Yes, there is a possibility that innovation can hurt your business, so you need to develop an innovation strategy to protect it. I have blogged on food innovation for the past three years, but never under a negative light. Today is different because I have an obligation to point out a potential downside.
The following blog is based on an April 4, 2013 Wall Street Journal article by Paul Ziobro and Serena Ng titled "Is Innovation Killing Soap Sales?"
Case Study: Detergent "Unit-Dose" Products – Think Tide!
In the article, the authors state that it is commonly understood that new products (including food) ought to expand the revenue pie for manufacturers and retailers, not shrink it — at least that is what innovation has done in the past. But in the laundry soap business, rapid innovation has been transforming the laundry business. The last round of highly concentrated laundry soaps occurred in 2008. But following this innovation phase came Tide laundry soap pods in 2012 — called "Unit-Dose," the products were designed to add convenience and limit overdosing by cost-conscious consumers.
The strategy has worked well for Procter & Gamble, but not so well for its competitors. The article states that "P&G is winning 75 percent of the new market, which is leaving competitors in a bind, as sales of traditional soaps fall." This begs the question asked by Church & Dwight Co. CEO "Now what kind of new product is good when it is hurting the total category?"
Robert McDonald, P&G CEO, sees things differently; he says Tide Pods represent the "perfect dose" of laundry detergent.
Overcoming Consumer Waste
Burt Flickinger III, managing director of Strategic Resource Group and a former P&G executive stated, "Companies that make packaged goods have long profited from consumers' tendency to use more than the recommended amounts." Adam Lowry, co-founder of Method Products Inc., which makes concentrated detergents that are dispensed like hand soap via a few small pumps, stated that "a major contributor to the overdosing problem is the oversized laundry jug, which he likens to sport-utility vehicles. The caps tend to be much bigger than the dose for the heaviest loads."
What is the application to the limited-service restaurant?
Let's consider a couple applications to the restaurant industry:
Restaurant Cleaning Supplies. After working 20 years in the restaurant industry, I have concluded that "unit dose" technology innovation is desperately needed for soap and sanitizers used in 3-compartment sinks in the back of restaurants. Restaurant operators would agree that this is the most wasteful opportunity. The same perfect dose technology could be used for floor cleaning and sanitizer spray bottles.
Flavored Drink Mixes. Perfect dose technology has long been used for coffee, tea and carbonated beverages, but it now needs to be applied to flavored drink mixes that still use some pour requirements. I am sure you can think of more options.
In conclusion, "single dose" technology innovation has huge opportunities for application to the restaurant industry — and it will save costs needed to offset increasing labor costs. So let's embrace technology, but make sure it fits a planned strategy.
Food Technical Consulting (www.foodbevbiz.com) is sponsoring its next industry workshop titled "How to Develop, Commercialize, and Market Your New Product Ideas" during a 3-day industry workshop in Denver April 29 – May 1, 2013. Contact us at email@example.com or 303-471-1443. You can also plan to attend the May "How to Start and Grow Your Own Food Truck Business" workshop.
I will also be speaking on food innovation the Korean Food Show/Asian Food Forum in Seoul, Korea, during the week of May 12.