Innovation and exciting new products are vital to today’s consumers, but keeping a steady stream of high quality innovation in the pipeline is a challenging task, as SLR discovered when it caught up with Heineken Innovation Director Sam Fielding.
by Antony Begley
There is absolutely no doubt that today’s convenience shoppers love innovation. Nothing gets them quite so excited as a great quality new product or variant from a brand they know and trust. Ten years ago, new product development (NPD) wasn’t quite so high up the agenda for most manufacturers and new lines were rare, relatively speaking. Over the last five years or so however, NPD has become a mainstay of the go-to-market strategy for the vast majority of household name brands. New flavours, new formats, limited editions – the list goes on.
One company that has long taken innovation and NPD seriously is Heineken, so much so that the beer and cider giant even has a dedicated Innovation Director, Sam Fielding. Heineken has a strong track record when it comes to launching products that really capture the shopper’s imagination, Strongbow Dark Fruits being one of the most obvious examples. But why is innovation so important to category growth?
“At Heineken, we believe that innovation will be key in the long term because it’s new products that really excite shoppers and draw their attention,” says Fielding. “Shoppers’ needs evolve and change over time too, so we need to respond efficiently to that, but it’s one thing to decide that you want to be innovative as a brand and another thing entirely to consistently deliver great quality innovation that stands the test of time.”
Fielding likens the work of his team to the work that retailers do in their own stores, making continuous judgment calls on which products to get behind.
“In a sense what we do is very like what local retailers do every day when they look at their ranges,” he says. “There are no infinitely expandable shelves out there so we need to work with retailers to carefully manage products in and out. As manufacturers we have to be just as disciplined as we expect retailers to be.”
Leverage the brand
When it comes to launching new products, Fielding says retailers should expect Heineken to focus more on leveraging the strength of the huge brands it handles, rather than launching entirely new brands. “It’s hugely expensive to successfully launch a completely new brand in the UK – and I mean hugely – but with brands like Heineken, Strongbow and Foster’s we have enormous amounts of heritage and equity to put to good use, so I see us moving in that direction.”
That’s not to say introducing completely new brands is off the agenda, as the UK launch of Old Mout demonstrates.
Brand extensions create their own set of challenges, of course, but Fielding says Heineken takes a very simple approach to deciding whether a brand extension is likely to go down well with consumers or not. He says: “You just have to remember that a brand is a promise. It promises to deliver certain qualities to shoppers and that’s exactly what shoppers learn to expect from that brand. Break that promise and you risk losing the shopper’s trust.”
Fielding says the key question when launching a brand extension is whether the new product takes the brand in the right direction? Will this new product help the brand along the way on the journey it is committed to?
“If you answer that question honestly, you’re a good way along the road to establishing whether your new concept is likely to gain traction in the market”, he says.
A good example of this is new Strongbow Cloudy Apple, a new line that Fielding can hardly contain his excitement about. Will it match the mammoth success of Dark Fruit? Fielding squirms in his chair, desperate to say that his hopes for Cloudy Apple are loftier even that that, but eventually satisfies himself with a toned down: “Let’s just say that we’re very, very pleased with the product and it has tested exceptionally well, so we expect it to perform well in the market.”
That confidence presumably explains the huge £7m spend backing the launch, which should help it on its way.
But the key thing here, believes Fielding, is that Cloudy Apple delivers against the Strongbow ‘brand promise’. “What consumers expect from Strongbow is thirst quenching refreshment, that’s the brand promise,” he enthuses. “And that’s exactly what Cloudy Apple delivers. It’s new, it’s different, it’s exciting, but it’s absolutely Strongbow through and through.”
With the cider and beer markets in decline in 2015 (5% and 2% respectively), Fielding won’t admit it but he certainly hopes Cloudy Apple could bring the lift that both Heineken and the wider category needs.
It’s not all about cider, however, with recent innovation from Fielding’s team including a couple of rum-flavoured Foster’s variants. Badged Foster’s Rocks, the products are available in Classic Rum flavour and Spice Rum flavour. Sweet and easy to drink, the products are the latest to leverage the massive Foster’s brand equity.
The new John Smith’s Golden Ale variant is another twist on a brand with a long and reasonably staid heritage, a launch that is attempting to make the brand accessible to a wider audience, including the many craft beers drinkers that have sprung up in the last few years.
Core to much of this innovation activity is premiumisation, something that most local retailers no doubt welcome. While customers are undoubtedly still hugely interested in ‘cheap’, there are many shoppers out there happy to pay a small premium for something different, something high quality – and Heineken is trying to deliver that.
“We have to deliver value in a market that is premiumising,” he says. “And that’s great news for retailers because we all want to see some value driven back into the market.”
Build on the basics
With so much innovation taking place, it’s easy for retailers to lose their way with the beer and cider chillers quickly degrading into a mess of slow moving, low margin lines. There’s little point in successfully bringing in high value new products, only to lose sight of the basics.
“Getting the basics right lies at the heart of everything, and on that front I would recommend the Star Retailer programme to retailers in Scotland, says Fielding. “It’s a fantastic, well thought out programme to help retailers ensure that they stock a solid range that’s well presented and will deliver for them every day of the week. It also builds a great platform for product innovation which drives excitement and engagement in-store.”
Fielding concludes with some very pragmatic, common sense advice for Scottish local retailers when it comes to NPD: “It’s absolutely vital that retailers give great quality NPD from trusted brands like Strongbow and Foster’s space in the fridge and support launches with the POS available. Heineken spends millions of pounds developing, supporting and marketing these products – so it makes absolute sense to give these new products the space and support they deserve in-store. If you do that, you give them the very best chance of delivering for you.”
