Disruptive Trends: The Rise of Craft Branding
"Small batch." "Homemade." "Artisanal." Specialty goods with labels like these are taking up more and more of the market share (and space at Expo East and West) as consumer demand for craft brands grows.
There's no cut-and-dried definition of craft branding, but in general, it refers to products that aren't mass-produced. They often emphasize values such as green practices, social responsibility, and healthy, wholesome ingredients. Many use personal stories in their marketing, thus appealing to shoppers' emotions and identities rather than their wallets. If you think that only appeals to a niche demographic, think again: craft brands are seriously disrupting the market.
Boston Consulting Group calls this emerging dynamic "David and Goliath.” To put it simply: "Small brands are stealing share from big brands." Thanks to craft products, big-name companies whose profits have been on the rise for decades are now beginning to see a decline. Between 2012-2016, 85% of the biggest companies in consumer goods saw "a decline in either revenues, profits or both…In the US, small brands are 65% more likely than large brands to outgrow their category, according to our analysis," writes the management consulting firm Bain & Company.
Research shows that shoppers want to buy brands that support their values (Nielsen). Many craft brands market those values heavily, thus calling out to their target audience and setting them apart from mainstream brands. This appeals especially to customers who shop by specific filters, such as:
Diet, such as keto, paleo, or vegan
Health-related, and/or ingredient-specific, such as dairy-free, gluten-free, or low sodium
Certifications like kosher, organic, or non-GMO
Social impact, often using labels such as Fair Trade or Equal Exchange
Many of these labels, once considered “niche,” are skyrocketing in popularity. For example, gluten-free products comprised a $7.59 billion industry in 2018, (up from $5.94 in 2014), and is expected to “expand at a CAGR of 9.1% from 2019 to 2025” (Grand View Research). In 2015, “sales of consumer goods from brands with a demonstrated commitment to sustainability [grew] more than 4% globally, while those without grew less than 1%,” reported Nielsen.
Shelf space – who needs it?
Another cause for the growing popularity of craft products is that they can forego the age-old battle for shelf space.
One reason for this is simple: the internet. "The rise of technology [has] lifted the massive barriers to entry faced by small brands attempting to reach customers," writes Ben Zifkin in The Rise of the Craft Brand: Why Small Is Going to Be Huge.
But that’s not the only reason. Here are three additional ways craft brands sell their products without the help of traditional grocers:
Pop-up stores. Many entrepreneurs set up pop-up stores that they can advertise on social media, drawing customers to a novel, temporary location such as sidewalk space or a food truck.
Online stores. Many craft brands sell their products online. This can take several forms: a simple online store; subscription services, like the NYC-based ice cream company MilkMade; or memberships, like the zero-waste eCommerce company Thrive Market.
Farmer's markets. In 1998, there were fewer than 3,000 farmers markets in the U.S.; in 2017, there were almost 9,000 (USDA’s Agricultural Marketing Service). At farmer's markets, big-name brands are nowhere to be seen; local, homemade, and home-grown goods abound.
What can a grocer do?
Craft brands have penetrated the retail market, and that's not likely to change any time soon – so grocers and retailers should embrace the trend and capitalize on it where possible.
The most obvious way to do that is to offer local and craft goods, perhaps in a devoted section of your store, as many grocers have already opted to do. Other retailers are getting in on the craft action by inviting small brands to do pop ups in-store. This not only benefits the brand by extending their reach, but also allows the grocer to gauge interest for new products while appearing supportive of the local food economy. Plus, many shoppers love to sample new foods and meet the people behind the brand.
In today’s omnichannel world, it’s essential to offer those products online, too. You can do this easily via an Endless Aisles Marketplace, which expands the scope of your inventory by offering products from trusted third-party sellers - like local, craft, and specialty brands.
When you offer craft brands, don't be shy – advertise that your business supports artisanal suppliers. Shoppers want to see stores as well as products that are socially responsible, so use that in your marketing. You might draw in some new customers.
To learn more about how locai can help you incorporate the latest consumer trends into your business, contact us here.