New Brand Equities are in Vogue, but Can They Perform Over Time?
Each year, Nielsen analyzes new CPG product launches and identifies those that were most successful in terms of revenue, mass potential, longevity and appeal towards specific consumer targets. To decide the 2019 winners, the company reviewed almost 45,000 products that had been launched in 2017.
In the past five years, there’s been a shift in the branding of the winners, from known brand extensions of megabrands to new, previously-unknown brands.
As recently as 2013 and 2014, established brands account for 75 to 80% of the new product winners named by the Nielsen Breakthrough Innovation awards. Starting in 2015, new brands began to make up a larger percentage of successful new products, ranging from 42 to 56% of the winners.
The CPG Brand Architecture that Built Today’s Megabrands
In fast-moving consumer packaged goods (CPG)– such as food and beverage, personal care, household cleaning, and health and beauty– strategic brand extensions leveraging a well-defined brand architecture have proven effective for innovation.
The brand equities that CPG leaders have built over time with ongoing marketing and innovation investment in the tens and hundreds of millions provide a proven platform for extension. For example, we’ve had the privilege to work on defining the brand strategy and vision for megabrands that extend across multiple categories, such as Sara Lee, Quaker and Barilla.
The Trend to Launch New CPG Brands
There’s been a shift in CPG innovation, favoring new brand equities. Because they are previously unknown, each of these new/unknown brands requires marketing investment.
While it may be expected to see a new brand from a new company, it’s also increasingly common to see large CPG players like Johnson & Johnson, PepsiCo, Mondelez and Arm & Hammer creating new equities. Explanations given for creating new brands include the need to offer different products to:
- Millennials or Gen Z
- Consumers of all ages who prefer natural and alternative brands and shop natural/alternative channels (like Whole Foods)
- Influencer-driven brands
Will New Brands Stand the Test of Time, and Become Profitable Innovations?
I wonder, however, how many of these new equities will stand the test of time? And how many will receive the ongoing innovation and marketing support required to sustain them for the next ten years? A common pattern in consumer packaged goods is to support a new product launch heavily, but then dial back on marketing support in years two and beyond. Without ongoing innovation and support, the lifecycles for these new equities will likely be relatively short, perhaps less than five years.