The Growth of Microbrands

Opportunity Knocks for the Printing Industry

Microbrands or Direct-to-Consumer brands (DTC for short), have traditionally been recognized as specialized businesses serving specific geographic areas or niche markets. With the continued expansion of e-commerce, however, microbrands are now offering significant competition to larger and more prominent brands. As a result, numerous opportunities are developing in the printing industry in the form of labeling, packaging and out-of-home promotional applications.

Select microbrands have hit it big, such as Casper Sleep, with North American Sales in excess of $400 million annually. Regardless of size, however, these brands share several common characteristics that distinguish them from the traditional big brands:

E-commerce: The sales of microbrand products are predominantly online, supported by in-store showroom presence. For example, a beer brand may have a tap room, or a cosmetic brand may have a pop-up booth within a clothing store.
Consumer targets: Microbrands over-index in the consumer goods sector; however, other market segments are starting to see microbrand penetration as well.
Marketing: The audiences of microbrands are reached primarily through social media and digital marketing efforts, as well as interactive events such as pop-ups and tastings.
Size: Business sizes are typically less than $10M in annual sales, although there are exceptions as noted above.

Customer Experience Redefined

Microbrands share another significant feature - offering unique and personalized customer experiences. In fact, microbrands are redefining the customer experience by recognizing that customer service is much more than simply transactional. Due to their small size, owners are much more accessible to their customers, enabling them to provide feedback quickly and directly. Furthermore, microbrands typically share the inspirational story that sparked the brand. Like-minded consumers embrace the passion and become brand loyal customers through shared values. Through this relationship, customers become the brand ambassadors via their engagement on social media and by word of mouth. Most microbrands recognize and embrace the relationship, and their customers are an integral part of their marketing strategy.

Opportunities for the Printing Industry

Personalized interviews with three microbrands surfaced some key areas where the printing industry is falling short in supporting them. Although their products are diverse, all three brands shared common challenges that can be resolved by observant print providers that are willing to serve as a resource of knowledge as well as provide print services. The three main areas include:

Education. Not all microbrands are thinking about product promotion beyond e-commerce, and in many cases, they don't see the value of printed materials, believing them to be too large an investment. Numerous opportunities exist for the industry to demonstrate how print can amplify a brand’s digital presence and how printers can support overall business growth. For example, Shaidzon Beer Company, a Rhode Island brewer of exceptional craft beers, has struggled to build brand awareness in its locale. FLEXcon and Shaidzon collaborated to brand the FLEXcon trade show booth at the recent Printing United show, and Shaidzon is now in the process of establishing a physical presence in their area. “We were unaware of the myriad options available in pressure-sensitive to build awareness for our brand,” says Chip Samson. “Not having a starting point on how to approach things is a real challenge.”

Simplification of the Process. The same knowledge gap regarding wide format graphics mentioned above exists regarding narrow format labeling and packaging and how they can drive sales through eye-catching packages produced with metalized or holographic label materials or convenience features such as resealable packaging. Microbrands need help navigating the choices. They have needs around package design, sourcing and compliance which align with their brand purpose. For example, HamdAllah Olona, the founder of GoodieKrunch, has struggled with sourcing biodegradable packaging materials. She asks, “If I utilize a packaging material made with rice, what guarantee do I have that the rice won’t leach into my product?” A print provider that can research and source options is critical.

Furthermore, the ability of a printer to provide the right product for the application method is necessary, so collaboration with the brand to understand their needs as they establish themselves and grow is essential. For example, they may be hand-applying labels now while demand is small, requiring a thicker gauged film and/or liner and an adhesive that can be repositioned, but as business grows and they scale up to labels that will be auto-applied, their label specifications will change. Your ability to source and print a product at all stages of their growth, and guide them through such transitions, is imperative and will build trust over the long run.

Invest in true partnership. "Microbrand” does not equal “transactional.” These brands often seek true, consultative partnerships with organizations that recognize their potential and want to help them achieve it. This includes being transparent and being comfortable with saying, “I can’t help you with that piece of the project, but I know who can.” Brenda Feldman of Inchbug was very appreciative when a potential vendor she spoke with at a trade show did that very thing.

Openness like this shows that you really care, and it won’t be forgotten. A microbrand may need only a few signs right now, but as your collaborative efforts yield business gains, the level of business they bring to you, as well as their loyalty, will only grow. Strategic relationships with your suppliers can be integral to adapting to your customers’ changing needs. A trusted supplier can not only scale production as demand changes, they can collaborate with you to problem-solve technical challenges as they arise as well.

Telling Statistics

Still not convinced? The numbers don’t lie.

E-Commerce continues to grow as a percentage of total retail sales – from 11.5% representing $390B in 2016 to 14% ($517B) in 2018.¹

Smaller players made up 97% of market growth in the consumer goods sector in 2016. The top 25 brands held 45% of category sales but represented only 3% of the growth, while roughly 20,000 small brands represented 49% of category growth.² Furthermore, microbrands are expected to continue growing in popularity.³

Craft beer sales are booming. Smaller brands experienced 2.5% growth ($4B in 2018 U.S. sales) while domestic beers declined 4.2% during the same time period.⁴ There is a large concentration of craft breweries in the northeast, the Great Lakes region and the west coast.

¹ Source: Internet Retailer, U.S. Commerce Dept.
² Nielsen – June 2016
³ Deloitte - 2019 Consumer Products Industry Outlook
⁴IRI

The fact is, microbrands have become a force to be reckoned with for traditional brands, which means they offer significant opportunity for the printing industry - whether you print labels, packaging or large-format graphics. Our recommendation? Get in now. Form those relationships. Be a source of knowledge and technical expertise. Your efforts now could mean big business down the road.

Case Studies – Common Traits and Unmet Needs of Microbrands

See a Need, Fill a Need

In most cases, microbrands have identified a specific gap in the marketplace and developed products to fill those gaps.

GoodieKrunch: Founder HamdAllah Olona realized that there were no granola products on the market that were gluten/grain-free, vegan, and Fair Trade. Inspired by a recipe passed down by her grandmother in West Africa, HamdAllah began producing this “deliciously crunchy coconut snack” at home and distributing it at tasting events. Since starting her business in 2018 and now in a commercial kitchen, HamdAllah has enjoyed 64% growth year-over-year. She says that the most common reaction from folks tasting GoodieKrunch for the first time is, “Wow, what is this?!” HamdAllah’s unmet printing needs include assistance with sourcing biodegradable packaging materials as well as product promotion, such as signage.

Inchbug: As a young mother, Brenda Feldman found that there was no easy way to label her child’s items for daycare – bottles, snack containers, clothing, etc. Inks wore off and hand sewing labels into clothing was time-consuming. So, she set out to create organizational tools and labels for parents. Her first product was the Orbit Label^®, a personalized, non-adhesive, reusable label for bottles and sippy cups. Since then, Brenda has developed a variety of pressure-sensitive labels, including allergy alert labels, date stickers, clothing tag labels and more, and she is enjoying double digit growth year-over-year. Inchbug customers say things like, “a gift that lasts for years through many stages of a child’s life,” and “These were the perfect solution.” Now that’s filling a need! Brenda still struggles, however, with finding manufacturers who will work with her in a consultative fashion to produce her products, the packaging and promotion.

Shared Values and Interests

Common interests - whether they be global warming, supporting veterans, or simply seeking the perfect beer - have a natural tendency to bring people together especially when they’re centered around a meaningful goal. When a brand’s purpose aligns with that of its clientele, and the owners personally connect with their customers, deep relationships can be formed. There’s nothing quite like feeling that you know, and have something in common with, the proprietor of the business.

Shaidzon Beer Company: Chip Samson and Josh Letourneau began sharing their passion for exceptional beer with the world in 2017 and have experienced steady growth. In addition to making excellent beer, they help stimulate the local economy by sourcing ingredients such as hops, coffee and sage from growers in their area. This is important to many of their clientele who enjoy a tasty brew and conversation with Chip and Josh in the Shaidzon tap room where discussions often center around the beer and the space. Customer opinion is of significant value to these two brewers, and the interest they show in their customers’ thoughts and ideas allows clientele to experience a sense of belonging that keeps them coming back and has them promoting Shaidzon to their friends. One goal for Shaidzon right now is to establish a better physical presence in their local area, but they’re struggling with the myriad of options available.

Think about whether you may be in a position to serve as a resource to microbrands that may be seeking support. The statistics support that microbrands are a growing source of business for printers.

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