From where does your brand source volume?

Innovative new CPG brands have a curious habit of sourcing lots of volume from outside their respective categories. This is NOT true of most line extensions, which are engaged in a limiting market share battle within their core merchandising category. One way they do this is to connect to an outcome of large-scale interest NOT currently linked to the category in consumers’ minds. The most popular examples of this are innovations like Caulipower, which successfully pitched a weight management outcome to those who associated frozen pizza with tons of excess calories per slice. It seems crazy on the face of it, yet it worked.

Perhaps the most counter-intuitive example of growing by bringing new consumers into a category is the example of alternative dairy. Widely assumed to be largely responsible for cow milk decline during the period of its rise through soy, almond, and now oat phases, Mckinsey recently popped the bubble on this myth. Fluid dairy milk’s decline can be largely attributed, they claim, to a steady increase in bottled water consumption (especially among children, I would add).

More importantly, their analysis of plant-based beverages’ sources of volume revealed something startling:

“About 44 percent of plant-based sales, or 22 million gallons from 2015 to 2019, were incremental, representing overall beverage category expansion.”

With almond and oat milk especially, we now know that consumer usage in emerging food and beverage forms: fresh smoothies, home espresso drinks, etc. is driving this incremental growth given that it can’t be explained by cereal, oatmeal, and coffee consumption (the three primary ingredient uses). What founders new to the industry don’t realize is that straightforward survey techniques can usually reveal these novel sources of volume category buyers are not thinking of until they are commonplace. And these novel sources tied to your brand can become important arguments for greater leverage with buyers.

Knowing your sources of volume helps you understand which potential outcomes are truly of great strategic value. There are always more consumers outside your category than inside it who will pay a premium price for a premium brand. In fact, consumers outside category are least likely to even have a price anchor in their subconscious and may not fully appreciate your absolute price premium.

So, it often makes sense to build a competitive strategy around a consumer outcome of mass interest that is bringing lots of consumers into the category for the first time.

Interested in more thinking like this for your brand? Please check out my Founder’s Resources page. At the top, you can take my Founder’s Quiz right now and learn if you’re ready to Ride the Ramp

Dr. James Richardson

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