CPG giants can innovate, but smaller firms just do it better

The next speaker - the ‘Godfather’ behind the ‘Got Milk?’ campaign, Jeff Manning - looked at why big companies are increasingly looking to smaller ones to deliver innovation.

It’s not that CPG giants don’t have great R&D teams or lack imagination, he said. But they don’t have a great origins story (no one reads the ‘about us’ section of their web pages to get inspired); and they don’t like taking risks, and buying a ready-made brand is much easier than coming up with your own.

So when Hershey bought artisan chocolate manufacturer Scharffen Berger in 2005, it wasn’t buying products, innovation or technology it was unable to deliver in-house (high cocoa solid chocolate), noted Manning.

It was buying a “narrative, a passionate founder, a distinctive brand name, logo and packaging, and incremental sales in high-end and specialty distribution channels.” ​ 

He just came out of left-field ​

Much the same applies to Odwalla and Naked Juice - brands acquired by Coca-Cola and PepsiCo respectively, he observed. “It’s incremental business. Naked was in places that would never carry Pepsi products.”​

A passionate individual with vision and ambition is also the key to the success of Chobani, which went from zero to $1.2bn in six years thanks to the singular drive of its founder Hamdi Ulukaya - who completely transformed the fortunes of the yogurt category - without even resorting to earth-shattering innovation (Ulukaya didn’t ‘invent’ Greek yogurt), said Manning.

“He just came out of left-field.”​