Agile approaches to innovation have come to be viewed as vital for large corporates to unlock fast-developing, high-growth areas of the food and beverage landscape.
Streamlining innovation pipelines has come to be a priority for CPGs – and PepsiCo is no exception. By shaking up its innovation process, the Lay's-to-Pepsi manufacturer has accelerated its go-to-market time by around 30% in recent years.
But the company is not taking its foot off the gas: “We are looking to further strengthen our approach,” Karen Scott, Senior Innovation Director of the group’s Future Brands unit, told FoodNavigator.
Future Brands was established two years ago and works across food and beverage categories. The unit’s mandate is to ‘focus on emerging new categories and trends that we believe could be important spaces for the future’.
“With the Future Brands team, we are able to develop and nurture new propositions that consumers will love in conjunction with key customer partners, working together to iterate and commercialise these into viable brands that can then be scaled where we see results,” Scott explained.
The brands under its umbrella include Off The Eaten Path, Kevita Kombucha and Alvalle Gazpacho. The portfolio represents a mix of both smaller-scale acquisitions (such as Kevita and Bare Snacks in the US) and new propositions where the company sports an opportunity to fill a ‘white space’ area.
The need for speed
Fast decision making and an eye to the future are distinguishing features of the Future Brands approach.
Under this model, brands and concepts are launched, tested and – where necessary – modified at a much greater speed through a ‘test and learn’ approach.
“We are aiming to set ourselves up for success in the future through a dynamic innovation process, which means we can adapt and pivot much faster than traditional innovation processes would permit. The products and concepts we are working on are being launched earlier and then adapted to ensure their appeal to our customers. During that iteration process, we look at the way we market the product, as well as the product itself, for example, from location in store, to sampling and digital communications,” Scott explained.
While for some this might seem like a low-risk way to innovate – trialing a wider variety of concepts with smaller levels of investment – Scott suggested it is actually more about ‘agility’.
“We are flexing our approach to focus on earlier launches - testing and learning once live, rather than opting for a big bang launch at the start. For example, we considered many brand and product options ahead of us launching Off the Eaten Path, our plant-based snacking brand, and in the initial launch phases we iterated around many aspects of the proposition, including flavours, product forms, position in store and activation plans.
“We want to make decisions on a piece of innovation really fast. Our ambition is to create and test lots of ideas but then recognise quickly where we need to stop, pivot or proceed.”
But PepsiCo isn’t just taking a stab in the dark. Before the company commits to a project, it will have developed a ‘clear line of sight’ in terms of what it will take to succeed and what the specific challenges will be.
“Some don’t make the cut. For those that do, the most critical early question is whether the proposition is working from a consumer desirability and distinction point of view; if consumers aren’t attracted to it, there is no point proceeding and this limits the risk.”
Consumer insight for meaningful innovation
Scott believes that focusing on fast innovation is necessary if food and beverage innovators are to keep up with the pace of change in consumers’ lives. And the consumer is placed at the centre of the innovation process.
“New trends are emerging and developing quickly all the time, and this presents a large number of opportunities as marketers look to respond to new trends and provide innovative and tasty new solutions. At PepsiCo, we are finding smarter ways to understand how consumers are changing. This allows us to gain a deeper understanding of their needs and place them at the heart of our innovation process.”
Scott stressed the importance of backing the trends that have long-term potential versus ‘fads’. In order to achieve this, new technologies are playing a big part in determining PepsiCo’s approach to NPD, the innovation chief tells us.
“Technology will play a big part in the future of innovation and is already a key part of our processes, particularly when we are identifying which trends will stay versus being yesterday’s fad. We are using technology and working with key external partners to monitor both traditional and social media, blogs, message boards, restaurant recipes, review sites and more.
“Essentially this approach enables our marketers to take a much more proactive role when it comes to early trend detection and what it means for innovation. That allows us to test and learn in spaces that we wouldn’t originally play in and helps us get to market much faster than we could before. For example, through our new ADA AI Insights technology, we identified Kombucha as an on-trend beverage category leading to us launch our Kevita brand across seven markets in 2019 in Europe.”
Looking to the future of F&B innovation, Scott noted that sustainability is becoming a ‘major part’ of innovation efforts and suggested the importance of sustainability ‘will only grow’. Scott pointed to PepsiCo’s ‘Sustainable from the Start’ programme for all innovation, launched last year, to illustrate the point.
“Sustainable from the Start enables all teams involved in product development (from concept to launch) to consider the environmental impacts of their decisions. Each new product we develop is being designed with carbon, water and packaging impacts in mind and there is a series of tools that can estimate the environmental footprint of a product under development and then compare that to a benchmark. Over time, these insights are helping us make smart decisions from start to finish,” she explained.
Leveraging the benefits of scale
While PepsiCo’s Future Brands’ might start small, there is no doubt that the company aims to scale innovations where appropriate.
“We want to leverage successful new launches as much as possible. Our plant snacking brand, Off the Eaten Path is now launched in the US and Australia. Our goal is always to bring those brands to as many consumers as we can and help to democratise previously niche trends,” Scott said.
That’s not to say there isn’t a place for smaller names within PepsiCo’s portfolio of billion dollar brands. “We will always have different scales of brands and that is part of diversifying the breadth of the portfolio so that it reflects consumer choice and we have something to offer to appeal to them all,” Scott added.
As well as leveraging its global scale to enter new markets and build revenues, the Future Brands unit is also able to take advantage of PepsiCo’s size in terms of sourcing, R&D expertise and supply chain.
“We have full access to the expertise within the business. In fact, during the development phase we closely collaborate with all of these functions during our Design Sprints. This is where we try to condense the whole innovation process into one week and invite everybody we need from a functional point of view – including our insights team, design studio and R&D colleagues, including our product development chef.
“During this week the whole team focuses on the trend or problem we’re solving for and works collaboratively to create a solution or prototype. The goal by the end of the week is to have a strong enough idea to proceed to the consumer feedback phase.”
And in terms of brand development, as the Future Brands start to scale, the support on offer is adapted to their needs.
“The most important thing with innovation is that you continue to give brands multi-year support, and that includes marketing activity, focus from the business and driving continued expansion through distribution.
“We ringfence funding for these brands and continue to look after them until they are at sufficient scale to be supported by our snacks and beverages teams, alongside the rest of our established portfolio.”
Case study: Off the Eaten Path
Off The Eaten Path was one of the first Future Brands launches and Scott describes it as ‘our most advanced brand’.
The concept was developed for the UK market, where PepsiCo was looking at how to deliver snacks to mid-lifer consumers, who were a ‘sizeable and growing’ cohort. This coincided with a growing trend in vegetable snacks. “At the same time [UK supermarket] Sainsbury's were also looking for differentiated innovation that tapped into trend ingredients,” Scott recalled. “This was the start point of Off The Eaten Path.“
The product concept was developed during an initial one-week co-creation workshop - a ‘fully dedicated immersion’ into the trend and its target consumers. The week brought together chefs with prototype recipes, consumers and nutritional scientists ‘to name a few’. “We fully explored the world of plant-based diets, we talked to consumers and experts, observed them cooking, shopping and also lived like some of them,” Scott explained.
Next came the visual identity and decisions on flavours, which were developed in collaboration with Sainsbury’s.
“The initial launch was a clear success. We agreed to rapidly develop additional offerings and our third SKU focussed on seaweed,” Scott said.
Why seaweed? PepsiCo leveraged its AI technology to develop deep consumer insights and identify this as an up-and-coming trend using real-time data.
“Through work undertaken with PepsiCo’s Insights function using our ADA AI technology, we were able to analyse billions of social media conversations to deliver real-time food and beverage insights. This identified seaweed as a trend ingredient, delivering on the brands positioning of ‘Snacks for the Curious’. Using seaweed harvested from the idyllic Scottish Outer Hebrides, the product format brought accessibility to seaweed snacking.”
Off The Eaten Path currently has retail sales of over £6m. “We are now looking at rapid expansion plans.”
Unlocking Innovation: NPD and the evolving consumer
Scott will be joining the latest webinar in FoodNavigator’s Unlocking Innovation series, which goes live tomorrow (20 July) and be available on replay thereafter.
During the 90-minute event, she will talk agile innovation and share key learnings from PepsiCo’s Future Brands initiative.
Scott will also join a panel of experts, including Mike Hughes, Head of Research and Insight at FMCG Gurus; Marie-Bénédicte Charpentier, Marketing Director of
ADM’s Health & Wellness division; and Nicki Morley, Senior Director/Innovation Consultant in Kantar’s Insights Division.
