By Rob Wengel, SVP, Innovation and Taddy Hall, SVP, Breakthrough Innovation Project, Nielsen
It’s a sobering fact that more than 85 percent of new fast-moving consumer good (FMCG) products fail in the marketplace. Yet a small percentage of new FMCG innovations do more than just succeed in the marketplace. Some like Procter & Gamble’s Tide Pods, Meow-Mix’s Tender Centers and Anheuser-Busch’s Bud Light Lime Ritas expand and revolutionize their categories, driving growth for the industry.
So what do these companies do differently? Why do they win when others fail, and what can we learn from them? With these questions in mind, Nielsen launched the Breakthrough Innovation Project, a multi-year in-depth analysis of more than 17, 000 new product launches from 2008-2012, which has resulted in the selection of 62 winners over the last three years. Out of 3,463 product launches in 2012, only 14 Breakthrough Innovation Winners met three stringent criteria: distinctiveness (not mere refinements to existing brands in terms of ingredient reformulations, repackaging or size changes), relevance (earning at least $50 million in their first year) and endurance (achieving at least 90 percent of year one sales in year two).
At the end of the day, despite the pundits’ best attempts to define innovation, it is best identified by consumers themselves. Our aim at Nielsen is to prove that it is far more science than art and that it’s possible to identify and distill the seemingly elusive quality that drives consumers to try a new product and return to it repeatedly. This year’s winning companies gathered at Nielsen’s global thought leadership event, Nielsen Consumer 360, to share their findings and insight into turning the statistics of innovation on their head and bringing successful new products to market. And just one example of this success is 2014 Breakthrough winner, Anheuser-Busch’s Bud Light Lime Ritas.
The Science of Successful New Product Innovation
The big idea came from Asia. Senior executives challenged Anheuser-Busch’s Innovation VP, Pat McGauley, to find a way to capitalize on a growing Asian trend of pouring beer over ice—allowing beer to remain cool during power outages while also treating the beverage like a cocktail.
That was a Friday. By Saturday, Brewmaster Jill Vaughn, had quickly created some beer prototypes. Sunday afternoon, Pat and three members of his team set-up an experiment in the St. Louis brewery tour center tasting room. They assembled a range of existing and prototype beers and invited folks on the brewery tour to taste beer on the rocks. The feedback was clear: Everyone hated it. As one participant shared, “You’re messing with my beer way too much.”
The King of Category Expansion
The idea could have died there, but in-line with the findings of Nielsen’s Breakthrough Innovation Project, the team knew that to succeed, they had to:
- Seek opportunities to expand and transform categories—this ‘beer-as-cocktail’ idea was new in the U.S. and could attract new consumers who prefer cocktails to beer.
- Introduce new rituals—the act of pouring beer over ice suggested an opportunity to innovate around experience, not just product.
“If beer over ice is a bad idea, what’s good over ice?” McGauley recalled the progression of the team’s thinking. “Cocktails.” And the most popular cocktail? “Margarita.”
But a margarita from Anheuser-Busch? “We look at our share of throat across all alcoholic beverage consumption, not just within beer,” McGauley explained, “so a hypothesis that points across category lines is actually exciting rather than problematic. The question was whether there was latent demand: could we innovate around this Bud Light Lime Margarita idea in a way that would bring new consumers into the category and also take beer into occasions where it was typically absent? You do that and you transform categories and generate commercial success.”
“What we discovered,” McGauley recounted, “is that for many beer drinkers, Bud Light Lime made a margarita more approachable, more co-ed, and more refreshing. Conversely, for many non-beer drinkers—especially women—the margarita dimension made beer more appealing.”
The Job Spec
Anheuser Busch found that the ritual of the cocktail—the glass, the 8-ounce serving size, pouring over ice, a distinctive package and the social experience—were all part of the innovation “spec.” The team discovered that the experience of pouring the drink, the packaging, serving method and how the beverage was enjoyed were all as much a part of the innovation as the product itself.
So Anheuser-Busch created an additional circumstance for a consumer category purchase by bringing margarita drinking out of high end restaurants and into backyards across America. The margaritas were sold in non-threatening 8-ounce cans reminiscent of beer, but brought traditionally non-beer drinking demographic groups, such as women, into the Bud Light consumer fold. The Bud Light Ritas example illustrates a company’s ability to expand its product category in a way that gets outside the box but not off the reservation. Anheuser-Busch stayed true to its brand identity, while increasing its consumer reach.