I’ve seen you described as ‘a long-time creativity and innovation practitioner’. Tell us something about your background; how long have you had a passion for innovation?
Arun Prabhu: I started my career in advertising as a copywriter in Bombay, and did that for five years. When I arrived in England looking for a job, I came across an innovation consultancy. I found them by mistake, so I kind of fell into the innovation game by accident.
I enjoyed working with different companies around the world on different innovation projects – companies such as Nestlé, Coca-Cola and Unilever – working with innovation or brand teams. I enjoyed that, but something was missing, and that was the sense of accomplishment from owning a project and bringing it to life myself.
In an innovation consultancy, you get involved in different stages of the innovation process, but it wasn’t usual for the company to keep the same innovation agency throughout the whole process. Some of the projects never saw the light of day, but even if they did you could never claim it was your project – it belonged to the client. So I was missing that sense of accomplishment and that brought me to Arla Foods when they were looking for an innovation manager.
I knew it wouldn’t be plain sailing, yet I wanted to have the challenge of pushing ideas through a corporate system. Clients used to talk about the difficulties of working through all the various parts of the corporate chain.
Tell us why innovation is so important, especially in dairy.
Prabhu: 30 to 40 years ago, in the UK, it was normal to receive your milk on the doorstep from a milkman, delivered in a glass bottle. Over a period of time, with the growth of supermarkets, people changed their shopping habits and the need for milk deliveries at home – daily – changed. If the dairy industry hadn’t embraced that change, consumers would have found another solution. As the needs of the consumer evolve, so the products and services from dairy companies need to evolve.
Some experts tell us that innovation is just as important, if not more so, during a recession. Yet the tendency is to cut NPD in order to save money. What’s your message on innovating during recession?
Prabhu: I think there are five key tips for working in a recession. In fact, I believe they’re good practice even if you’re not in a recession. The first one is focus on the consumer. If there’s a strong consumer need that’s not being met by any other provider, you’re already ahead of the game.
The second one is to prune the innovation portfolio. I read of companies that have innovation portfolios of 80 to 100 projects. That’s madness. A system can’t cope with 80 innovation projects, and I’m talking about game-changing projects, not just flavour changes. Projects that have a lot of risk but will also have a lot of impact. You need to prune those down to half a dozen to a maximum of 20 or so, depending on the size of your company.
The third is to align with the needs of the business, and this is especially important during a recession. We have our strategy that we announced about two and a half years ago when the new leadership team came in. One of the rungs of that strategy is to build platforms for growth and development, and innovation is very much a part of that.
In a recession, our strategy is still holding solid, yet we need to understand that the short-term goals may change, and we need to adapt what we do to the needs of the business. It may be that the company doesn’t need innovation but needs renovation or rejuvenation of existing brands, but that’s also the job of the innovation team; it’s not only about NPD.
The fourth one is adding value to all people in the value chain, and the four key stakeholders that we’ve identified are: the end user and the shopper (not always the same), then the customer (in our case the retailer) and finally ourselves. If you have a proposition that’s adding value to all these four stakeholders, then you’re on a strong wicket.
Number five is about attitude and engagement with the wider business. I’ve worked with innovation teams that don’t like to share their ideas with the wider business in the early stages. They work in secret before they reveal their invention and, in my experience, that’s often too late. They haven’t brought people onboard, and people get scared of new stuff.
If you engage with the wider audience, and this includes customers in the supply chain and other parts of your own business, you’re able to address concerns early and bring people onboard early, so they feel a part of it and you don’t get too much opposition later on.
You’ve been described as being ‘guilty of launching Lactofree’. Tell us something about how that came about.
Prabhu: Lactofree was very much about tracking new territory, drawn from an understanding of consumer needs and a new technological breakthrough.
When I joined Arla in 2004, we looked at the dairy market in the UK and found that there was a gap in the market for a dairy-based lactose-free drink. We had looked at what was happening in the US, because a lot of trends seem to start in California, move east to New York, then cross the Atlantic into the UK and on to the rest of Europe.
Around this time, there was a significant lactose intolerant market in the US and we believed that the UK was ready for such a market and that was where our idea was born – looking at a category and the opportunity from a new technology that we had developed. This had allowed us to create a lactose-free milk that had virtually the same taste as standard fresh milk.
We needed to test our hypothesis and we looked at various sources of data that suggested that, in the average European population, between 7-15% of that population is lactose intolerant. Among some ethnic minorities such as Afro-Caribbeans, it’s about 75%, and among Asians 90%.
That was what the data suggested, but it wasn’t what the reality demonstrated to us. We went out to speak to people and there was low awareness of lactose intolerance. People were subconsciously dealing with it. Some had learned to live without milk or had switched to soya drinks.
We spoke to soya consumers and found that, at that time, 20% were drinking soya because they were lactose intolerant. That suggested to us that 20% of soya consumers could come back to cow’s milk if we had a suitable product. This research gave us an idea of what the size of this opportunity might be.
So we knew there was a gap in the market. Our next step was to create the brand. When we thought about what to call it, Lactofree was the first name we came up with. We came up with others, but when they were all put to consumers, Lactofree came out on top.
The pack design came from looking at the supermarket shelves and the milk fixture, and discovering that the milk alternatives looked much the same. Soya couldn’t claim to be milk, but they had to make it look like milk, so they had this white liquid pouring shot. No one had any pictures of cows and we wanted to tell consumers that this is a cow’s milk product and it’s lactose-free, and that’s what drove the design. People don’t spend too much time looking at packs on-shelf, so we have to almost ‘jolt’ them, and we felt that the cow design did that. Once we had grabbed their attention, the name gave them the clue to the benefit as well.
How long did it take for this idea to get on-shelf?
Prabhu: About 15 months. Once we’d created the brand, the next step was to engage the retailers and share with them our vision. We got listings in all the major supermarket groups. A slow build to begin with, this wasn’t a brand we had a lot of money to put behind. We didn’t have a huge marketing budget, but we knew there was almost a dual audience: the consumers themselves and healthcare professionals. Our main objective in the beginning was just to grow awareness of this. Once you’re aware of it, once you try it and like it, you’re going to come back to it.
It was a slow build-up for six months, yet you could see the rate of sale-building and the retailers supported us as we tried to build a new category. In about eight months, we had launched a UHT version and then after two years we launched a whole range of extensions, creating a new subcategory in the milk fixture.
How good would you say the dairy industry is, generally, at innovation?
Prabhu: It depends on what the criteria are. If you say does dairy bring out a lot of new products, then yes, I would say dairy is better than average. If your criteria is how many of these stay on the shelf – again, I would say we’re better than average. If you look at the products that have been launched in the US, in Australia, in Europe, in Israel – products that have featured in Dairy Innovation magazine – there are a lot of bright people working in the dairy industry around the world who are pushing the boundaries, looking at how consumer needs are evolving and then meeting them.
I think that sometimes we’re too hard on ourselves because we’re not a funky industry like the technology market. Things don’t always work, but that’s the nature of innovation.
Take a look at the cheese market. You have Cheddar, but you have mature, extra mature, light – that’s all innovation that wasn’t around 20 years ago. There’s a lot of innovation in dairy and a lot of successful innovation as well. We should be proud of it.
Arun Prabhu is head of future creations at Arla Foods UK, home to some of the UK’s leading dairy brands such as Cravendale, Lurpak and Anchor.
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