“The most frightening statistic in our business is … only 3% of the brands get past the $20 million retail mark” that defines the experimental phase of a launch, Murray said April 29 during a webinar hosted by New Hope Media’s NEXT Accelerator. “That is a horrific failure rate. That means 97 tries didn’t work and only three made it to the next phase” of growth.
Next Foods probiotic drink GoodBelly is one of the 3% partly because unlike some competitors it did not over extend itself by “getting way too much distribution without getting consumer pull” to justify expansion, said Murray, who also will present at the Probiota Americas event in San Diego, June 3-5.
Overextending distribution is tempting for brands eager to grow, but it can cost a lot of money so that there are insufficient funds for other business components, such as marketing, Murray said.
When GoodBelly launched it concentrated its efforts on the early adopter market at a regional Whole Foods, and “only once we had established a base of consumers with them … [did] we decide to move to the next retailer,” which was in the same natural channel, Murray said.
Once GoodBelly was firmly established in the natural sector at Whole Foods, Sprouts and Natural Grocers, it expanded into “more progressive retailers like Kroger and Safeway,” but still has not gone into club or mass “because that can always happen at a later stage,” he said.
Next Foods’ patience was rewarded with GoodBelly making the next cut in the launch cycle and entering the “proof of concept” phase, where brands earn between $20 million and $50 million in sales. It is now preparing to enter phase three – pain of growth – which earns between $50 million and $150 million but which only 16% of the 3% who made it to the second phase enter, Murray said.
GoodBelly’s success is not all due to slow and steady growth, Murray said. Rather, he also attributed the brand’s success to five factors: being a first category-mover; having a descriptive brand name; insisting on efficacy; protecting proprietary information and being authentic.
Creating a category
Creating a food or beverage category is riskier than launching into an established category because it costs more to promote a product, but it also offers the huge advantage of being the first player which comes with increased consumer recognition, Murray said.
GoodBelly was an early entrant into the probiotic and digestive health drink space after the founders, Steve Demos and Todd Beckman, traveled the world to find their next business venture after leaving WhiteWave Foods. They talked at length with people in the medical and lifestyle fields to identify a product with an established track record in other parts of the world, but which was new to the U.S.
An important component of successfully establishing a new category is having a product idea that is “big enough” to support the category, Murray said. Initial research into the GoodBelly brand, which originated in Sweden as ProViva, revealed it could be worth as much as $2 billion in the U.S. if adequately supported.
What is in a name
When building a category or launching a product, a clear, descriptive brand name will help consumers understand the benefits more quickly, Murray said.
“Taking a brand name that says what the product is all about can save you a lot of work and your advertising dollars perhaps will go a little further,” he said, pointing to examples of clear branding include Vitamin Water, 5-Hour Energy and Simply Orange.
On the flip side, an unclear brand name that requires explaining could cost more in advertising.
“We are very grateful to Activia for pioneering the category, but the name doesn’t say anything so they had to pay Jamie Lee Curtis to stand there with arrows going down her tummy to talk to her friends about what is happening down there. They spent $550 million telling people this, whereas we feel that the brand name GoodBelly does a lot of work for us just by having a name that tells you what it does,” Murray said.
Solidly grounding in science that GoodBelly is a “feel the effect product,” also helped the brand grow by demonstrating efficacy and instilling trust in consumers, Murray said.
The probiotics in GoodBelly have more than 16 significant clinical studies to support a clinically significant dose and the claims made by Next Foods.
Other effective positioning strategies include around an ingredient, like Mamma Chia and Pom Wonderful have done, and around technology, Murray added.
Protect proprietary advancements
Category leaders usually are targets of “me-too” products and to retain their edge, firms need to protect their brands’ intellectual property, Murray said.
“The science, the patents, the trademarks, make sure that is all covered because you don’t want someone else running away with your bone,” Murray added.
All these elements can be a lot to juggle, but if a brand is authentic, they should come naturally and be easier to balance, Murray said. He noted that Next Foods’ follows the principles of right livelihood to ensure its products and company are transparent and authentic.
Editor's note: If you are interested in learning more about GoodBelly and probiotics join us in San Diego June 3-5 for our Probiota Americas live conference. Joining Murray will be speakers from UCLA, Bayer Healthcare, Nestle Health Sciences, McMaster University and more to discuss cutting edge research and business insights. Register quickly and easily HERE.