Where will be in 5 year’s time?
Most small and medium sized confectionery businesses worry about where they will be in one year’s time, let alone crystal gazing for the future
However, the future is important because if we do not understand and anticipate future trends then we will be left with a redundant business in a few years, wondering where we went wrong. Conversely, if we are able to react to future needs then we may have a growing and successful business.
Most if not all the products from large manufacturers are (to be polite) “mature”. Although there will continue to be a market for these products it is mainly as a snack or meal replacement rather than as anything stimulating and exciting.
A chocolate bar with another flavour of broken biscuit or a dark or flavoured version of a product which has been on the shelves for 40 years or so do not count as innovations and are certainly not going to excite the target audience Consumers will buy them mainly because there is nothing more interesting available, or (equally, perhaps more likely) buy a “top up” for their mobile phone.
Change is something we almost always under estimate, but five years is not too far a horizon, whereas ten years probably is.
Two sectors will in all likelihood remain fundamentally unchanged and will probably continue to be dominated by the major manufacturers. These are the “snack and meal replacement” where distribution and price are key issues and those products bought by most mothers for their children. There may be some movement and innovation here, but branding and familiarity will be important and significant moves to more expensive “healthier” and “organic” products will probably be limited to those that have a high disposable income.
That leaves excitement and gifting as two important sectors where the ability to change and innovate present opportunities for the smaller manufacturer. There will also remain the opportunities around relatively conventional products with special branding or location (such as amusement and similar destinations). However these are generally conventional products with a dedicated wrap and not an opportunity for innovation.
Let’s consider our key target consumers for smaller and medium sized businesses and how they have and are changing. We could consider the most important age group to be perhaps 12 to 25 years old. Much younger and they don’t have disposable income or the power to make individual choices, older than that and they are losing interest in confectionery.
Of course beyond this there is a market for current “mainstream” products, but the brand strength and distribution power of the major players will make this almost impossible for smaller businesses to develop a strong position in.
What characterises this dynamic age group now, and will even more in the future is that they are driven by change, by constant communication, by novelty, by innovation, by fashion.
We are going to be in competition for their spend and attention with some interesting and perhaps not always obvious competitors who do supply them with what they are seeking, for example:-
• Mobile phones
• Electronic capability
• Social media
• Fashion
Just think about the approach of all of these sectors, relentless change, new ideas and capabilities, communication, are characteristics of all of them. Whilst some sectors innovate and make the un-thought of innovation the selling point (for example Apple), others put effort and energy into spotting trends and wishes and quickly offering those.
An interesting example is the fashion retailer Zara, where store managers are specifically charged with identifying the trends and interests of their customers and rapidly communicating those upwards into the organisation. By retaining local (in this case Spanish) manufacturing capability they are then able to respond quickly and with excellent distribution to get new ranges into their shops rapidly and efficiently.
So where does that place us, as suppliers of pleasure, indulgence, relaxation and (sometimes) nutrition to this population of fast paced, innovative people always looking for the next “thing”.
• We will need to be in a constant dialogue with our target consumers and understand the things which interest and influence them on an almost day to day basis. We will therefore need a strong presence in social networking, with a real reason for being part of the lifestyle.
• We will have to accept a very short life cycle for products and plan and design for constant change and innovation. This will mean having a long term plan for innovation, without necessarily knowing exactly what that innovation is going to be. This in turn will influence the manufacturing processes we use, which will have to be very flexible and adaptable rather (perhaps) than being dedicated and efficient. This flexibility will probably be provided initially by people, but as it reduces in price and becomes simpler to introduce robotics will become ever more important even to small businesses
• We will have to become very effective at announcing what we are doing and why, not through conventional advertising channels but on a one to one basis. “Why” will become an important part of the message.
• Products will become smaller (hence individually lower in calories) and more “pocket friendly”. Flavours will be more exotic and exciting, even if they taste more or less the same in reality (look at the hair care business which is strongly driven by seemingly endless new, exotic sounding, ingredients)
• “Natural” and “Free From” are going to be increasingly important and strong selling points, the things which will attract consumers to you. However these claims need to be:-
o Realistic and real – many claims currently have little connection with reality (for example “Gluten Free” boiled sweets or chocolate, neither of which could or should contain wheat protein anyway)
o Provable – you need to know and be able to properly validate any claims you make, even those based on ingredients you source from third parties
o Relevant to the target consumers
• Although nutrition will become an increasingly important issue, this will be very difficult to incorporate into confectionery in this sector as it becomes smaller and more focussed on experience. Some creative thought is needed!
Jan 16