Consumers are looking for premium brands and premium brands are the most successful worldwide. Premium products grew by 21% in Southeast Asia, by 23% in China between 2012 and 2014 and 26% in the USA from Apr 2015 to Apr 2016 across the home care and personal care categories, (Nielsen, 2016a). Different factors helped the growth of premium products:
Economic growth of middle class: Middle class is massively growing especially across emerging countries (Brazil, China, India, Indonesia, Mexico, Malaysia, Thailand, Vietnam, etc) and by 2030 (Reuters, 2012) will almost count 5 billion people worldwide (two times the current middle class population). This will encourage people to access a many different products and to expand their shopping basket with highest probability to trade up for premium products.
Urbanization: many people will move from the countryside or rural areas to cities and towns (from the current 2 billion to 5 billion by 2030, Nielsen, 2016b) gaining access to more services who will help to raise the premium products consumption. For instance, even more people will access Internet to be informed and buy and even more people will access convenience store or specialised stores to purchase premium products.
Digitalization: At the beginning of 2017 more than half the global population uses a smartphone, almost two-thirds has a mobile phone, more than half of all mobile connections are now ‘broadband’ and arond 20% of the world’s population shopped online in the past 30 days (We Are Social, 2017) Thanks to this data and thinking about the massive digital future growth more and more consumers will be affected by the effects of the omnichannel. The combination of different and many touchpoints any time and anywhere will make information more accessible and, as a result, many consumers more influenced by advertising, educational information, promotions, etc.
Wider offer available (private labels and brands). If in the past only manufacturers offered premium brands in last 10 years we saw a new phenomenon showing how even retailers could launch premium labels on the market moving from aggressive promotion and discounting to better and higher quality in their offer (especialy on food and beverage).On top, we can also talk about the rising of local brands and smaller countries which, although a different impact depending on the countries and regions, massively contribute to increase the percentage of premium products on the market.
1. What are consumers looking for?
According to Nielsen (2016a) many reasons encourage consumers to buy premium products. Results are different across different countries, regions and consumers generations:
Overall there is no always a correlation between highest incomes and premium products purchase rate. Indeed, the study (Nielsen, 2016a) shows how in many countries and regions a better salary doesn’t always influence the attitude to spend more.
Price is not the only attribute consumers link to premium products. Only 31% of global respondents declared to think about a premium product when the price is high. On the other hand quality and performance are considered a plus. Quality and performances change depending on the product category we are talking about. For food quality is made by the ingredients used to make that product, while for a home care product by the effectiveness of a formulation. Other factors are the design or the brand name. The bottle design for a detergent or the brand awareness might be decisive to encourage consumers to purchase a product in a certain category regardless the quality and the performance. Even sustainable attributes are relevant especially among the youngest generations (Millennials and Generation Z).
Social aspirations and status are important: many respondents, especially in emerging countries, declared that buying premium products increases their self-esteem, feel them better or more confident about themselves as individual or as members of social groups.
2. Private Labels vs brands: what’s the status?
The relevant growth of the premium fmcg products on shelf has been also facilitated by the launch of premium private labels. From the report (Nielsen, 2014) we can see how Europe, North America and Oceania, are the main region wolrdwide in terms of private labels presence. In Italy (Il Sole 24 Ore, 2016) premium and bio private labels products generated €1.32 billion (13.2% of the total private label segment value of the market in Sept 2016, respectively + 14% and +16.1%, vs Sept 2015). On the other hand low cost private labels lost share (-22% in value vs Sept 2015) only representing 2.6% of the total private label segment.
Local retailers massively invested in brand management and innovations in recent years building a high brand equity across different categories, with the main goal of creating store loyalty and getting better trade terms conditions vs manufacturers. However, there are categories (such as personal care) showing highest and similar value share across different regions around the world.
For brands the premium fmcg path is almost mandatory. Brands should continue to raise investments in brand management through marketing investments in communication and innovations, to better communicate the uniqueness of their value proposition and make their brand equity stronger. In order to do so, heavily marketing research investments looking for new and unmet needs among consumers are required to get the right consumer insights.
However perception of brands vs private labels even for premium products changes depending on the region and on the country. In Europe, Latin America, North America and Oceania, there is a highqualitative perception of private labels, considered as key SKUs able to drive brand differentiation and store loyalty. On the other hand the situation is completely different in Africa, Asia and Middle East, where consumers show the highest willingness to pay premium prices for brands. Most of the respondents still consider buying private labels too risky.
3. Management Implications
Only some products can be upgraded (Nielsen, 2016a): Personal Care is the main category across many regions showing highest differentation and innovations rate vs other products categories. Regardless this trend, differences and opportunities across categories are different depending on the country and on the region. Premium perceptions are not the same worldwide for all products and categories.
Figure 2: Premium’s Value share per Category across different global regions (Nielsen, 2016a)
Think global act local: Differences are relevant depending on the market and the region we are taking into account. This implies how even marketing strategy should be locally adapted to support the launch of a premium product on the long-term, depending on the market area to be served.
Focus on digital and optimize your in-store visibility: In order to get highest results and makes the product successful an excellent quality, distribution or price are not enough. Firms and professionals need to find the right communication. Depending on products peculiarities firms need to find a balance between touchpoints showing highest awareness and trials (typically TVCs and high store visibility) and touchpoints showing a high degree of persuasion (e.g. digital). In many cases both brands and private labels are still struggling to achieve these goals.
Dried vegetables, protein-rich yogurt, burger without beef. These products are not only the core of organic shops, they become alternatives increasingly popular with consumers who aspire to a generally healthier diet … even if sugary is still a venial sin assumed. Overview of these top 10 food trends observed in Europe with Innova Market and Nielsen insights.
1 – Go with Transparency
27% of Europeans would like to stop eating transformed products. Consumers want a clear list of ingredients and transparency of the recipe. Some supplier don’t hesitate to highlight the recipe. In France, Marie made the brand name of one their product “All Simply “, where the ingredient list intends to be as short as reassuring. In US, for jerky products, local producer, Wild Merman, highlights the nutrition facts.
2 – Go with Flexitarian
The soft vegetarian which consume meat in small quantity, has grown by 25% between 2011 and 2015. Vegetable Nuggets for kids, vegan salami and other alternatives are under expansion. Retailer like Carrefour adopted this trend with its private label “Carrefour Veggie” in France. In US, Hilary’s Mediterranean vegan burgers were recognized as a lighter and healthier version of a fried falafel.
3 – Go with“0%”
There is now 12% desired gluten-free products, with an increase of 30% between 2011 and 2015. If these customers still a niche, the image is such that some products naturally gluten or lactose, even boast of his absence! The offer is growing, Innova Market’s insights noted, indeed a huge 26% increase of products bearing the words “without” the last four years. Recently in UK, Coca cola launched its new brand ‘Coca Cola Zero Sugar’ to highlight the fewer calories. In 2020 they target more than 50% of their sells from Diet coke range. Bjorg, widely known for their Gluten-free assortment, are present in 1/3 home in France.
4 – Go with Natural Process
Key success is to enhance naturalness of the products, betting on natural and ancestral manufacturing methods. Fresh prepared goods are highly valued by retailers. Nestlé yogurt brand “La Laitière” use this image of ancestral fabrication indicating that only the fermentation participated in rendering its dairy product. Private label as “Carrefour Lunch Time” highlights this natural made image.
5 – Go with Vegetables & Fruits
These plants have never been so good news! If their benefits are globally well communicated, its hegemony is now spread in many product categories. For example fruit juice, a quarter of new products marketed in 2015 has at least one vegetable in their composition, against 16 % in 2011. Another trend that follows, the soup acquires acclaim . In Spain, the cold & hot soups are increasingly premium, like the brand Tio or Mucho Gazpacho
6 – Go with Labels
The origin is a new recurring motif in the marketing of food products. Recognized labels linked to the origin of products tend to comfort consumers. The development of protected geographical indications (PGI) help brands to seduce shoppers. In France, as each year, Herta (Nestle) and Fleury Michon still the most loved brands, their labels play a large part of this success.
7 – Go with Local
Local taste preference dominates: Local companies often have a deeper understanding of consumer tastes in their market and can respond more quickly to changing needs. Local products are a great way through which to differentiate, able to reinforce the link with local farmers and producers and provide a guarantee of food security. Retailers know how to link local farmer to shopper mostly through private label. Carrefour has one especially for Italy (Terre d’Italia) and France (Reflets de France). Virginia Tea company is a popular start up which promotes the American East Coast tea with an exclusive local sourcing.
8 – Go with Protein
Rich-protein products keep healthy. These products, originally created to satisfy athletes, are now desired by the mass market. Rich protein yogurt are a good example in terms of diversification as Danone did with Light & fit assortment. In a more local format, Think Jerky got funded in two month in 2015 by proposing a creative and healthy snack offer.
9 – Go with Fun
In 2020, Millennials will be the largest group of shoppers worldwide. Global mobile penetration will be 70% and the main influencing device will be online video. Buzz create an emotional link with the product, well-executed humor appeal, enhances recollection, evaluation and the intent to purchase. Doritos Roulette is a famous case, containing some ultra-spiced chips, makers claims they are the hottest sold in the UK. Jelly Belly is also well-known among younger in this concept, they even created a board game with their candies. In YouTube they are both doing the buzz with more than ten millions views.
10 – Go with Exoticism
Discovering new foreign flavours still a famous trend and constantly renewed. Exotic products remain a niche market which contributes to renew the offer. It’s important for retailer and supplier to find the exotic touch of the moment. As Asian flavours are quite trendy in Europe nowadays, Unilever with his local brand Conimex in the Netherlands and global brand, Knorr Asia.
• Born in 2004, Michel & Augustin are winning in a saturated market
• Millennials management
• Omni connect strategy
• Using online method for offline recruitment
• Mastering marketing tech without budget[/mks_pullquote]
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Michel & Augustin: How Marketing allows small company to compete against giants:
Nowadays competition is hard in food industry and it’s more and more difficult to stand out of the crowd. With the increase of the gluten free products, the sugary market is not the easiest place to start a company.
But there are still some passionate entrepreneurs to believe that their products will meet consumers’ expectations. And there is no doubt that Michel & Augustin belong to this exclusive circle of visionary. By simply navigating through the website of the brand we realize that M&A is more than a promise, but the cornerstone of an attractive business.
From SME to the American Dream
Michel & Augustin is born from a similar story than Ben & Jerry but in France with a friendship that started on the school benches between its two creators. After making higher education in commerce and marketing, Augustin decides to drop his suit and tie for a baker’s hat and passes its diploma in pastry. As Steve Jobs in his garage, the first recipes are born in the kitchen of the two creators with the small round shortbread in September 2004. The story then goes that Michel & Augustin left driving their Kangoo to canvass all grocers and shops of the French capital.
Today the brand is now firmly entrenched in all major distributors in France but also around the world (Russia, China, USA, Eastern Europe …). Its “Bananeraie”, seats of the brand, are located in Lyon, Paris and New York.
Recently, Michel & Augustin is based on well-established American brands. Since January 2016, Starbucks distributes the products in 7.624 stores. In the air, Delta Airlines offers the products on its 4,000 daily flights, first class and business class. Therefore, the company multiplied by fourteen the capacity of its production line in the United States. They are now targeting other important retailers in the West Coast the recent acquisition of their capital by Danone might be interesting for them, mostly for the distribution.
In fact the company is not anymore cooking in their kitchen, they managed the Finances engineering tips by They no longer produce, focusing on marketing and sales. They now call 7 companies (6 in France and 1 in Portugal)
Product Marketing: Transparency, premium and fun
The key to success of Michel & Augustin isn’t a huge marketing budget, but a clever use of transparency, simplicity and creativity. The best showcase of this type of brand is undoubtedly the products and company values that they transmit. From the “cows to drink” biscuits through desserts, cookie to-go or crackers; Michel & Augustin retains its basic promise: authentic, homemade and quality ingredients.
The brand positioning is thus clearly that of premium and quality. The price is certainly higher than average but the strategy makes it stand out from its competitors on the shelves of supermarkets. Basically the
Out of the box
Urban area tailored
Gourmet & Authentic
Promotion: Zero budget but rich in ideas
M&A are particularly brilliant in term of communication, despite having limited budget they managed to be viral mastering Commando Marketing and Street Marketing. The promotion is based on three principles “millennials, fun and smart.
The launch of their best seller “Cow to drink” is a true best practice in this area comparing to the competition:
High visibility thanks to a Friendly childish tone
The keyword of the brand communication strategy is the use of a childish tone on all its communication channels. Michel & Augustin has opted for humor and derision, wanting to be close to its customers. The smile is therefore required, the customer proximity magnified by a deep friendship between him and the brand. The idea is to invite customer to join the beautiful little family Michel & Augustin. This style of communication is fully assumed by the use of a color graphic, a logo with childish drawings and a friendly tone.
Mastering Buzz with Commando Marketing
For the launch of the “Cow to drink” in July 2006, one of the best sellers. The launch of the yogurt has been at the same time as that the Danone called “The Two cows” produced by its US subsidiary Stonyfield. Michel & Augustin took advantage of this coincidence to launch a commando operation by distributing at the entrance to the press conference to each journalist, their product with a letter denouncing the arrival of US cows in France. It was indeed a unique opportunity to reach 150 journalists. And it worked since the first questions from journalists at the conference was “Will you announce the launch of the cow to drink Michel et Augustin?”. This is typically the kind of action that M&A lead, without means or pretension but that will make people smile.
The Bill Gates imposture
In February 2007, Bill Gates gives a conference in Le Palais des Congrès (Paris) in front of 6000 entrepreneurs. Augustin, disguised as a kitchen employee of the conference, dropped one of his “Cows to drink” on the speakers table. The video of the conference will be diverted on the social media and M&A created a viral marketing campaign with Bill Gates, photographed next to the yogurt.
Mastering Customer proximity with Street Marketing
One of the big part of the brand marketing strategy is its presence in the streets of major French cities or in New York. Michel & Augustin has made the wise choice to invest heavily on street-marketing, without hesitating to stage the creators of the brand. So we could see the two friends put cows in a Paris train station, take the stage in a supermarket, make a press conference in the same disguise. In the same idea Michel & Augustin conducted a campaign to see land a giant cow throughout France, the cow and came to stand before the most famous French monuments.
Another successful operation of the brand is the 100 Scooters in Paris, offering customers to rent scooters with the colors of the brand which promote the use of bicycles in the city. This transaction also put Michel & Augustin in their local environment by placing the brand as a change driver of the city, including the promotion of an eco-friendly mode of transport. They also organised event in Paris Une Nuit à la belle Etoile in the heart of Paris in park Monceau.
Talent Acquisition: Made by passionate for passionate
The corporate culture is a key factor for Michel & Augustin. The internal organization of the company seems to grow every employee to propose ideas, share feelings, to express her doubts when more or less formal meetings. The work environment is the corporate image: colorful, quirky, warm, fun… As evidenced by “The Banana Plantation”, the workplace which opens its doors to visitors every first Thursday of the month.
Social media transparency: To communicate internally, the 90 employees have their own group on WhatsApp and
Passion for product: No matter if the employee works in finance or marketing, they all have to pass their pastry diploma.
Michel & Augustin are famous for recruiting through their event and they feature in social media their employee “adventures” and achievements. Behind every function they valorize and highlight employees (Webdeveloper, marketers, finances etc.) with pictures directly on the product for example.
However, there is still too little dimension explored by brands: Using Online method for Offline operations. It’s precisely on this point that Michel & Augustin makes the difference. When the offline becomes a real scene for the actors who play the game, one explores a form of communication that becomes a reflection of inner experience.
Example: There is a lot of creativity when it comes to recruiting online. But what about recruiting offline using online method: M&A recruiting in the metro
As in France, their US employees must pass the equivalent of a pastry diploma. In Brooklyn, the doors of the “Banana Farm”, the nickname of their New York offices are always open to customers and curious. The company recently organized BethecookieBoss a contest to win 25 a pastry trip to France.
Digital: Omni-Connected with the consumers
You will therefore understand, Michel & Augustin likes and enjoys quite frankly this marketing guerrilla strategy. But the brand does not forget of course the digital component of its business by including each of these operations on social networks.
When many brands rely entirely on digital, there are others that sail between offline and online to provide proximity and engagement with their community. Michel & Augustin is one of those brands that know how to encourage commitment, although social media reach the masses, the land offers a rarely achieved complicity on the net. By using omni-connect strategy, M&A created an intra-community link.
They have over 177,000 fans on Facebook, 35,600 followers on Twitter and a YouTube account relaying the life of the brand.
Michel & Augustin is rich in education and serves in particular to emphasize the importance of the relationship brand / consumer. A beautiful lesson in marketing, communication and building a strong community around two omni-present entrepreneurs.
The Michel & Augustin case show that disruption doesn’t has to come only from pure player or tech companies but by engaged and passionate people even in a traditional saturated market. Thanks to their quirky look on life, their desire to create an affinity relationship with their consumers but also (and especially) to their love for good products.
After three years of testing and development, Ferrero launches in France a novelty on breakfast biscuit market: B-ready, signed Nutella filled bars. The launches are rare in Ferrero, because the tests last long and that the elect are few, but those who pass all filters are calibrated to be cash machines. The B-ready bar have just made their appearance at Auchan grocery store, which presents as an exclusive (although at Ferrero, it is emphasized that the distribution is also underway in other stores).
The first announced events are scheduled for early March. The novelty is sold € 2.10 8 bars (153 g). Ferrero has long sought to settle on the breakfast market with a specific offer to attack Kellogg innovations. In 2009 already, Linear had spotted the first bars of tests Kinder Breakfast. The adventure was cut short. In 2013, a first version of Nutella bars, called Bready, has appeared in a few targeted stores. Ferrero took his time to refine the concept, for example by adding crispy balls in the feed Nutella. B-Ready has been officially launched in Italy in 2014 and in Spain in late 2015. In 2016, it is the turn of France to host the new.
Find bellow a short video to appreciate this new product in this early wednesday!
Since 2007 “My M & M’s” in France and US, proposes Internet sales of chocolate balls with a personalized message: Consumers can share with their families one of the most sold chocolate candies in the world on the occasion of a birthday, a wedding or a baptism. It represents the ultimate degree of relationship between companies and consumers. Even pictures can dress the chocolate candy. Some 50 people work for the customization service (See Mydesign), including 25 in the production line on the site of Haguenau (Bas-Rhin) from where orders arrive from dozen European countries. Mars claims “My M & M’s” is a “profitable”production line for now.
MyEvian creates word-of-mouth for your dinners
In a very similar case there is also Danone with MyEvian.com since 2010. On this website, consumers can buy glass bottles with a message engraved directly onto the glass. 20% of orders are for wedding, and 30% anniversary which evokes an average basket of 115 € per consumers and an increasing rate in digital each year. The presence of such bottles on the tables at large events creates a word-of-mouth, a fundamental impact on consumers. Much more durable relationship is established.
Another advantage: With personalized offers, companies get more detailed knowledge of their customers and therefore can improve their marketing campaigns. At the time of social networks, where people expose their wishes, it is clear that customization goes in the direction of history and that trade will find other variations.
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