Technology-powered innovation

We all know its getting harder and harder to differentiate. And those nice, friendly "partners" in the big supermarkets will copy your latest product innovation faster than you can say "And by the way we’d like another 5% points of margin or we’ll de-list you". This limited and shrinking "window" of innovation advantage vs. the retailers is one of the key arguments of the "emotional branding" brigade, as typified by Saatchi’s Lovemarks concept.

Well, another way of looking at this is to for brands to raise their game on innovation, rather than giving up on it and hoping to seduce the consumer to stay away from own label by relying on emotional "sizzle". It was the recent post I did on Nike + iPod that got me thinking about this…

One great example is the phenomenal success of Dowe Egbert’s joint-venture with Philips to develop the Senseo coffee machine system. This machine uses single-serve pouches that look a bit like teabags to make an espresso or latte at home. In the first market where Senseo was launched penetration is now at a mind-boggling 40%, 4 years after launch. And 30% in Belgium. That’s 1 in 3 consumers who have been upgraded to a whole new and more premium experience that’s much harder for own label brands to copy (though I’m sure they’re busy trying to copy the pods). Sure, this might impact on sales of instant coffee, but the new sales will be more profitable. And, its a way for coffee brands to fight back against the growth of coffee chains like Starbucks, by making the at-home drinking experience more exciting.

The one issue with the Senseo launch is whether they been fast enough to roll out. For example, in the UK Kraft have launched Tassimo in response not long after Senseo, and Nestle are now launching a more accessible, mainstream machine called Dolce Gusto to complement their upmarket, super-premium Nespresso line. We’ve got one of these ones, which are very snazzy. The beautiful little capsules are almost jewel-like, and ordered online or in the chic Nespresso boutiques like the one near the Arc de Triomphe in Paris. This works out at about 30p for a single shot, or 60p for one of my home-made lattes with an extra shot! This compares to £2.44 for 100g of Nescafe’s (already premium) Gold Blend instant coffee.