A number of us recall the familiar crinkling sound of opening a Twinkies wrapper after school, the way the cream filling would stick to the bottom and the soft, sweet first bite. For many generations, Hostess Brands represented a snack-time tradition, a lunch-box snack or a special treat. As the nation moved towards a healthier way of life, Twinkies and Wonder Bread quickly became items of nostalgia. Unfortunately, the recent bankruptcy and closure of Hostess Brands can be attributed to a number of managerial, operational, financial and other causes. As a Food and Beverage manufacturer operating within a realm of fierce competition and constant market change, a number of industry analysts have pointed to Hostess Brands’ failure to innovate as a contributing factor.
In Consumer Packaged Goods (CPG) organizations, particularly food and beverage companies, product failure rates are high – sometimes upward of 90%. Today, organizations are often turning to new and improved products to help them grow market share, and these new and improved products frequently come out of a changing market demand and consumer preference. Successful CPG companies have to be equipped to create and shift products and portfolios in response to changing markets and consumer preferences to not only succeed, but to survive. The failure of Hostess Brands is now opening up a new innovation opportunity for other companies—at least, those that can innovate quickly--to take their place. What is perhaps most surprising is it appears the first groups of companies to do so are private label companies, not branded ones . Hostess Brands’ fall from iconic brand to bankruptcy brings to mind a similar, yet very different, example of innovation success in the face of failure.
The Greek Yogurt Revolution
Who knew consumers needed or wanted a ‘new’ kind of yogurt? The grocery store shelves have always been stocked full of flavors and varieties of ‘traditional’ yogurts, from fat-free to fruit-on-the-bottom. In recent years new types of yogurt, beyond the traditional, are taking over store shelves. Starting as a niche market, Greek yogurt began slowly appearing in natural and local grocery stores and quickly exploded to become a booming $1.5 billion business in a matter of 4 years. At the heart of this Greek yogurt boom lays one single, rapidly growing company – Chobani.
Similar to the gap left by Hostess Brands exiting the market, Chobani got its start by launching operations in a shuttered Kraft yogurt production facility. Founded in upstate New York as a company of 5 employees, mostly from the closed Kraft plant, Chobani quickly grew to be the #1 yogurt brand on the market in 2012. At inception, Chobani leveraged the closed Kraft facility to innovate beyond traditional yogurt, and began developing a strained yogurt that was thicker, with over twice the protein of its traditional yogurt counterparts. With roughly $1 billion in annual sales, Chobani is still turning to innovation to continue to drive growth – Here are a few recent examples of innovation at work:
- Yogurt as a Kids Snack. With fun flavors like “Very Berry” and “Banana Honey”, and availability in kid-friendly tubes, Chobani Champions appeals to kids.
- Yogurt as an Indulgent Treat (yet, healthy). Chobani Bites bring smaller yogurt servings to snack time with luxurious flavors like “Fig with Orange Zest” while Chobani Flip introduces mixing in premium toppings like dark chocolate and toasted almonds.
- Moving Yogurt Beyond Breakfast. With the majority of yogurt consumed at breakfast, Chobani’s website features the Chobani Kitchen – a resource for videos and recipes using yogurt in a number of non-breakfast capacities, like soup, salads and dips.
What Does it Take to Adjust to a Changing Market?
Yogurt producers continue to innovate and shift product portfolios to stay relevant in a changing market, to avoid being left behind like Hostess Brands. In response, leaders in traditional yogurt categories quickly brought thick, creamy high-protein Greek yogurt offerings to market and continue to evolve new flavors and delivery. This yogurt revolution and the Hostess Brands decline highlight how crucial effective innovation performance is in food and beverage organizations. Additionally, organizations looking to drive growth through innovation must understand and effectively manage all stages of the
innovation lifecycle - innovation planning, idea and concept development,
gated process management, and portfolio optimization. Managing each of these elements of the innovation lifecycle will empower organizations to focus resources on the highest-value brand innovations and meet ever-changing customer needs, helping to identify the right products to bring to market and bringing them to market at an optimal pace.
Is your organization prepared to adjust to changing markets?
To better understand the new leading practices that can help improve innovation performance, join the WTG Webinar Innovating on Innovation: New Leading Practices in Food, Beverage and CPG Innovation for 2013.
1 Angrisani, Carol. “Retailers Cater to Twinkie Lovers.” SuperMarket News. 1 February 2013. Web. 04 February 2013. 2 Walsh, Meghan. “Chobani Takes Gold in the Yogurt Aisle.” Bloomberg BusinessWeek. 31 July 2012. Web. 06 February 2013.