Blog: International Brewing Convention - Day 2
Olly Wehring | 4 October 2007
We're finally back home after three days at the International Brewing Convention. The main theme to have emerged from the final day was innovation.
Listening to the number of press conferences on brand launches and packaging changes that just-drinks does, it would be easy to believe that this was the 'Holy Grail' of the beverage industry. No doubt, that's the image most modern drinks groups would like to project - that innovation, consumer foresight and groundbreaking launches drive their businesses forward.
The truth, as articulated by a number of panelists from outside the sector over the last couple of days, is that the beverage industry's track record in innovation does not stand up when compared to other FMCG categories.
The two stand-out speeches at the IBC for me came from outside the drinks industry - from Paul Molyneux of the bread and baking company Premier Foods and Andre Teixeira from Campbell Europe. Both focused on innovation, with Molyneux speaking of the opportunities to use it to drive premiumisation whilst Teixeira talked of the innovation process itself.
Though the appearance of Molyneux on the agenda might at first have appeared strange, he was quite an inspired choice as a speaker because the similarities between the bread and beer industries are striking. Bread, for example, had a reputation as a bit of a tired category, it was low margin and used to drive footfall in supermarket. Then, in the 1990s, the bread industry began to innovate. Hovis, for example, now has a multitude of different offerings from Best of Both to Hovis Sensation. The result has been a noticeable increase in the value of the UK bread market.
Interestingly, when just-drinks posed the question of how the retailers took to the higher pricing policy bread producers followed as a result of the innovation, Molyneux said they had experienced very little opportunity, with supermarkets just as keen to drive value into the category as the producers were. "No one was making money," he said.
You don't need me to point out how similar beer's predicament in the major multiples matches bread's some years ago.
Meanwhile, Teixeira took us on a complex journey through the innovation process. And what I pulled out from it was quite how challenging the whole process was and, as a consequence, how few companies really buy into it fully. He argued that there were three voices you had to listen to in order to innovate successfully: the consumer, the product and the market (in other words, the client, trends, pricing and value). But he also described how hard it was to really produce an atmosphere in companies where innovation is truly embraced. And here he pointed out that marketers tend to dominate strategy rather than innovators, which may give you consumer insight, but it doesn’t give you foresight. He also pointed out that few companies really reward innovation, which given the high risks involved in launching new products meant that investment was weighted behind existing cash-cow products. "I have never met a CEO whose reward scheme included how much the company innovated," he said.
All in all it's been an interesting few days in Manchester. That it has taken ten years since the last brewing convention in the UK was put on is amazing. Organisers told me they were looking to repeat the exercise again in three years time. I would argue that the changing dynamics of our business demands that the industry comes together more often than that, but three years is at least better than ten.
I'll leave you with my favourite quote of the week, from Andre Teixeira, who talking about insights into launching a new product said: "If you don't know what you don't know and your competition knows you don't know, you are in deep trouble."
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