For European consumer goods brands, achieving ‘the American Dream’ has long been a key milestone. Promising millions of new customers, massive deals and a whole different league of volume and complexity, breaking the US is high on the list of priorities for companies right across the sector. Equally, the opposite is true – China might be the holy grail but US businesses consistently prioritise Europe as a first step to becoming global.
The result of this is symbiotic influence and an exciting and dynamic global consumer goods market in which trends develop fast and markets are consistently disrupted. Few categories demonstrate this better than Beauty, Pets and Drinks, where we’ve seen some serious brand creativity and product innovation over the last few years. But what does this mean for talent? Cracking a new market is no mean feat, and businesses must think carefully about which hiring strategies will allow them to successfully secure market share. Getting it right is critical.
The beauty space is a prime example of cross-pollination between Europe and the US. In the last few years, beauty brands such as Glossier, Milk Makeup and Drunk Elephant have exploded into the European market. Alongside names like Goop and The Honest Company, which promote carefully-curated all-natural products, these businesses have been key drivers of the wellness-based approach to beauty in Europe. In particular, there are lessons to be learnt from US beauty brands about diversification. Glossier’s move from an online pureplay to an omnichannel operator is redefining what customers expect from beauty, and paving the way for further innovation among European CPG companies.
In the other direction, iconic European brands with punchy personalities and smart innovation such as Charlotte Tilbury, Nails Inc. and Tangle Teezer have all successfully made it across the pond. Other highly popular British-bred brands such as Ciaté London, Nails Inc. and Pixi Beauty have also successfully expanded into the US, capitalising on the ‘skincare first, makeup second’ movement shared across both markets.
A similar story can be found in the Pet space. Here, trends from the US are driving rapid growth in Europe, while European CPG brands are targeting the US for global expansion. While Mars and Nestlé still dominate the market with a combined 45% global share, innovative brands are shaking things up on both sides of the Atlantic with new offerings such as personalisation, subscription services and supplements.
In particular, there are key opportunities here for European brands to break the US market, which we are already seeing with Nestle’s recent acquisitions of UK-based brands Lily’s Kitchen and Tails.com. The popularity of the category in America has even given rise to new ways of shopping, with Chewy.com billed as ‘the Amazon for pets’. Looking ahead, it will be interesting to see whether a European competitor to Chewy.com emerges here, or whether the ecommerce giant expands internationally.
US trends are also pouring into Europe in the Drinks category. A year ago, few Europeans had heard of ‘hard seltzers’ (flavoured sparkling water with added alcohol) – but now ready-to-drink (RTD) cans line the shelves of supermarkets, and the UK market is set to be worth £75m by 2027. White Claw, the market leader in the US, launched into the UK last summer and more and more drinks businesses are placing bets on the category, hoping to capitalise on increased demand for low-calorie alcohol alternatives. In December 2020, for example, Molson Coors unveiled its new hard seltzer brand Three Fold, and companies including BrewDog, Kopparberg, Heineken, Smirnoff and Coca-Cola have all developed their own take on the product.
The US is also leading the way in the no-and-low alcohol space, with the segment registering an increase of more than 30% in the US in 2020, boosted by mindful consumers focused on health and wellness. Here, we’re seeing innovation at both ends of the scale, with large global players like Heineken and Asahi diversifying into no-and-low as well as small challenger brands disrupting the market. European startups like Seedlip have capitalised and already made the move into America – and our bets are on the likes of CleanCo and Pentire targeting the US as part of their next moves.
But what does all this mean for talent?
“As brands on both side of the Atlantic rush to secure market share, leaders should assess which talent strategies will work best for their business. Hiring plans will no doubt be informed by the strength of a company’s brand and the saturation of the destination market – but finding the right person to spearhead the move could mean the difference between success and failure.”
As brands on both side of the Atlantic rush to secure market share, leaders should assess which talent strategies will work best for their business. Hiring plans will no doubt be informed by the strength of a company’s brand and the saturation of the destination market – but finding the right person to spearhead the move could mean the difference between success and failure.
In our experience, cultural differences remain the biggest barrier to entry – both from an external customer and internal company perspective. That said, the most success we have seen has been to hire locally. Hiring local talent to lead operations in the new market is often the best course of action, as this person will ‘get’ the nuances of deals in the geography and advise where messaging should be tweaked or offering adapted to suit specific cultural trends or needs.
But how do you bridge the gap between the local customer and the core business where significant cultural barriers exist? Hiring from the destination market is not the only route. Candidates from the country of origin have proven to be just as successful at building the business, providing they have a firm grasp of the new market. The critical upside here is that they will ‘get’ the heart of the brand and how to communicate with HQ. The importance of ensuring brand authenticity, and being trusted by HQ, should not be underestimated.
Breaking into a new market is certainly no easy task. While it may seem like the European and US landscapes have a lot in common, differences in consumer demand and spending habits can act as barriers to success if not properly addressed and understood. Another big mistake is to identify the US or Europe as singular identities, rather than recognising that each is comprised of regions with highly complex and fragmented cultures, laws and consumers.
When it comes to global expansion, establishing the right talent strategy will determine if a brand sinks or swims when making the move across the pond. Who do you think has done it well? We would love to hear…
Scarlett.mayne@thembsgroup.co.uk | Huw.llewellynwaters@thembsgroup.co.uk | @TheMBSGroup