Small brands are thriving given their easy access to consumers, strong fit with millennial preferences, and pull from mass merchants seeking to differentiate themselves.
Retail is changing, consumers under 35 demand fundamentally different things to older generations, e-commerce is disrupting traditional shopper behaviours and the discounters have well and truly upset the apple cart, but we knew that right?
However, what nobody knows is what the shelves in your local store will look like in 10 years’ time; I’d bet they’re home to a lot of new names in food and drink. Small brands have always been around but, not in the vast quantities they are now and, what’s more, the odds have never been more in their favour.
Small brands accounted for a 33% share of UK sales and 59% of category growth in FMCG in 2016-17.
Source: Retail Measurement by The Nielsen Company. “Large” refers to top 16 companies, “medium” to next 400 companies, and “small” to remaining companies.
While some categories have remained resistant to change, others have readily adopted new brands and the real innovation they bring with them. There is no better example of the latter than the crisps, snacks and nuts fixture which has seen an explosion of exciting new brands in recent years. Small brands will continue to see success in this aisle as larger commodity brands struggle to keep pace with the speed at which small brands can pump out real NPD, and by real NPD, I mean pushing the boundaries of manufacturing processes to create genuinely innovative products.
The Snaffling Pig are a fantastic example of a brand who have found success in this space by taking the humble pork scratching to lofty new heights. It’s no surprise that they have gained a lot of traction in both grocery and on-trade channels.
A point of difference
The rise of e-commerce giants and discounters has forced the hand of the traditional retailers to look at opportunities to differentiate and drive traffic. With that comes the opportunity to disrupt. White Rabbit Pizza are one the best live examples of what can be done when you really challenge the status quo. They have secured lucrative chiller space for their range of fresh vegan pizzas and have exceeded all expectations since landing on shelves nationwide in the UK.
We often hear ourselves conceding that small brands struggle to compete with the scale of their blue-chip counterparts, and whilst that’s true, it’s easy forget how much they have in their favour. Their energy, passion, and agility are unrivalled qualities and a winning formula, particularly in today’s retail landscape.
Small brands, or more specifically the people within them, have a penchant for doing things differently. Buyer pitches are no longer on the same template that Dave created 15 years ago (no offense Dave), and there are very few rules when it comes to new product development. Entrepreneurial innovation and creativity is now embraced and shared, it has become synonymous with small food and drink brands.
The future of food and drink is full of challenges but the explosion of cool new brands is no longer going unnoticed and doors are firmly ajar.
Functionality, sustainability and meat-free are just some examples of trends influencing new market entrants, with young brands expertly positioned to capitalise on these movements. Sustainability is gathering momentum as consumers become more socially responsible, brands like Spare Fruit and Rubies in the Rubble, who both re-purpose second grade fruit and veg, will see more mass-market adoption of their ranges.
In addition, as the war on plastic rages on, it will be the start-ups and challengers that react first. The infrastructure found in larger brands only serves to slow large-scale change and it will be the newbies on the block that deliver on the increasingly important sustainability credentials first.
So, what next?
The shelves in the major multiples are changing and store formats will follow suit. In the next five years we expect to see the launch of new formats to cater for ever changing shopper demands. The new players in food and drink are quickly becoming the ‘ones to watch,’ and many of those will become the next ‘major’ players.