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Smaller companies are thriving

BY Dan Mack

Gone are the days of big companies outperforming the small. Today, most industries are being shaped by emerging smaller and mid-sized organizations, many of which out-innovate competitors that are much larger and more powerful.  According to an IRI report from 2016, small and medium manufacturers accounted for more than 75% of all “New Product Pacesetter” companies and 64% of the growth in dollars. New challenger brands and dark horse competitors are having a profound impact on business and the broader culture.

Sales for many of the leading packaged food organizations are not stellar. With a few exceptions, most of the top CPG companies are growing at all-time low levels.  What is hindering growth?

According to recent research by Goldman, larger brands still control the lion’s share of the business (close to 80%), but smaller, emerging, challenger companies have the edge, gaining share in sixty-two percent of the top fifty packaged food categories. Are they more innovative and do they understand the heart of the new consumer better than their competitors?

Consumers love to discover early stage brands with unique identities and purpose. Brands like KIND Snacks, Olly Nutrition, Sundial Brands, Zevia, Vita Coco, Paris Presents and Zarbees are masters of marrying purpose with experiential brands and the fulfillment of unmet needs. They introduce innovation in uncrowded spaces within the category. Or they create new categories altogether

They also listen intently to their core customers. If they uncover a new need in their ongoing customer discussions, they co-develop a product for them immediately. They are one with their tribe.  When they see a problem, they fix it immediately. And when they uncover a white space, they fill it.

According to a report in “CircleUp”, it is reported that larger companies are sometimes calling new packaging or line extensions “innovation.” CircleUp states that some of the largest CPG companies “spend up to six times more on marketing and advertising of old products than they do on innovation of new products. Of that innovation, only 39% are new products, while the other 61% are incremental changes to existing products.”  Let’s be honest: another flavor is not innovation.

Entrepreneurial founders think differently than larger multi-nationals.  Bain Consulting reminds us of the traits of the Founder’s Mentality:

  • A sense of insurgent mission:  They are led by a higher purpose, a burning vision, and a flexible business model that morphs and adapts to new opportunities and threats. It is the lifeblood of the culture.
  • An obsession with the front line: They have an intellectual curiosity about every detail of the customer experience and operations. They have their finger on the pulse. Executives use instincts formed at the ground level to make key decision, frontline employees have a voice, and the customer is central to all decisions.
  • An owner’s mindset:  They have a focus on speed, decisions, and action. Most owners have a passion and a broader responsibility for their employees, customers, and brands that requires deep thought and reflection.

Maybe it’s time to start thinking more like a tech company.  The average tech company dedicates fifteen percent of the investments to R&D, while CPG only commits two or three percent.  There is too much wasted investment in underperforming advertising and not enough in experimentation.

Are smaller companies more innovative? You decide. It is true that smaller companies’ have a granular understanding of future trends and that is vital to outperforming the market.


Dan Mack is the founder and managing director of Mack Elevation Forum, and author of the book “Dark Horse: How Challenger Companies Rise to Prominence.”

 

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Harris Teeter customers help raise $1 million in support of USO

BY Michael Johnsen

MATTHEWS, N.C. — Kroger's Harris Teeter banner announced Monday it is donating $1 million to the USO, a nonprofit organization dedicated to supporting America’s service members and their families. The donation was made possible through contributions from Harris Teeter shoppers and valued associates during the company’s sixth annual Support Our Troops donation card campaign.

“Harris Teeter is a true example of what it means to be a Force Behind the Forces,” said Kristina Griffin, USO senior director, corporate alliances. “The USO is grateful for the many in-store activations that provide support to our nation’s military  and appreciates its ongoing commitment to hiring transitioning service members. These generous contributions will go a long way in helping connect our service members to family, home and country throughout their service to the nation.”  

“Harris Teeter is overwhelmed by the extreme generosity our valued associates and loyal shoppers continuously show to the USO,” said Danna Robinson, communication manager for Harris Teeter. “We are proud to partner with this incredible organization to show support of our brave servicemen and women, as well as their families.”

The $1 million donation brings the total amount donated through Support Our Troops since the campaign’s inception in 2012 to more than $4.6 million.

 

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Kroger takes Lidl US to court over own brand trademark

BY Michael Johnsen

CINCINNATI — Kroger on Friday filed litigation against Lidl US for infringing on the grocer's own private label program.

At issue is Lidl US' own brand "Preferred Selection," which Kroger charges is virtually indentical to that company's store label "Private Selection." "Lidl's actions herein have been willful and deliberate acts of infringement and unfair competition, which will cause irreparable harm and other damages to Kroger," Kroger stated in its suit filing.

According to the lawsuit, Kroger first opposed Lidl US' use of "Preferred Selection" through the Trademark Trial and Appeal Board of the United States Patent and Trade Office in March.

Lidl US has not yet responded to the suit, according to court documents published on June 30, and likewise has not issued any statements addressing the suit.

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