Brand 2.0 and Beyond:
The post Covid opportunity for consumer brands
This blog is based on our 3rd session of Guts Glory & Story – The interview with Kanwal Singh – MD and CEO of Fireside Ventures.
Some additional inputs have been added based on our own research as well, but the piece broadly reflects the content extracted from the rich conversation.
Link to the recorded video is at the bottom of the page.
The case for brands 2.0: Disruption of media and distribution
In erstwhile years, the darling of all campuses was the FMCG sector. And within the FMCG sector were the usual favourites – Hindustan Levers, Procter & Gamble, ITC, Nestle etc. These were the FMCG behemoths having a slew of brands which were literally household names. Their business empire was impenetrable – standing on the citadels of deep distribution and big media. Both these citadels needed scale. All of them boasted of deep distribution and deep pockets to afford the so-called ATL or Above-the-line advertising which included television commercials -the iconic 30-second spot plus radio, outdoors and print. And the huge investments needed for both kept the business well insulated from newer entrants.
About 10 years back though newer developments began to disrupt the order of things. E-Commerce came into play with the Rise of Amazon, EBay, and later Flipkart and many more similar players. And there was a rapid rise in new media like Google And Facebook, followed by other platforms. The citadels began to have cracks and the FMCG opportunity was open for democratization. The most important development was the shift in consumer behavior. Consumers were looking at choices that reflected what they cared for. They were not happy with cookie-cutter solutions anymore. Here is where new-age brands came into play. Brands that were born out of a passion for a space that reflected consumer tastes and preferences and which would deliver directly, bypassing the conventional distribution channels through media that was not so expensive at all. Brands like Paperboat etc were the early ones that took advantage of this trend. Other examples are brands like Epigamia, Pepperfry, Urban Ladder, Licious, Bombay Shaving Company, luggage brand Away and Wingreens amongst others.
Covid: The Turbo button
While this shift to new age brands was already work-in-progress, pre-COVID, COVID only acted like a big turbo button to speed dial the trend. COVID accelerated the adoption of digital media. With touch and feel out of the way, going to digital channels even for the most basic needs became the order of the day. Even senior citizens started becoming friends with digital transactions, payments and e-commerce. On the other hand, digitisation was no more an option even for smaller hyperlocal brands. They also were forced to jump on the bandwagon. Local grocers were accepting digital payments, accepting orders on WhatsApp and got comfortable, not depending on the physical shop. The digital playbook got a huge boost. Direct-to-consumer is now no longer avant-garde. And now there is a third trend that is going even beyond the playbook of brands 2.0. And that is the rapid digitisation of another category of brands that were into services.
Content, Community and Commerce: The new Covid-sponsored opportunity
Take the example of some brand which ran physical classes at multiple locations – Sarva – the yoga studios, a Fireside investment is a case in the point. The business was doing well and then suddenly COVID struck and business overnight came to zero. The brand rapidly rushed to digitisation of its classes creating content and digital experiences online. Right from meditation, breathing, pranayama to asanas – there was content now that could reach anyone without the limits of geography. Sarva is now doing 3 times the volumes as compared to the pre-COVID period. We are sure there will be more examples in other domains. Sarva is now looking at billion-dollar businesses like apps like Calm and Headspace. The higher e-commerce opportunity should be used by traditional experiential brands to create content, community and digital experiences to drive robust commerce.
Bucking the discounting trend:
The important part of the journey of brands 2.0 is that they break the misunderstood perception about online brands being cheap and discounted. As a matter of fact, because these brands are crafted on a well-understood niche, they tend to satisfy consumer needs more intimately. They tend to pay attention to what consumers are saying, have a dialogue with them, are conscious of packaging thus creating intimate relationships. They are therefore a little more expensive. Licious, Vahdam Teas are examples of brands that are not built on the ‘cheap’ premise. Most of these brands live on consumer reviews and have really high ratings. These ratings, reviews from influencers and customers alike enable them to charge a premium to their offering.
Brands built for the Agile World:
Brands 2.0 are not built on the old world of marketing – depending on the monolithic consumer research belted by a big research agency which led to a big TV commercial on all big TV channels followed by front-page ads, Instead they have a constant dialogue with the customer. They invest marketing money through A/B tests in an agile manner constantly optimizing the message, tweaking every iteration to pack in more bang for the buck. They use performance marketing, live and breathe data metrics and use these metrics to constantly fine-tune marketing, product SKUs, product iterations and also their service. They work with bloggers, influencers, reviewers and even collaborate with their customers to make this intimacy even more pronounced.
The growth rate of brands 2.0 is rapidly accelerating:
The best part of Brands 2.0 is that the time taken to reach an ‘X’ revenue figure is decreasing every passing year. For instance, it took Paperboat 10 years to reach an ‘x’ revenue but it took Epigamia just 7 and Licious just 3. And all of this is happening at much lesser investments. And this is all thanks to an increased consumer openness to experiment, faster digital adoption and democratisation of the media opportunity. New players thinking of launching consumer brands must capitalise on this virtuous cycle.
New Covid Niches for upcoming ideas for consumer brands:
Post-COVID, apart from massive digital adoption, there have been huge shifts in consumer behavior. A lot of these changes might be here to stay. These changes are creating various niches for completely new business ideas. Here are some of the niches that COVID is creating – Health – People are increasingly conscious of health and immunity – opportunities for pharma, beauty, skincare, and food products that can capitalise on this and build products that can address it. Work from Home: Opportunities for technology products that make working at home easier – ergonomic furniture for home offices, headsets, connectivity solutions, work from home apparel (WhyNot!), physiotherapy sessions for those strained backs from long working hours, yoga and mediation sessions, workouts at home etc. Food: Increase in-home cooking, ready mixes, sauces, exotic ingredients, cooking apps, recipe apps, food delivery brands, small specialty restaurants, tiffin services etc. Content and Learning: With so much time being spent online, all kinds of learning will move online – right from your child’s learning to hobby classes for the wife to executive career-advancing learning to spiritual sessions for senior citizens Entertainment: There has been a massive upsurge in Netflix and OTT usage, and all ideas around home entertainment, gaming, e-sports will see a massive surge. There will be opportunities for stand-ups, artists to build smarter solutions for their audiences. Protective Gear: PPEs, gloves, masks, sanitizers, air purifiers and all kinds of brands that will offer high protection. Pet care: One of the categories that experienced a surge in spends in India is petcare. This will be one domain to see smarter brands to emerge. These are just some examples. As we uncover more stories, more such niches are coming forth.
New age Consumer brands are built on passion:
New age consumer brands are not built on stacks of statistical analysis, but rather a passionate entrepreneur excited about a niche he wants to fill. It could be a passion to take yoga to every home or a niche to provide a clean sanitized and hassle-free way to buy meat. These things can’t be done while doing a full-time job, You have to be all-in, and fully committed. It’s only when you take the risk, that an investor will put in money. And in some cases, you will go a long way without a VC investment.
Lastly, always remember Valuation comes only if there is Value:
A clear clarion call is – Forget valuation – Focus on creating value.
If you create value consistency the valuation will come.
For the full interview, click here..
– Sangram Surve
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