products.
While this flurry of consumer-driven product development and commercialization was occurring in other beverage categories, how did milk processors respond to offer a product to be considered in the beverage competitive set? They continued to make the same product they had made for decades in a container that was no longer preferred by consumers.
Even though they have a product that delivers on the nutritional benefits consumers seek, they did not advertise those benefits to consumers the way their competitors did. They responded by continuing to promote their product through increased price reduction and coupons—regardless of the data indicating that deep and frequent price discounting no longer draws the consumer response it once did—to grow sales. These actions commoditized the category through the offering of a common product in a non-relevant package with overused and ineffective promotional tools that decreased margin and dollar sales in the category.
A review of syndicated data and consumer purchase behavior indicates consumers no longer are driven by price alone. Data indicate consumers will pay a higher price in exchange for a value-added product that delivers the benefits they seek. Value is no longer defined only as a low price point. When any manufacturer no longer listens to or puts the consumer first in product development, it should come as no surprise that sales will suffer. This is where the milk category is today.
Of course, there are products in the milk category that are exceptions to the declining category sales trend. Those products are considered value-added because they have, for example, increased protein and calcium, they are lactose-free, they are plant-based or they have innovative and relevant packaging. And most importantly, the consumer has shown a willingness to pay a premium, non-promoted price for these products. These products are increasing margin and dollar sales for retailers and manufacturers, all of which is necessary to keep the innovation pipeline filled.
When considering your private label offering in the milk category, are you offering the same common product as everyone else? Or are you uncommon? Is your processor developing milk-based beverages that deliver what the consumer wants? No expensive consumer research needs to be conducted. Consumers already have demonstrated through their purchase behavior what they are looking for. Ask product development questions of your supplying processor. Analyze and believe the data. Be uncommon and break away from the commodity mindset. Your shoppers will thank and reward you.
Cindy Sorensen is the founder and CEO of The Grocery Group, which focuses on developing leadership in the grocery industry. The Grocery Group’s expertise is in developing innovation in merchandising, category management, distribution and promotion strategy, as well as digital and website development. The Group also is working with the industry and colleges and universities to attract, recruit and retain a talented workforce in a competitive employment market. Working with manufacturers and food startups to develop products to fulfill changing consumer demands also is of special interest to The Grocery Group. Reach Sorensen at firstname.lastname@example.org.