CPG Trends, Growth 14 December 2021
Interview with Sevendots Partner Miriam Mostarda: Our Growth Series report on Big vs. Small brands
Introducing the latest Growth Series volume, on the dynamics of Big vs. Small brands, and the value this will bring to brand owners.
In this conversation with Sevendots Partner Miriam Mostarda, we discuss our latest Growth Series volume, on the dynamics of Big vs. Small brands.
In our previous Growth Series, we mentioned the growing role of small brands or small companies and their specific dynamics in the CPG industry and now we have taken a look at the reverse perspective, focusing on large brands and what they can do to sustain, and sometimes regain, their appeal for consumers. Here’s the insight from Miriam on how this project can provide specific and actionable insight for big brand owners.
The growth of smaller brands has been something that’s been happening for a while. But we saw at the beginning of the pandemic a kind of temporary reversal in consumer choices, shifting back towards larger brands. Can you speak to that or explain the temporary shift back to big brands?
Initially when we were looking at the study, the instinct was to think that the increase in trust in big brands was driven mainly by the uncertainty of the pandemic, that we were living with in the world. We thought, okay, smaller companies are there when your mindset is a more lighthearted one – when you’re ready to experiment, when you’re not in the place where we were in during the pandemic, which I think is more a place of requiring reassurance and being certain that what you choose is going to perform. If we look at it from a rational perspective, I think that has been true even in my personal experience in recent years.
But there were more elements in play. Firstly the element of having to go in and out of a supermarket really quickly, and therefore, going with choices that you were more familiar with, as you could not take the time to navigate the shelf. When you’re experimenting or when you’re looking at small and less known brands, you require that time to think about the purchase. And secondly, there were more mechanical elements when we looked into it for the study, such as availability. Sometimes the smaller brands couldn’t catch up with problems with stock, making big brands more available on shelves.
Finally, there was also a perspective of stocking up – people stocked a lot more in their house and I think you tend to stock what you know. Another personal experience is that I think we’ve now gone back to cooking or eating what we desire. In the pandemic, we were eating what we had. That change during the pandemic might have been a more sustainable one for our society, where the menu is driven by what you have in your fridge or pantry, rather than picking up something additional because you saw it on television or because you’re inspired by Instagram. The big brands probably benefited from the fact that you needed to restock based on the products that you most needed.
This shift towards the smaller brands capturing more market share has been happening since well before the pandemic, and we are seeing the shift back towards small businesses even now as things become more “normal”. Why do you think that is? What do you think are the benefits of small brands currently?
The question we all had was on how or what behaviors would stick. During the first wave of the pandemic people loved to cook and exercise and then we started to see articles and posts around people saying, “I will never bake big bread from scratch! I hate the smell of baking!” Small brands benefitted from those who were not wanting to do the things that emotionally reminded them of such a difficult period. Also, it’s potentially like making the most out of the experiential elements that we can finally go back to. Having to exploit the things we enjoyed while we have the freedom we did not have during the pandemic.
You mentioned before about being inspired by Instagram or other social media, making choices more experimental. We know things like TikTok and other new technologies and formats really exploded during the pandemic, and especially amongst Gen Z users. Do you think the overarching shift towards smaller brands has anything to do with the younger generation and the way that they make decisions on what they consume?
Yeah, I think it does, for two reasons. One, the communication abilities of small brands are often more in line with the media consumption that younger generations already have. Two, small brands have the characteristic of being able to capture the trends, and to really pick up signals that large companies are a bit more distant from. For this reason, I think there’s the meeting of desire and offer for a younger generation, an effect that is also increased by how they communicate and the concern for purpose that they have. So, I do think that Gen Z and the millennials are the ones that are more exposed to smaller consumer brands.
We’re seeing big brands increasingly really interested in better connecting with these groups. Our Red Flower Factory’s work reflects this; clients are really curious because you don’t have many Gen Z people in the office yet, right? While often these startups, smaller businesses or brands are also driven by very young people.
You mentioned earlier various things that we identify in the study as being reasons for the strength of small brands – agility, and storytelling. Can you talk a little bit more about storytelling, or developing new communication strategies? How important do you think that is for big brands to regain some ground?
In our study, we are never suggesting that the elements are different between big and small brands – they both use the same elements. Storytelling, Sustainability, Innovation, Purpose. But what we need to understand is what angle should be used. How can big brands play on these same elements but in a relevant way to who they are? I think that what we identified is that the storytelling of small brands plays on trends, and really engages the consumer from that point of view. From a big brand perspective, we don’t think that there needs to be a reinvention of following the trends, but instead it’s about taking your original deep human truth and keeping it updated with the times.
[Coca-Cola] continue to drive their storytelling in a way that is credible and deeply rooted in a human truth – people are always seeking happiness – but then making it relevant for the times, and maybe even influencing the times. It’s really about utilizing your long-lasting elements, making sure they’re always up to date.
Miriam Mostarda
Human truths are always there and always relevant. But how can they be adapted over time? One of the examples we have in our study is Coca-Cola – always relevant and always recognized by any generation as a brand that they can relate to and that they want to buy. They took happiness as one of their main elements in their whole history. They’re not afraid to ask, “What does happiness mean for the new generation?” They continue to drive their storytelling in a way that is credible and deeply rooted in a human truth – people are always seeking happiness – but then making it relevant for the times, and maybe even influencing the times. It’s really about utilizing your long-lasting elements, making sure they’re always up to date. This offers a competitive advantage to big brands, as some of the small brands are just navigating a trend or capturing something that might not be relevant over time.
You mentioned adaptability earlier – smaller brands being able to bring innovation to the table. We’ve also talked in our previous report on the role of innovation in the context of sustainability. Given the uncertainty in the world, what role do you think innovation now has? Is there still room for that kind of experimentation? Or has this conversation moved on somehow?
For me, innovation is one of the most important things in the CPG business. It’s important for small brands, and it’s important for big brands. It’s important for progress in society, and also for responding to new emerging needs. We are seeing this from all our studies on plant-based proteins – it’s about imagining the unimaginable. It’s not about inventing new needs, but rather following where society is going from a broader perspective.
I think there’s a difference between renovation and innovation, and big brands tend to renovate quite often. What small brands are showing is true innovation. I think what we need to inject in big brands is really the culture of how powerful innovation is, because I think they underestimate the amount of brain power and technological and R&D power that there is in their businesses, and how to use it.
Also, big companies have the option to fail – when you are a startup, if you fail, everything has failed. In big brands, in big companies, where 90% of your business is stable or growing, you have to allow yourself that 10% of risk taking that can drive true innovation. You also have the magnitude to deploy an innovative solution. You don’t have to convince everyone of what you’re worth. It’s really about scale – this is very powerful whether we’re talking about deploying a brand purpose, sustainability solutions or innovations. I think you have to have the small brand mentality in the big brand space, and then nothing can stop you
Absolutely. It’s been a little while now since we did our study on purpose. But, as this report shows, one of the main features of a lot of small brands that are particularly popular amongst young people, is that they have a really clear purpose, and it is often sustainability adjacent or similar. Since that study was published, do you think the conversation around purpose has changed? Is there some new driver of what ‘purpose’ means or how this should look, post pandemic?
Purpose has been there for a long time and is clearly here to stay. It’s about having a purpose that the consumer can relate to. Tell us why you exist – I want to know your point of view. It’s so important, brands not only have to show us why they exist, but also, they have to show us what they do. They have to bring about a transformation in society. It’s really about acting, and not just acting as a brand alone, but influencing the brands around you.
Brands not only have to show us why they exist, but also, they have to show us what they do. They have to bring about a transformation in society.
Miriam Mostarda
Take Dove, who are now saying, “It’s not just about me, featuring real beauty in my advertising, but I advocate for everyone to do it.” When we discuss with clients about purpose, sometimes there’s the trap of them asking if it’s not differentiating enough. My provocation is, if you really believe in your purpose, you would want everyone to have the same purpose, because then everyone is backing that societal issue. It cannot be just my battle, it has to be everyone’s battle.
It’s like you’re moving from just being an advocate to being an activist, which is a different emphasis…
Exactly. And even from the activists, it’s becoming about action – because the activist is there protesting, but can you become the change that you want? Can you lead the change? Brands are bringing proposals of laws – they’re not in the streets saying to the government that they’re doing the wrong thing, but they’re proposing alternatives. That’s a real step. Clearly, that step requires partnering with the activists, NGOs, and people that then can drive you in the right direction. Because otherwise brands are not experts in activism or action.
Partner with the right people. It’s both a small brand and a big brand requirement.
Miriam Mostarda
It can be a place where brands fail, because they’re not credible. So, it’s really important to be authentic, and to say, respectfully, I believe in it, I want to help, but who are the real people that are leading on this cause? Partner with the right people. It’s both a small brand and a big brand requirement. I think the advantage of small brands is credibility. Because they’re born with a purpose, often. With a big brand, you do not invent ‘purpose’, you have to elicit it from within your DNA. If it’s not there, you don’t have a purpose. That’s the sad truth.
We suggest a couple of concrete ideas for big brands in our report, not in terms of mimicking small brands, but rather utilizing the strategies for decision making while finding their own angle on them. Do you think there’s any other takeaway value that you think brand owners can get from our report, or this study?
Overall, I think the main take away from this study is from the words of brand owners themselves: identify those four elements of purpose, sustainability, innovation, and communication, and take them on. In all our Growth Series, it’s not Sevendots having identified these elements – the power of our reports is really showing what the community of people that work in the business see as the most important elements for their peers. I don’t think we necessarily need to have the ultimate solution, but we hope to spark the debate on how big brands can continue to grow.
Big brands absolutely have the power to continue to succeed. Alongside the four fundamental elements essential for business today, we found three strong angles of discussion: on their scale, their ability to impact communication, and rediscovering their deep human truth. Ultimately, we want to keep asking, “How can we move this conversation forward for brand owners and business owners?”
Read more and download our latest Growth Series report, “Big can be beautiful too”. You can also sign up for updates and join our subscriber list for more knowledge direct to your inbox.
