Innovation: Embracing the superpower of small and mid-sized entrepreneurs

Innovation can feel intimidating, especially when entrepreneurs are uncertain whether the risk of change will yield the benefits they seek. 

FCC’s newly released Innovation Guide: Success Through Innovation, leads small and medium-sized food and beverage processors through a series of questions towards successful innovation. 

The need for market innovation in the food and beverage sector has never been more critical.

The need for market innovation has never been more critical. Despite this need, Mintel, a market research company, reports that the rate of new product innovation in the food and beverage sector is down almost 50% since 2007. The industry faces challenges such as margin compression, global disruptions and labour shortages, amplified by economically strained consumers increasingly selective about where they spend their money. 

Sector strength 

Still, Canadian food and beverage processors are both resilient and adaptable.  

 “All the food and beverage manufacturing companies, from a single employee operation down to the very large companies, are all contributing to the success of this very important industry in Canada,” says Craig Klemmer, Manager of Thought Leadership at FCC. “In Canada, we're seeing a shift in the conversation around food manufacturing. It's no longer just a manufacturing sector in Canada, but it's evolving to be part of our national security and the food security conversation.”   It’s simultaneously an exciting and unpredictable time to be a small and medium-sized food and beverage processor in Canada. Strategic innovation is vital to ensure that the investments companies make respond to both consumers’ needs and their markets.

Demystifying innovation

Innovation can unlock barriers, drive overall company growth and strengthen a brand’s connection with its consumers. Often the smallest changes can have the biggest effects, meaning innovation doesn’t always need a massive change or invention.   The key to unlocking these barriers lies with understanding your consumers. Consider the following to gain valuable insight when you develop innovation in your brand: 

• what type of struggles do consumers have with what you produce, whether it’s finding your product, preparing or eating it? 

• what prompts consumer reactions such as pleasure, uncertainty or annoyance? 

• what is the impact of changing lifestyle trends on your product and what consumers will continue to purchase? 

Adopt the consumer purchase mindset

Jo-Ann McArthur, President of Nourish Food Marketing, says investing the time to recognize the process consumers go through when making purchase decisions can help food and beverage processors identify their strengths and the areas they need to alter.  “It gives you a practical roadmap, including identifying where there is an opportunity to remove friction or to create more delight,” McArthur says.   Understanding the critical moments in the purchase decision process can help ensure that the product and messaging address the consumer's needs. These moments include:  

Research and discovery 

Consumers frequently check out your products online, either through search engines or social media. This pre-first contact with your product will determine how the rest of their interaction with your product goes. 

“With the internet all of a sudden, consumers were discovering products in different ways, whether it’s scrolling through TikTok, AI, chatbots, or as simple as going onto an Amazon review site,” McArthur says. 

First encounter 

When the first in-person interaction with your product happens, it’s the time when consumers make their initial judgement and decide whether to purchase your product or not. Packaging, branding and product presentation are important here. 

“If you really pinpoint those moments, that's where you can take your limited budget and time and really focus on the areas that matter most for that product,” McArthur says. Strategic innovation can help ensure your product stands out from the competition on the shelf.  

Experience and loyalty

Once a consumer experiences your product, they’ll form their opinion – from preparation to consumption. This will help them decide whether to become a repeat customer and their level of loyalty. Product quality, customer service and brand experience are all key at this point.  

SME superpower

Small and mid-sized entrepreneurs have several strengths that make the path to innovation simpler than for larger companies. One of their biggest assets is a close connection to the end consumer.  

Farmers' markets are often the first place to launch new products. These underrated spaces can serve as mini test kitchens, providing entrepreneurs with opportunities to engage with their consumers and gather feedback. 

“I often advise clients who grow to stay and keep that small place in your farmers' market,” McArthur says. “You get to see who your consumer is, you get to test out your pricing. It’s kind of a living laboratory.” 

Smaller processors can also have the freedom to experiment more and take more risk, including trying new flavours or entering niche markets. If they don’t work, the smaller company can shift more easily, as they are more agile and responsive.  

“We call it a perpetual beta,“ McArthur says. “You’re constantly trying and optimizing. Big corporations cannot do that.”

Success through innovation

From new products to process improvements, innovation can take many forms. Get practical ideas and resources in our guide for small and mid-size food & beverage businesses.

Explore the guideExplore Success Through Innovation guide

Article by: Anne-Marie Hardie