Multinationals Seek Growth, Niche by Niche

Pukka Herbs specializes in herbal organic teas

Nestle is buying a small California firm known for vegan and vegetarian foods; Unilever is buying a company that makes herbal organic teas. Both of these multinationals are seeking growth by acquiring businesses and products in niches that are attractive because of increasing consumer appeal and the ability to be noticed through distinctive brands/products.

Mainstream brands/products continue to sell--but certain niches are growing more rapidly and delivering customer acquisition (and profits) through specialization. Unilever, for example, pursued Pukka Herbs because it is unusually fast-growing in its niche. Unilever's top tea executive explains: "In the morning a lot of people still drink black tea as it picks you up, but in the afternoon or evening herbal tea is wonderful with different benefits." In other words, Pukka Herbs complements Unilever's existing tea brands and products.

Nestle bought Sweet Earth, a vegan/vegetarian food marketer, to get firmly established in the plant-based protein market. Nestle USA's CEO comments: "One of Nestlé’s strategic priorities is to build out our portfolio of vegetarian and flexitarian choices in line with modern health trends."

Watch for more multinationals to exploit niche opportunities by buying firms that have a following and a strong brand image.

The Ice Cream Marketing Wars

Unilever's Magnum brand has become a $1.24 billion blockbuster because rich-tasting premium ice cream novelties are back and they're, well, hot. Magnum's Facebook page has more than 4 million likes. The brand was founded in 1989 but Unilever has been taking it global market by market, with very good results.

Until recently, the star of the ice-cream freezer case was the 100-calorie treat, which consumers could enjoy without blowing the entire day's calorie or fat budget. Skinny Cow, founded in 1994 by Nestle, is fighting back against high-cal competitors with new low-fat, high-taste products and unusual promotions like the Dirty Dancing movie tie-in above. Its Facebook page has 564,000 likes and the supermarket freezer case has many facings of Skinny Cow treats, I know from personal observation.

Still, super-premium ice cream treats seem to be today's trend. Graeter's, the Cincinnati-based independent with a growing presence in supermarkets coast to coast, offers ice cream pints in flavors that are fresh and luscious. Toffee Chip, vanilla with gigantic choco chips and Heath chips, is only one of Graeter's fantastic flavors. And Graeter's offers to ship anywhere in the continental US for the enjoyment of consumers whose local markets don't have the brand. Let the ice cream marketing wars continue!

Nestle's "Not Kit Kat" Super-Premium Chocolates

Nestle has a new line of customized luxury chocolates--and these are not your everyday, average Kit Kat bars (one of Nestle's top global brands).

Instead, Swiss-made Maison Cailler chocolates serve as a journey into your Chocolate Personality. The process begins when you read about the Maison Cailler chocolates, look at all the luscious photos on the Web site or the Facebook page, and order a sampler to taste.

Now comes the personalization part: You go to the Maison Cailler site and rate each chocolate in the sampler box, also noting whether you like to discover "exciting flavors" such as spices in your chocolate. With a click, you'll know your choco personality and you can then order boxes of premium chocolate specially selected for your preferences.

Not at all like Kit Kat, which has just introduced a new chunky peanut butter flavor, below (based on the results of a public vote).

Nespresso: The Apple Store of Coffee-Machine Boutiques

Nestle's Nespresso boutiques sell high-end espresso and coffee machines in 50 countries worldwide. The Nespresso store in downtown Copenhagen, left, is stylishly designed and has the feel of an Apple retail store, with products prominently yet tastefully displayed and highly knowledgeable experts on hand to demonstrate, educate, answer questions, and help customers buy.

The ambiance, the fixtures, the lighting, and all other visual clues reinforce the upscale positioning and create the expectation that customers are going to receive personalized, specialized service as they shop for a coffee machine or coffee capsules.

Browsing in the boutique, I took this photo of a George Clooney poster. Clooney has been the face of Nespresso for 9 months now, in TV commercials and in store signage. Clooney's sophisticated image only adds to Nespresso's coffee-maker cachet.

Consumers are adopting single-serving coffee-makers (for home or office) at a rapid rate, driving Nespresso's annual global sales to nearly $4 billion even as it defends against competition.

Is the coffee culture at its peak or can Nespresso extend its success by opening new boutiques in additional US and international markets?

New Twist on Ingredient Marketing

This month's Entrepreneur mag has a full-page ad about Nestle Toll House Cafe by Chip franchise opportunities.

The ad sends readers to the Nestlecafe.com site, where I learned that "The concept was conceived in 1998 and takes advantage of the fact that people love to reward themselves with items they feel have a distinct quality and freshness." The cafes feature Nescafe coffee, cookies with Nestle ingredients, and Dreyer's ice cream--all well-established Nestle brands. The franchisor, Crest Foods, has awarded 100+ franchises and recently opened its own cafe in California.

The Nestle choco chip is often discussed in marketing texts as an example of "ingredient marketing" because it's incorporated into a finished product. This franchising concept puts an entirely new twist on that idea, with the spotlight on multiple Nestle brands that have earned reputations for quality and flavor.

New Packaging for Nestle

Nestle just changed the packaging of its Carnation Instant Breakfast. Guess which is old and which is new....

Left is old and familiar. Right is new, more modern and adds lots of benefit details. Note banner at top left of new canister that says "New Look! Same Great Taste!" Same amount in package but new (higher) retail price.

I'm a loyal customer and accustomed to flying down the grocery aisles, snatching up a Carnation Instant in an instant, and continuing on my whirlwind tour of the supermarket. New pkg meant taking a moment to process new look and "same great taste." It worked because the new pkg is similar enough to the old pkg that customers can identify the product quickly and easily.

Marketers can't make such changes lightly--customers devote only a few seconds to scanning the shelves for familiar packages and if your product looks radically different, it may not be identified and selected as the favorite that it used to be.