Its report – snappily titled ‘Dude, where’s my consumer?’ – claimed iconic brands were increasingly out of step with consumers’ changing preferences and priorities. “Unless large food and beverage brands take bold action, they run the risk of following baby boomers, once their core consumer, into retirement,” predicted the bank’s analysts.
Outlining a five-point plan to reverse the trend, Rabobank said core brands should reposition to better cater for consumers’ changing needs. It also highlighted the need for new brands and products to respond to the demands of today’s new consumers.
‘Consumer tastes are shifting’
“Consumer tastes are shifting, but not so fast that companies cannot capitalise on them,” said the bank. Its senior global consumer analyst Nick Fereday said the five recommendations were based around acquisition strategies – buy, not build – and in-house innovation – build, not buy.
The five strategies were headlined: Say hello, wave goodbye, Buy small or pay high, Room to breathe, Step up the innovation and: If it ain't broke … See the full list below.
The Say hello, wave goodbye recommendation referred to the need for brand owners to fully digest the change in consumer trends. Corporate culture should be transformed to welcome new ideas, brands, and riskier strategies, while allowing iconic brands to “exit stage left”.
Lost research and innovation edge
Top brands in trouble
“Unless large food and beverage brands take bold action, they run the risk of following baby boomers (once their core consumer) into retirement.”
Buy small or pay high applied to firms that had lost their research and innovation edge. Such firms were advised to outsource innovation by buying companies at an early stage in the lifecycle to reduce costs.
The Room to breathe tip advised managers to nuture “the culture and integrity” of their new brand acquisitions, not suffocate them.
Stepping up the innovation underlined the need to focus on bolder and “more disruptive innovations”.
Finally, the If it ain’t broke … recommendation advised brand owners not to tinker with brands that buck current trends. “There are lessons to be learned from iconic brands that remain irreverently relevant and laugh in the face of today’s health and wellness trends: from Jack Daniel’s, Lunchables, and Oreos, to Twinkies, Domino’s Pizza, and Popeye’s,” said the report.
Rabobank spirits and wine analyst Stephen Rannekleiv said the strategies were not mutually exclusive. “Many companies are actively pursuing both ‘buy, not build’ and ‘build, not buy’ – depending on the need they’re trying to fill, how much time they think they have, their appetite for risk, and the strengths and weaknesses of the company itself,” said Rannekleiv.
“We don’t believe one strategy is preferable over the other. There are multiple drivers behind changing consumer preferences, and it would be naive to assume there is a single solution.”
Read more about the report ‘Dude, where’s my consumer’, where’s my consumer?’ here.
Rabobank's five top brand management tips
1 Say hello, wave goodbye. Although companies are no longer in public denial about the change in consumer trends, many haven’t fully digested the implications: the need for a transformation in corporate culture that welcomes new ideas, brands, and riskier strategies, while also permitting iconic brands to exit stage left.
2 Buy small or pay high. For those companies who have lost their R&D mojo, Rabobank’s advice is to continue to outsource innovation by buying companies, but at an earlier-than-normal stage in the life cycle, thereby reducing the risk of paying too much.
3 Room to breathe. The big players have learned the hard way not to mess around with their shiny new purchases. To maintain the culture and integrity of these acquisitions, they need to be nurtured, not suffocated.
4 Step up the innovation. Companies that pride themselves on their R&D capabilities need to focus on bolder and more disruptive innovations. Going forward, no more ‘innovation-lite’: product reformulations just won't cut it.
5 If it ain’t broke … This isn't a total meltdown, and not every brand is in trouble. There are lessons to be learned from iconic brands that remain irreverently relevant and laugh in the face of today’s health and wellness trends: from Jack Daniel’s, Lunchables, and Oreos, to Twinkies, Domino's Pizza, and Popeye’s.