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My take: The ins and outs of innovation

March 19/26, 2018: Volume 33, Issue 20

By Steven Feldman

 

Innovation. It’s more than a buzzword; it’s basically a blueprint for survival in the face of competition. Talk to any manufacturer, and most will tell you their ability to innovate is what sets it apart from the pack. Whether it’s a product like Air.o from Mohawk; a new locking system from Unilin, Välinge or Innovations 4 Flooring; a novel dyeing process; or some new wrinkle in the waterproof flooring category, innovation is truly the name of the game.

It’s a phenomenon not unique to flooring. Every company in virtually every industry must innovate, the success of which is predicated on a company’s ability to convey the benefits to end users and why this innovation truly matters.

I was reminded of this the other day as I was reading an article on innovation in the adult beverage industry. Back in 2013, the vodka category was beginning to go through a real identity crisis. For a while, the major innovation was flavored vodkas. Believe it or not, the first flavored vodka to hit the market was Absolut Peppar in 1986, seven years after the birth of the Absolut brand. But nearly 30 years later, the flavored vodka boom was ending, and vodka companies were scrambling to figure out ways to hold on to their growth and still remain relevant in a marketplace that was increasingly shifting toward whiskey. This sort of parallels carpet’s position as the marketplace had been shifting in the direction of hard surface since the turn of the 21st century.

Grey Goose was one of those brands that was really trying to navigate these changing vodka waters. In 2013, Bacardi, which owns the Grey Goose brand, saw a 5% decline in sales. Part of this falloff was attributed to Grey Goose’s decision to not chase the flavor trend too hard, but a more significant factor was unexpected competition from non-premium brands like Tito’s Vodka, which took significant share away from premium players like Grey Goose. For our industry, the parallel could be Royalty Carpet Mills, which saw its market share erode in the face of competition from new mills like Engineered Floors, Phenix and Lexmark Residential, to name a few. Royalty did not chase the hard surface business, either.

The problem with the vodka category, and its players, was it had enjoyed such effortless success for decades with very little need for innovation. Sort of like carpet not facing any appreciable hard surface competition until the mid-1990s, when laminate hit the scene and hardwood and ceramic became more readily available to the masses. While carpet was not going to lose its dominance to any one hard surface category, the landscape was clearly changing, and mills really had no maps to navigate the road ahead.

What Grey Goose did with VX was akin to what Mohawk has successfully done with Air.o, which looks and smells like carpet but is billed as Unified Soft Flooring. Grey Goose VX isn’t technically a vodka: the Alcohol and Tobacco Tax and Trade Bureau slapped a “spirit drink” classification on the brand and bottle. Grey Goose VX is essentially Grey Goose vodka finished with a hint of cognac. The bottle does disclose that it’s a blend of 95% vodka and 5% cognac, the same ratio that’s common with spirit whiskey.

Grey Goose VX infuses some of the flavors that cognac offers without fundamentally disrupting the vodka experience. Sort of like Mohawk improving some of the attributes of carpet (health, installation, etc.) without disrupting the carpet experience.

The important thing to keep in mind with any innovation is pricing. The end user must see the value. The big problem with Grey Goose VX when it launched was the price. Given that Grey Goose vodka typically sells for around $30, the leap to $75 a bottle for Grey Goose VX was pretty dramatic. It begged the question, “Why not spend the money on a good cognac instead?” Once ultra-premium vodka leaves the $40-$50 price point, there’s a real question over what you’re really paying for. We saw that with laminate not too long ago. As manufacturers innovated to improve style and performance, the price could reach a point where the consumer could purchase real hardwood.

Innovation is a requisite for success. But it must be well thought out and provide a solution—at the right price.