Coffee’s Once Unshakable Advantage No More – High-Caffeine Teas Are Breaking Into The Morning Jolt!

Energizing-Zest-Tea-charts-high-octane-growth_strict_xxlCoffee has had it easy.  For most of us, it is a routine drink to get us up and running in the morning.  Some of us have come to enjoy a cup in the afternoon to power through the rest of the day.  What’s really made a difference between tea and coffee in America has been its caffeine content.  A cup of coffee contains, on average, 95 to 200mg caffeine per 8oz cup, while tea has traditionally been around 26mg.

Coffee’s domination of our morning start based on its once-infallible advantage in caffeine content is no more.  ZestTea has created a line of high-caffeine teas that easily hold their own against coffee.  Their black teas hand out 155mg caffeine while their green teas come in at 140mg.

For some time, high-end coffee purveyors have been touting “varietals” (similar to wines and, yes, teas) to create additional differences against the value-players of the coffee market.  But most of us haven’t really put much thought into what goes into our cup, just as long as it gets us our buzz.

And with significant health studies touting the health benefits of tea, high-caffeine teas may have finally scaled the impenetrable rampart of the coffee fortress.

It is an interesting case study into strategic product development to challenge the status quo of a huge addressable market that had been left to be dominated by the competition.  It is also a textbook case of going after non-consumption rather than incremental innovation.

Watch out, coffee!  You are in for some heavy competition for that morning jolt.

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Holistic Innovation

header_innovation_01When it comes to innovation, usually our first thought is on the product or service, ideally highly differentiated from other products or services already on the market.  All too often, though, what eventually comes out is a product that is mired in the past, fairly close to the rest of the line of products that a company makes.  It’s all very functional and efficient.

Think of your last meal at a restaurant (one where you actually sit down and take time to enjoy your food).  While the food may be excellent, the rest of the experience is fairly tamed.  The plates are all the same.  The table setting is the same on every table.  The waiters are basically dressed casually in inconspicuous clothing that bring no attention to them.  The script they go through is the same (drinks, entrees, dessert/coffee, good bye).  At best, the restaurant has some level of ambience that has been built in to give a feel of whatever positioning they have.  So if the food isn’t great, there isn’t that much there to differentiate this restaurant from another one down the street.

Disney got it right.  It’s all about the experience.  Maybe even more so than the food (it’s not like the food at Disneyland is top notch).  But if you have great food (the product) and a great experience, you get holistic innovation.

Why is it that all pasta containers are all the same?  It’s easy and efficient.

Why are all cereals in rectangular boxes?  It’s easy and efficient.

All yogurt were in cups not that long ago.  Then came Faye and Chiobani with the flip yogurt trays.  You get to see the fruit.  You get to mix the fruit in just the way you want.  You get to enjoy a great product and have a great experience with it.  That is what consumers are looking for these days.  They want to experience the products, not just get a functional product.

Steve Jobs got it right.  It’s not about making a call on a phone.  It’s about the design, the user-friendly interface, etc.  It’s an experience.

Let’s look at product development a bit more holistically…and we will see better results!

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Oreo Innovation – Go Far and Wide but Have They Stretched Too Far?

It’s hard not to love Oreos.  I mean, what’s not to love about chocolate wafer cookie and sweet cream filling?  Add a little milk, and it truly is a child’s dream snack.

Born in 1912, Oreo cookies are far and away the best-selling cookie franchise in the United States, with global sales at $3.2 billion.  The next best-selling cookie franchise?  Mexico’s Gamesa at $1 billion in sales.

At such scale, it is hard to fathom tinkering too much with such a cash cow brand.  Surprisingly, Oreo brand continues to explore ways to continue to delight its consumers in far and wide places, though many in fairly expected, not-far-from-the-tree places, following five predictable portfolio management tangents.

First, explore adding more or less of the product:

  • Double Stuf Oreosdouble stuf Oreo
  • MOreosMOREO

Second, flavor changes and combinations.  Keep the main product the same but change the flavor:

  • While the list is surprisingly quite long, here are a few more interesting flavors:
    • Candy CornOreo Candy Corn
    • Caramel AppleOreo Caramel Apple
    • LimeadeOreo Limeade
  • Then comes the savory flavor trend that Oreos tapped into fairly heavily:
    • Bacon Cream Oreos (what doesn’t go well with bacon??)bacon-cream-oreo
    • Spam Oreos
    • Cheeseburge OreosOREO cheeseburger

Third, change the shape of your product to create new news:

  • SticksOreo sticks
  • WafersOreo Wafer
  • Soft CakesOreo Cakesters2
  • BrowniesOreo-Brownies

Fourth, go after guilty pleasure/indulgence consumers with:

  • 100 CaloriesOreo-Thin100
  • Healthy Oreos (??)HEALTHY_OREO

I have to hand it to the brand team for testing and launching flavors to see what works, what doesn’t and move on.

Five, go play in someone else’s sandbox and steal their show.

While the recent launch of Oreo Thins should come as no surprise,la--fi-oreo-thins-20150706-001 after such indulgent flavors and stuffings, the idea that these would be targeting “sophisticated” palates seems a bit of a stretch.  The sophisticated cookie market (think Pepperidge Farms) use different shapes, textures, and packaging to communicate premium sophistication with small portions.  The Oreo Thins are just thinner versions of Pepperidge Farms Milanothe same old Oreo cookies we all know and love, but no match to the category expectations they are aimed for.  It is an interesting brand play, but the brand has been dominating the slightly less than healthy cookie indulgence for so long that it will be quite challenging to stretch into this new area with so little product, flavor, texture and packaging modifications to dominate in this new sandbox.  It will just end up further segmenting its own consumers, though hopefully profitably.

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The SONY Light Bulb Speaker

Yes, you read that correctly.  SONY has launched a light bulb sony-btthat contains a Bluetooth speaker.  You can control the volume via an app on your smartphone, along with the brightness of the bulb.  According to SONY, the goal for this innovation was to make it easy to get audio equipment into locations in the home where it’s normally hard to put audio equipment.

While I don’t want to belittle the technological achievement of being able to combine these two products, it does remind me of the mash-up era we find ourselves where things are combined, it seems, for the sake of combining them (a la donuts being used as buns for a burger).  It’s flashy, arresting, and maybe even intriguing for some, but does it have “legs” for the long-term?  Does it really solve a problem consumers had before?

sony-bt-2In the age of smartphones with decent speakers, mini Bluetooth speakers or Jambox speakers, is there really a need for a speaker in a light bulb?  Even if there were, on a more practical level, what happens when the lightbulb gives out?  At $199, it is an expensive light bulb to replace.

So while the mashup of a light bulb and speaker is intriguing, it seems to be an innovation for the sake of innovating.

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Boar’s Head Hummus – adjacent innovation without a purpose

So you have not heard?  Yes, Boar’s Head, the deli meat brand that makes lunchmeat is in BoarsHeadSnacks225the hummus business.  In fact, it launched 10oz hummus tubs of regular hummus and roasted red pepper hummus in 2014 with tepid results.  After all, who wouldn’t want to take a chunk of the $800 million hummus business?

The problem is that retailers across the country are overSKUed – fancy trade lingo for too many products on shelves.  Besides the national brands of Sabra (owned by Pepsi), Tribe (owned by Nestle), Athenos (owned by Kraft), the retailers themselves have launched their own private label hummus.  Apparently, this has not stopped Boar’s Head hummus to get a decent 20% distribution on some products across the retail landscape, and dollar sales nearing $10 million!

But this adjacent innovation – they are already in the refrigerated deli business in lunchmeats and condiments so why not round it out with hummus – does not have a point of different.  As Clayton Christensen in “The Innovator’s Dilemna” asked, what is the job to be done by this product?  It is plain hummus.

With Sabra cashing in at $450 million in sales last year, and Tribe far behind at $50 million, there really isn’t much room for an undifferentiated product.

It’s good to innovate and broaden one’s portfolio, even get into hot trending categories, but you need a point of difference, a “raison d’être” or someone’s going to eat your lunch (pun intended)!

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Thinking outside the field – new business model innovation for agriculture?

Agriculture is a tough business.  Just like any business, it too seeks predictability in producing its products to allow it to maximize profit.  Unlike many consumer goods that are produced uniformly in a factory where every ingredient, every step, every detail is under the business control – except maybe the raw materials, unless it is vertically integrated, agriculture is under the control of Mother Nature.  If it freeze a little more than usual, rains a bit more than needed, heats up a bit too quickly or erratically, the end product could be ruined.

As much as we want to innovate the business model of agriculture to control all facets of production, there always seems to be ingredients we just can’t control.  Until now….

AeroFarmsGrowingRoom_editAeroFarms, a ten-year old aeroponics company, is planning to create the world’s largest vertical farm in an old steel factory in Newark, New Jersey.  Using next-level hydroponics – spraying nutrient-rich mist on plants – it is 75 times more productive per square foot annually than a field, using 95% less water.  Using the same seeds as those used in the field, they are able to grow into plants in 12-16 days (vs. the usual 30-45 days) and achieve 22-30 crop turns a year, instead of just three out in a field.

Another concept that is bound to change agriculture in the future is Smart Floating Farmfloating-farm-architectJust like the name implies, instead of the farm being on a field, it can be built on top of one of its key necessity – freshwater.  Instead of being dependent on getting the water to the field, this concept brings the farm to a plentiful source of water, thereby removing one of the key issues in agriculture.

Taking it one step further, I would think that we should build these on oceans.  With the majority of the world’s surface covered by water, there is no lack of space and resources (sun to power solar panels, wind for turbines, and of course water).  And we have the technology to desalinate water.

While these may take years to prove their viability and make a significant contribution to the world’s food production, they certainly offer a fresh take on our age-old agricultural practices and have the potential to dramatically disrupt how we grow our food in the future.

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Brilliant move on the part of a brand that is making a serious comeback

HormelSpamSnacksEmbeddedFor a product born of necessity in the years of the war, Spam has had a lot of ups and downs.  One would have thought it would perish in our zeal for “real food” and thirst for clean ingredients.  But our desire for ever more protein combined with the “jerky” phenomenon are the perfect springboard to give this brand a jolt.

Beyond riding this favorable wave, the brand is foregoing its iconic rectangular-shaped can to get into more convenience-oriented packaging.  While its age-old packaging can has quite a bit of brand equity, the move to a portable packaging is not only necessary to reinvigorate the brand but also allows it to tap into the on-the-go snacking trend that is sweeping throughout the demographics of this country.  Add to this that products that tap into “bite” sizes in general see a bump of 25% in volume, and you get a brilliant brand renovation, in the snacking aisle near you!

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