In this two-part series we’ll look at how insurgents threatened the dairy category, and how market leaders fought back. In Part I, we looked at the dairy category’s challenges when confronted with insurgent dairy alternatives. You can read Part I here. 

Category insurgent (noun) – a person or brand fighting against established market leaders or beliefs by attacking the mass-market model with small-producer, authentic crafted brands or challenging the category on health or ethical grounds. 


Stand Your Ground

Key tips and tactics for market leaders facing category insurgents

It’s never been easy for market leaders to react to insurgents’ attacks – especially when those attacks appears unfounded, or strike at the leader on health or ethical grounds.Tobacco and ‘unhealthy foods’ (soft drinks, fast food) are good examples. Tobacco companies infamously undermined anti-tobacco activists and research. Now it’s coming back to haunt them yet again: the industry has embraced e-cigarettes, but the very presence of tobacco companies in the e-market has raised doubts about the safety of vaping. On the other hand, many so-called ‘unhealthy’ food brands began discussing context – ‘it’s about having a balanced diet’ – but slowly recognised their role in the obesity trend, and transformed their portfolios to offer healthier alternatives.

But what happens when your category was perceived as fundamentally healthy, like dairy, yet is questioned by the arrival of new offerings, such as lactose-free and plant-based products? What tactics can be applied?

These four tactics are lessons from the dairy category, but apply to a wider range of markets:

Evaluate the threat and establish the facts

Begin by taking the heat out of the debate. That means, first and foremost, don’t overreact. Communicate at the industry level – remember, the public is always suspicious of companies defending their products.

‘When your category gets attacked, it is really important to check if it’s a fundamental market change or just an epiphenomenon driven by activists or extreme consumers. Talk to key stakeholders, do some active follow up. You don’t want to overreact.’ – B. Bourdin, ex-GM, Danone.

 

Remove the contentious ingredients

The Lactofree range is one Arla’s latest successes – it’s one of the few growing brands in today’s UK dairy category. Lactofree products don’t reject ‘dairy’ – there’s a proud cow right on the package. It’s also comparable in price to milk products, and sits beside them in the fresh aisle. Instead, Arla educates consumers on the impact of lactose intolerance and encourages them to test a 14-day lactose-free diet for themselves

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Other brands have decided not to create a new brand but just play the variant option. Ben & Jerry’s Vegan offers the same flavours (Cherry Garcia, Fudge Brownie) but with a vegan recipe, as well as totally new flavours like ‘Peanut Butter and Cookies’ to tempt the regulars to give their vegan option a try.

 

Embrace the new diversity

For market leaders, responding to insurgents can be about having alternatives, not a full replacement of their offer. In 2016 Danone purchased WhiteWave, makers of vegetal-based dairy alternatives such as Silk and Alpro. It marked a clear shift for the French company whose goal had once been to get people worldwide to eat ‘one yoghurt a day’.

With the dairy-free wave gaining momentum, Danone is now all about offering variety. With a complementary portfolio and culturally relevant products – many African and Asian countries have a limited dairy culture – Danone remains a leader, instead of letting smaller players own the market.

“In many ways, plant-based is an addition and an extension to dairy consumption”Emmanuel Faber, CEO, Danone

 

Redefine your category

Instead of opposing the challengers, view your market as a new category where solutions are complementary to each other. Redefining your category doesn’t mean you should be shy about your original product. On the contrary, be proud of where you come from. Play to your strengths and rediscover what made your category successful, but do so with a coherent story to help consumers understand which offer is best for them. Otherwise, there is a risk that your main category will rapidly decline.

‘Having [both a] Milk and vegetal offer – it’s a bit like the hybrid car solution. You get the best of both worlds: Lactose-free and planet-friendly solutions; high-quality proteins and rich-in-calcium products which are essential at certain stages of your life.’ – B.Bourdin.

 

Lessons from dairy
What to consider if your category is being challenged

It’s not if, it’s when: Innovate to stay ahead of the game. Very few industries or brands today can guarantee they won’t be challenged by category insurgents.

Consider higher-order needs: Define your new playground by looking at why your customers are buying your products. Most car manufacturers are now redefining their market as ‘Mobility / Transportation’ and developing electric cars, car sharing or multiple transport solutions. What will the category combining dairy and plant-based alternatives be called? It’s still up for grabs!

Which solution for which need?: It’s almost never one-size-fits-all. Vegetal alternatives are not recommended for all targets – toddlers and babies should probably stick to animal-based milk.

Be careful about health claims: Vegetal switchers are more interested in health than average consumers. Yet dairy-free products such as coconut desserts are often very fattening, and soya could be controversial as it needs to be reinforced in vitamins and minerals.

Use different approaches in different regions: The reasons why people may switch from dairy to vegetal-based products are different in regions with higher instances of dairy intolerance than in Western countries, which are fuelled more by the ‘free-from’ trend among urban populations.

Alternative ingredients have their limits: Not all categories have the same potential. Plant-based drinks are well established, but yoghurt is still relatively virgin territory beyond soya, and convincing consumers to switch to dairy-free ice cream – a category driven by pleasure – is a tough sell.

New brand vs. brand extension: Which direction is right for your brand and the challenges it faces? So far, no dairy yoghurt brand has succeeded with a plant-based brand extension (other than Ben and Jerry’s), but it’s early in that process and that’s certain to change!

4 tactics in response to threat level

Threat level