WORLDVIEW: Lessons for SA from the world of consumer brands

By Felicity Duncan.Consumers are over big brands. Reading between the lines of the results of some of the world's largest companies – Unilever, P&G, and Heinz, for example – the message is clear: Consumers don't care about big consumer brands..Around the world – but especially in relatively well-developed consumer markets – historically dominant brands in product categories ranging from tomato sauce to washing powder to face cream are losing market share even as the product categories themselves grow..___STEADY_PAYWALL___.There seems to be two distinct forces driving this shift. The first is the emergence of low-cost options. Grocery stores now routinely carry a range of store-brand products, including colas, cleaning products, toiletries, and processed foods. These products are usually more-or-less indistinguishable from the brand-name versions but cost around 20% to 30% less. For budget-conscious shoppers, buying the store-brand is a quick and easy way to save money without compromising on quality..The second is a broader shift in consumer tastes towards products that are seen to be more natural, healthier, and more environmentally friendly..In the food category, this means a shift from packaged meals, cold meats, and fatty meat products to fresh foods – often vegetarian or vegan – with fewer additives and preservatives. (In South Africa, the listeriosis outbreak helped spur this switch among consumers who can afford to buy fresh.) In other product categories, this can mean a switch to organic and non-toxic cleaning products or all-natural toiletries..The beauty industry offers a great example of the switch I'm talking about. Globally, beauty is big business. Orbis research estimates that it will be worth about $806bn in 2023, up from $523bn in 2017 – that's a compound annual growth rate of nearly 7.5%, far exceeding the world's 1.1% population growth rate..This rapidly growing market was once dominated by companies like Unilever, Nestle, and P&G, which own brands like L'Oréal, Olay, Maybelline, Garnier, and Estée Lauder. But today, those big brands are losing market share to small, upstart brands like Glossier, Hanacure, and Ordinary..Read also: To make big money, ditch Baby Boomers, embrace Millennials – world's powerful consumers.In the $80bn prestige beauty market, for example, the market share of the top 10 brands fell from 46% to 40% between 2010 and 2015, while the indie brand share rose from 20% to 25%..Indie beauty brands have a few things in common. Most focus their marketing efforts on social media, targeting online beauty influencers that young consumers follow and rely on for makeup and grooming advice. These companies skip the high costs associated with glossy magazine and TV ads, instead reaching out to consumers with highly targeted campaigns through Instagram, YouTube, and Facebook. Rather than selling their products in stores, most indie brands start off selling online, many of them selling directly through social media platforms. A lot of these brands also focus on distinct niches, such as organic ingredients..By taking advantages of some of the key benefits of the Fourth Industrial Revolution – social media, direct access to consumers, online retailing, and fast, scalable, low-cost manufacturing – these indie beauty brands have outmanoeuvred the big gorillas and won consumers' hearts..Like the beauty industry, the food industry is home to many examples of small, upstart brands that have won market share with a combination of smart, digital marketing, direct-to-consumer online selling, and a focus on health and natural ingredients..The lesson to draw from all this is that the Fourth Industrial Revolution (4IR) has the potential to shake up more than just the tech space. The traditional, conservative, cash cow business of producing consumer goods is facing enormous upheaval as small, nimble companies take advantage of 4IR tools to build fast-growing new businesses..South Africa is a market characterised by oligopoly. A handful of companies dominate many sectors, choking off competition and holding back job growth. Enterprising South Africans should look at how they can deploy 4IR tools to transform the economy and offer consumers new and exciting alternatives.

WORLDVIEW: Lessons for SA from the world of consumer brands

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