In 2010, Annie's Inc. almost extended our brand into pouched shelf-stable baby food, as part of a broader idea in the baby aisle. We decided not to do it. We were already in 10 distinct categories with HH pen of just 2.3% & just over $100MM in revenues. Too many categories at our size, LOL (topic for another post). But baby was VERY interesting and it was a tough call. Whether we'd have been successful or not is debatable. But for me what is most memorable about this episode is the lesson I learned about category expansion assessment. At the time, organic was just 10% of the category and pouches were a just emerging format at <1%. We figured we'd play there first & with these #'s our takeaway was that the category opportunity was too small. This was the major factor in our deciding to pass. What we missed was where the consumer/category puck was going and why. Today organic is >45% of the puree category & is dominated by pouch format. We missed a MAJOR category disruption wave that led to very lucrative 2013 M&A transactions for #emergingbrands friends Shazi Visram at Happy Family Brands (Nurture Inc), Neil Grimmer at Plum Organics, and Paul Lindley OBE at Ella's Kitchen. When evaluating category expansion, spend the most time on where the category is going and why it should go there for consumers, more than on the current category state. What disruption will your brand bring to that needed wave of growth and why? When I was assessing investing with Ari Raz & Cassandra Curtis in Once Upon a Farm in 2015, and then joining it in 2017, it was clear that refrigerated format baby food should be a huge category but it was basically zero. Up to half of potential buyers were actually opting out of the baby food category almost entirely & making their own fresh/refrigerated product at home. The signs were certainly there, if you looked FORWARD rather than at today. Didn't make the same mistake twice. PS historical fun fact, I wanted to buy Happy into public Annie's but Danone beat me to it, had much admiration for what the Happy team had done and the future potential of it.
Tony Dreyfuss
1mo
Thank you for the well reasoned and insightful post. It’s timely for me as my company is pioneering some products in a small but rapidly growing category - compostable single serve coffee.
Kelly B.
1mo
John, would love hearing your take on the too many categories based on size. I think this is a trap that many smaller size and growing companies fall into rather than being super hyper focused on core, the customer and targeted innovation.
Gil Jawetz
1mo
This thinking applies broadly. For those of us who are unlikely to ever steer a company into new core offerings this thinking is still relevant when evaluating new skills to build, new responsibilities to tackle and new directions to steer our own teams and careers.
Julie Kelley
1mo
This is the gift to us humans for making decisions, moving forward, and taking that knowledge to our next crossroad. As someone who has worked on having my eyes forward and forgiving myself for mistakes, How often have you lived in the regret of this one, if at all? I feel like that could also be a powerful insight.
Marina Erulkar
1mo
This is the innovator's dilemma in motion. Customers may not recognize their next need, especially when what's being introduced is disruptive. The exercise may be more about creating need and demand--and controlling the puck. I so appreciate this story! Thank you for sharing it.
Robert Little
1mo
Skate to where the puck is going not where it is.
Mike Schall
1mo
Really sage wisdom, John. Anticipate the inevitable. Can’t wait to see your post on “too many categories” 🙄
Sara Wilson
1mo
Such a great reminder of the power of listening. Thank you so much for sharing!
Pragmatic, Results-Oriented Marketing and Marketing Insights Leader: Brand Positioning | Digital & Social Media Marketing | Sponsorships | Market Research
1moIt is easy to look at current sales trends and conclude “no opportunity”. It is also easy to convince yourself that something is “not a strategic fit/priority”. I worked for a company that missed out on organic and refrigerated hummus, although we tried to catch up years later but missed the wave. We also did not enter categories due to entrenched competitors, even though consumers wanted us to enter. Try to get out of your own head. Look at consumer trends across categories and demographic shifts. Look for pain points among current category shoppers. Being a niche player in a giant category can be very lucrative if you are not insistent on being a top 3 brand overnight.