Gama spoke to Jose Luis Martinez, Communication and Marketing Services Director, Nestle Spain.
What are your day to day activities?
First of all let me say that I have only been responsible for Communication and Marketing Services since January 2014. So frankly my daily activities right now are focused on catching up. If I had to qualify my day to day work I would say that is diverse and intense. It is “diverse” because I ‘m leading differentiated but connected departments that set up the foundations for healthy growth for the company in the coming years: Market Intelligence, Wellness, Advertising, Media Planning, Consumer Services, Digital Acceleration Team and Innovation. And on all fronts we are aspiring to achieve excellence. Our big ambition is to become the recognized leading Nutrition, Health and Wellness Company not only in Spain but around the world. We intend to lead the digital revolution in FMCG, be the reference in Food through our bigger, bolder, better innovations and engage consumers with engaging brand experiences.
And my day to day activities are also “intense” because we have embarked on numerous initiatives and projects to make these objectives happen. But beyond all this work what really resonates with me is that we are a team of passionate brand builders.
What key trends do you expect to shape food and drink innovation in 2014?
We do not expect significant changes in the big trends that have been pushing the food and beverages industry in recent years. I would highlight Nutrition, Health and Wellness with all the variants of benefits from the very functional, backed by science, to more simple approaches. It seems that products “without” (gluten or lactose free, without sugar, without salt…) are in better shape than those enriched with “noble” nutrients. On the other hand, there are two polarized trends that have maintained momentum during the last decade: trading down (development of basic, cheaper solutions) and premiumization (a significant part of consumers are willing to pay more for high quality products/services). Regarding the latter, close systems for premium beverages and food are likely to continue growing fast.
What should manufacturers do to be successful in the current economic climate?
Food consumption in Spain will remain quite flat in 2014. Net income is not improving and although consumer confidence is slightly recovering from “the bottom of the sea”, 2014 will likely be the third year in a row that the country sees population decline, ergo a decline in buyers. Regarding behaviour, consumers are always changing but the crisis has accelerated the traditional consumption profiles of many families. Consumers are less affluent, wear austerity with pride and are smarter. They expect to get more out of 1 euro now than before the crisis, and brands need to adjust their value equations to this new reality. At the same time, this new consumer is generating many new “insights” that can be catalysed into new consumer propositions. Morever the digital world is offering opportunities for active listening to better understand consumers and reveal non-obvious insights. In both cases, I think most brands are neither properly listening to nor understanding these insights from consumers in this new era.
Which markets (countries) or consumer groups currently offer the greatest growth opportunities for FMCG companies?
Increases in population and income (particularly in emerging countries) are fundamental drivers of growth for most industries, including FMCG. And Asia, combining two thirds of the global population with high GDP development, is where more opportunities for growth do exist. Of course, this potential can be extended to other emerging markets.
Regarding potential consumers groups, Seniors and one and two person households have been steadily growing for years. However just a few products have really succeeded in reaching those targets. It is not easy but the challenge is there.
How do companies best achieve growth in developed or saturated markets?
Innovation is more necessary than ever to grow. Without innovation real consumption would be significantly decreasing and the downtrading trend would be accelerating. However the number of new products being launched on the Spanish market is severely declining. There are fewer resources to develop and support innovation and many retailers are not supporting new products. The market has initiated a vicious circle that must now stop. So the challenge is to maximise the ratio of success, focusing innovation on fewer products but with more differentiated and well perceived benefits and higher support. And marketed at the right price: consumers are only willing to pay more for more value.
From a marketing perspective, how is the way companies are looking to reach and engage with consumers changing? How can a brand successfully resonate with consumers?
As mentioned before, the worst thing for a company is if consumers change more quickly than they do. And consumers are changing rapidly (crisis, globalization, digital era…). Companies and brands have to listen to consumers more – and better – across all channels. It implies change within an organization (i.e. speeding up digital knowledge), but once you get powerful insights everything flows into more engaging communication, breakthrough innovation and definitively a more straightforward strategy. But acceleration is the key. The real opportunities come when you react fast.
Focusing on communication, as a result of the crisis, consumers have begun looking at the product choice process in a more rational way. The answer from many marketers has been, and still is, to create attractiveness through price, and sometimes, from the product superiority perspective. But this is not enough, and we must also build the attractiveness of our brands from an emotional perspective. We need our brands to propose and play a real meaningful role within consumers’ lives. Creating engaging brand experiences through communication and bolder innovation are the only ways to gain over private label pressure.