BrandZ 2023: Food & Beverage
The total value of the world’s top food and beverages brands fell by 3% year on year, as large brands remained resilient in the face of economic pressures that have affected other categories more deeply.
The total value of the world’s top food and beverages brands fell by 3% year on year, as large brands remained resilient in the face of economic pressures that have affected other categories more deeply. In the context of a 20% overall decline for the top global brands, food and beverages’ slight dip represents the best performance this year of any category ranking.
What’s more, much of the category’s resilience can be chalked up to good, old-fashioned brand building. At the height of the COVID-19 pandemic, consumers flocked to big brands as reliable and dependable allies in a world turned upside down. This consolidation trend has continued amid inflationary and recessionary pressures worldwide.
Over the past two years, top brands like Coke, Pepsi, Lay’s, and Dorito’s have shown a strong ability to protect their profit margins by raising prices as needed – without losing sales. They have earned the right to do so because of their strong reputations for value and difference – which in turn rely on strong commitments to brand building.
It’s notable, for instance, that Coca-Cola met the economic challenges of late 2022 by upping its final-quarter marketing spend, with plans to maintain that high investment throughout 2023. The brand’s ‘Real Magic’ marketing platform has aimed to leverage new insights around occasions, and create new excitement around innovations – but at core, it is resonating because consumers really do need moments of escapism in challenging times. Last year, Coke and Diet Coke notched continued improvements to brand equity even in their core US markets – which is no small feat for a brand that’s been around for almost 140 years.
Coca-Cola and PepsiCo have succeeded in the 2020s not only through continued brand investment during tough times – but also by doubling down on innovation in a period when many brands pulled back on their pipelines and new releases. Coke, for instance, has moved beyond mere ‘flavor twists’ (‘with lemon’, ‘with vanilla’, etc.) to embrace more creative, ground-up reimagining of their core offerings – including its recent ‘Move’ variant co-created with Spanish superstar Rosalía.
PepsiCo, meanwhile, introduced its first ever nitrogen-infused cola, as well Hard Mountain Dew and a limited-time, marshmallow-flavoured springtime edition of its flagship brand. And in PepsiCo’s snack business, brands like Doritos and Lay’s have promoted cross-cultural exploration by introducing new cheese and Flamin’ Hot flavors to Asian markets, while bringing flavors like tamarind to North America.
Doritos has proven an especially nimble platform for these kinds of flavor explorations (which in the US also encompass new combinations of barbecue, spice, and cool ranch notes); this past year, it was defined in the brand equity data by high perceived difference, superiority, convenience, advertising, and online capability.
In China, many large local brands have had to contend with macroeconomic headwinds, at the same time that new challengers are breaking through via digital DTC sales. An exception to this trend is Nongfu Spring, which has maintained its premium positioning in part by continuing to innovate around occasions and benefits – as well as by speaking to sustainability themes around responsible natural sourcing and environmental protection. The brand’s Changbai Snow range, for instance, is sourced from the ‘primeval forest of Changbai Mountains’; its ‘lithium-rich’ healthy mineral range comes from the Greater Khingan Mountains; its range for tea brewing comes from Wuyi Mountain (and contains a mineral mix that promotes electrical conductivity); and its range for infants and young children comes from Fusong Water Resources Reserve.
For food and beverages brands, another important side of sustainability is wellness. For the rest of the decade, you can expect a renewed worldwide push to further cut down on sugar and calories in most product offerings – not least because the World Health Organization and governments worldwide have continued to promote new sugar taxes and regulations.
The best innovations in response to these wellness drivers will be those that build on existing brand strengths and assets. Cadbury, for example, has launched ‘Fruitier and Nuttier’ chocolate bars and trail mixes that come in below new UK sugar guidelines. They do so by doubling down on the range’s hero ingredients – the fruits and nuts – while also still emphasizing the presence of the brand’s signature ‘dairy milk chocolate’. At the same time, scientists at Cadbury’s parent company, Mondelēz International, are putting the finishing touches on technology that the company says could lead to confections with up to 75% less sugar and fat.
BRANDS WITH MOMENTUM
Unilever-owned Dutch brand the Vegetarian Butcher offers plant-based products that meat eaters love, too. Future Power Index NETHERLANDS 165
Kusmi is a French brand that offers irreverent, organic tea gourmet blends. Future Power Index: FRANCE 139
Coca-Cola’s Simply brand of juice-based drinks recently expanded into mocktails and mixers. Future Power Index: USA 124
Founded in Germany, Hello Fresh has become the US market leader in meal kits. Future Power Index: USA 123
FINESSE FUNCTIONALITY
This decade, brands have moved away from centering their functional ranges around a single, hyped-up superfood – and are instead approaching functional products more holistically, with an understanding that even flavor and aromatic cues can contribute towards health goals via the mind-body connection. So, for example, a new functional beverage might offer prebiotics and probiotics, alongside a vitamin array and a fruit infusion. In the US, disruptor energy drink brand Celsius combines caffeine, BCAA amino acid compounds, electrolytes, and tart cherry extract (with anti-inflammatory flavonoids) for its workoutrecovery offering. In China, new products are taking a multi-pronged approach to functional needs like gastrointestinal health, sleep management, and even ‘emotional release’
THINK DIGITAL
In China, the COVID-19 pandemic shifted the category in myriad ways: demand for ice cream increased, consumers experimented with cooking steaks at home, and shoppers took a new look at a wide range of traditional Chinese medicine ingredients, to name a few examples. Most consequently, the past three years greatly accelerated the sale of branded food and beverage products on digital platforms – and consumers from all backgrounds made online grocery shopping a part of their everyday lives. At the start, this shift provided opportunities for upstart brands to break through in innovative emerging categories – for example, ‘zero-sugar sparkling tea infusions’. Now, however, large brands have fully stood up their ecommerce capabilities in ways that may prove a harbinger of new digital brand building best practices worldwide. In other words, they can now perform new kinds of advanced trend monitoring and consumer segmentation, which helps them to stay ahead of the disruption curve – provided they have the right analytical tools in place.
GUARD TRUST
Consumers’ consistent willingness this decade to stick with their favorite brands despite price hikes raises an interesting question around so-called ‘shrinkflation’ strategies – efforts to engineer slightly smaller portions to maintain margins without moving on price. Namely, were they ever all that necessary – and might they have indeed been too risky compared to more straightforward price adjustments? It’s clear that top food and beverages brands’ status as trusted sources of pleasure have given them uncommon demand and Pricing Power – so going forward, one of brands’ highest strategic imperatives should simply be to maintain that trust. Through that lens, it might also better, for instance, for brands to put forth clear plans for medium-term sustainability transformations, rather than rush into making quicker but more superficial changes that risk the trust-killing label of ‘greenwashing’
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