Recent regulatory rulings against Oatly, who are no longer allowed to call their drinks ‘milk’, might seem daunting for category challengers in the alternative foods space.
However, history and behavioural economics show us that such constraints often catalyse the most innovative brand transformations.
With the right strategy, emerging brands can turn apparent setbacks into powerful market advantages.
The Power of Narrative Redefinition
Humans are, at our core, storytelling creatures. We make sense of our world through narratives, and challenger brands that recognise this fundamental truth can transform seemingly restrictive regulations into powerful differentiation opportunities.
When faced with limitations, successful challengers don’t retreat—they reframe. Every restriction presents an opportunity to tell a more compelling story.
From Replacement to Reinvention: The Art of Strategic Framing
Breaking Free from the Substitute Mindset
The biggest trap for alternative food brands is positioning themselves as substitutes for traditional products. This inherently frames them as second-best—a reactive rather than proactive market position. The real opportunity lies in complete category reinvention.
The Power of Proactive Positioning
When brands define themselves by what they’re not (“non-dairy,” “meat-free,” “alternative”), they inadvertently reinforce the primacy of the original category. This defensive positioning creates a permanent psychological comparison where the alternative is perpetually measured against the “real thing.” It’s a subtle but crucial mistake that keeps innovative products trapped in the shadow of their conventional counterparts.
The path to category leadership requires a fundamental shift in positioning strategy:
Own Your Origin Story: Instead of apologising for being different, celebrate the innovative thinking and intentional choices that led to your product’s creation. Brands like Huel exemplify this approach—they’ve stopped trying to replicate traditional meals and instead proudly champion their role in evolving human nutrition.
Create New Consumption Contexts: Rather than competing in existing occasions, establish unique moments and needs that your product uniquely serves. This shifts the conversation from replacement to revolution.
Lead with Benefits, Not Comparisons: Focus marketing messages on the unique advantages your product delivers, rather than how it measures up against traditional options.
Oatly’s own history provides a masterclass in this approach. In their early days, they skillfully avoided the “milk alternative” trap by building their brand through coffee shops and baristas instead of supermarkets—a channel strategy that emphasised their product’s unique performance characteristics and avoided the problem of where they should be placed on-shelf, until demand was high enough that the supermarkets were incentivised to solve that for them.
Their focus on being the perfect partner for coffee, creating microfoam that baristas loved, and delivering specific technical benefits that resonated with their target audience created a cult following that eventually made supermarket listings a no-brainer for buyers. However, this later became a reputation issue as they grew, and shows that reputation management should be a key factor in your brand development from the start.
Key Takeaway for Challengers: Don’t compete with traditional categories—create your own playing field where you set the rules.
Building Mental Monopolies
When Red Bull invented the “energy drink” category, they created what marketers call a mental monopoly—becoming the default brand in consumers’ minds for a particular need state. This wasn’t just clever marketing; it was a category-defining strategy that offers crucial lessons for modern challenger brands.
The power of mental monopolies lies in their ability to create and own new cognitive categories. Red Bull didn’t just launch a new drink; they built entire new consumption occasions:
- Pre-workout energy boosts
- Late-night study fuel
- Party mixer and cocktail ingredient
- Extreme sports performance enhancer
Each of these contexts created a distinct need state where Red Bull became the automatic solution—not because they were better than alternatives, but because they defined the category itself.
Red Bull shifted the conversation from “carbonated beverages” to “performance enhancement.” This semantic shift positioned them as aspirational and premium, despite—or perhaps because of—the product’s unconventional characteristics. They weren’t competing on traditional beverage metrics; they were creating an entirely new value proposition.
For challenger brands entering new categories, the opportunity lies in identifying and owning unique consumption contexts. Success requires:
- Moment Mapping: Identifying underserved occasions in consumers’ daily lives
- Context Creation: Developing new usage occasions that don’t exist yet
- Ritual Building: Establishing brand-specific behaviours and habits
- Cultural Connection: Linking product use to broader lifestyle trends
The goal isn’t to compete within existing categories but to create new ones where you are the natural leader. By focusing on occasions and contexts rather than product attributes, brands can build unassailable market positions.
Key Takeaway for Challengers: Own specific moments and occasions rather than trying to be everything to everyone.
The Psychology of Defiance in Branding
Psychological research has long highlighted the power of reactance – humans’ natural tendency to push back against perceived restrictions of freedom.
For brands facing regulatory constraints, this presents a unique opportunity to transform legal limitations into powerful emotional triggers.
The Rebellion Effect
Consider Liquid Death’s remarkable success story. By selling plain water with heavy metal aesthetics and defiant humour, they transformed a commodity into a statement of rebellion.
Their success demonstrates a crucial insight: constraints aren’t just creative opportunities—they’re emotional catalysts that can spark powerful consumer connections.
By reframing the restriction as “we’re so unique, they had to invent new rules for us,” brands can tap into a sense of tribal defiance that resonates deeply with modern consumers who instinctively champion the underdog.
Key Takeaway for Challengers: Don’t fight the system—create a compelling story about why you’re different enough to need your own rules.
Conclusion: The Opportunity in Obstacles
What might initially appear as a setback for alternative food brands could well be the spark that ignites the next wave of category innovation. The most successful brands don’t just adapt to restrictions—they use them as launching pads.
For challenger brands looking to follow in Oatly’s footsteps, this ruling presents an opportunity to redefine not just their marketing approach, but the very nature of their category.
In doing so, they may find that the inability to use traditional terminology leads them to something far more valuable: authentic, distinctive brand positions that resonate more deeply with their target audiences.
After all, the most memorable brands aren’t built on conventional category terms. The question isn’t whether alternative food brands can overcome regulatory hurdles, but how magnificently they’ll transcend them.
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