Remixed: The Story of CPG Product Innovation
Would you like to play a game that I invented called “Spot the CPG Strategy Pattern”? It begins by you picking any one of the largest publicly traded multinational CPG conglomerates and performing a quick review of their latest annual report (10-K). After you do that…go through the exercise again with another leading CPG company. Then, do it again…and again…and I lost most of you didn’t I? I’m fully aware that this type of excoriatingly painful game is only meant for CPG nerds like me that also have an affinity for “light reading” of financial documents.
But while those 10-K reports are packed with unique company-specific information, it’s a major commonality between them all that I want to bring to your attention. These billion-dollar CPG conglomerates all highlight innovation as a key growth driver and an important tool to meet the shifting needs of consumers.
Too Much or Too Little
Which side are of the “product innovation coin” are you on?
CPG brands are picking from the same bucket of ingredients/components, thus there's no innovation left.
There’s an oversupply of innovation, but consumers don’t know how to fit all of it into their lives.
Consumers continue to demand new CPG products. To meet that continual consumer demand for newness, CPG companies have gotten innovation drunk, and it has caused a proliferation of products. Nielsen estimates that 30,000 new CPG products launch each year.
A seemingly endless product optionality is cool for consumers, but what happens when it comes up against today’s reality of physical retailers reducing shelf space for cost or other consumer experience reasons? That’s why Nielsen also estimates that around nine out of ten of those newly launched CPG products won’t survive their first few years in market. So, while product development (and innovation in general) is highlighted as a universally important growth driver for CPG companies, it also can be a resource-intensive process that results in a questionable return on investment.
Inches Not Miles
With tens of thousands of CPG products launching every year, simply putting “new” on a bottle won’t get any meaningful market attention. That being said, swinging the product development pendulum to the extreme other side, and thinking disruptive innovations are the only value creators today would be also be a mistake. The path to wild success is hitting that midpoint, right? Do something too closely related to the market leader and people won’t take notice, but do something too novel and they’re confused.
The CPG industry isn’t so much about invention as it is about innovation. Invention is creating a totally new thing. To create something that has a lasting impact on the CPG world, it needs to be combo of “new” yet “familiar.” In the CPG industry, most successful products do not arrive out of nowhere; they’re remixes of existing ones…
Case Study: Snickers Hi Protein Bars
If you read the Mars Wrigley press release or the many articles written about the SNICKERS Hi Protein bars launch, you’d be misled into believing this was the first time the uber popular candy IP was used for performance nutrition products in the U.S. market. In 2003, Snickers Marathon Energy Bars were launched that contained the Quadratein Protein Blend (a patented blend of soy proteins, peanut, and milk proteins). Two decades ago was arguably the origination point when the most indulgent CPG food categories started discussing a world where “better-for-you” and “functional” product development would be integral to limiting business continuity risk.
In 2000, PowerBar reached $150 million in sales, which essentially meant product adoption crossed the chasm into the into the mainstream. This led to the brand’s acquisition by Nestlé for $375 million that same year. With more consumers becoming health conscious and eating these energy bars with what M&M/Mars thought was subpar flavor, it formed the basis to confidently spend more than $20 million on the go-to-market strategy for Snickers Marathon Energy Bars. While candy industry experts at the time thought the bar would be a huge hit with the public, it proved unsuccessful in terms of Big CPG standards.
I remember eating PowerBars and Snickers Marathon Energy Bars during the mid-2000s in college. Both of them wouldn’t survive in today’s protein bar market (cough cough PowerBar is proving me right). Snickers Marathon Energy Bars was a noble endeavor in 2003, but it was too early. What happens though if Mars Wrigley remixes the Snickers Marathon Energy Bar with every product development advancement made available over the last twenty years? Well…we’re about to find out! The Snickers Hi Protein bar has the same chocolate, caramel, and peanut ingredients as the iconic Snickers, but the new offering swaps the sugar for protein and pledges to maintain the same flavor as the original offering.
To add another interesting remix layer to this story, the usage of the “Marathon” name in the original Snickers protein bar was actually taken from a 70s and 80s discontinued Mars Candy Company bar.
Case Study: Quest Nutrition
Throughout the last few years, the innovation pipeline at Quest Nutrition has been strong. If you haven’t been following the brand closely, here’s a quick recap of notable product innovations:
Revamped Quest Chips
Revamped Quest Bar
Introduced Quest Protein Candy Bars (and Bites)
Introduced Quest Cheese Crackers
Introduced Quest Protein Peanut Butter Cups
Wait…something is going on here, right? When those “new” Quest peanut butter cups launched in late-2020, I remembered seeing the brand create something like that many years ago called Quest Cravings. Most people forget about how innovative Quest Nutrition has been since the very beginning of the brand, and it’s that past that has and will continue to drive remixed iterative innovation ideas.
Do you remember any of these gems?
Low Carb Pasta (originally called Pastabilities)
Home delivery prepared ketogenic meals and desserts
Quest Keto Snaps
Quest Keto Crackers
I’m sure I’ve forgotten handfuls of others, but A LOT of these early innovations stemmed from the mid-2010s era Quest Labs consumer insights program. The secret behind Quest Nutrition’s current innovation streak is rooted in remixing the past…its own past, well before most of its fans today knew about the brand. It’s very likely that a few of the new Quest Nutrition innovations coming soon will come from remixed Quest Labs or forgotten discontinued products.
Final Thoughts
There’s no doubt in my mind that innovation done right accelerates company growth in the CPG industry, but anticipating consumers’ needs, and measuring/managing innovation to address those needs, will continually get tougher. With an understanding that in today’s business world it’s hard to come up with an original thought, you start seeing things through a remix-filled point of view. That’s a powerful perspective which will help you recognize that CPG product innovation at it’s best is done in inches not miles.