Here’s What It Really Takes to Create a New Market Category

Most companies are built within existing markets. There’s a defined financial sector, a known customer, and a clear set of competitors. From there, success becomes a question of differentiation, with better pricing, better product, better execution.

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But other companies attempt something more difficult: building a market that doesn’t yet exist. Which, if you think about it, most categories within a sector that you see today didn’t exist prior to its invention. Soda wasn’t soda. Energy drinks weren’t energy drinks. Even entire industries like the internet or artificial intelligence began as ideas people didn’t yet have language for.

That’s the real challenge of building something new. Rather than just creating the product, it’s creating the context around it. It’s why so many new ideas are introduced through shorthand. “It’s like Uber, but for X.” “It’s Airbnb for Y.” These are necessary comparisons that give people a bridge from what they already understand to something they don’t.

Category creation is building that bridge. This article is informed by insights I learned from Stephen Ellsworth, whose prebiotic soda brand Poppi helped redefine the modern beverage aisle, and Tim Richards, who is attempting something similar with fermented snack foods through his company Philosopher Foods. Their experiences reveal a consistent pattern: new markets don’t emerge when something novel is created; they are built when companies strike a perfect balance between offering something new while being easily understood.

The Illusion of the Open Market

In the finance world, category creation is often associated with what’s known as blue ocean strategy—entering an uncontested market with little to no competition. By contrast, red ocean markets are crowded, competitive, and saturated.

In theory, blue ocean sounds easier. In practice, it introduces a different kind of risk.

An empty market isn’t just free of competitors. It’s also free of validation because there’s no proof of demand, no established behavior, no pricing benchmarks, and no data to rely on. Every assumption—from whether people want the product to how much they’ll pay for it—has to be tested in real time.

That’s what makes category creation so difficult. The product isn’t the only thing that’s new. The entire system around it is undefined. There are no comparables , no clear shelf placement, and no shared understanding of what the product even is. The opportunity may be real but it has to be created, not captured.

If the blue ocean strategy were as simple as finding empty space, everyone would do it. The reality is that most empty markets are empty for a reason. Figuring out whether that reason is a lack of awareness or a lack of demand is the real challenge.

That’s why some founders choose to compete in crowded red ocean markets instead. While competition is intense, demand is already proven.

If The Market Can’t Place You, It Won’t Buy You

Before a product can succeed, it has to be understandable. Consumers rely on categories as shortcuts. A drink is either a soda, a juice, or a health beverage. A snack is either indulgent or functional. These frameworks allow people to make quick decisions amid the thousands of options.

And when a product doesn’t fit cleanly into one of those frameworks, it creates friction. Retailers don’t know where to stock it. Consumers don’t know how to judge it. Without those two things, the product rarely moves.

Ellsworth saw this firsthand in Poppi’s early years. Despite strong demand signals, the product bounced across stores—placed next to kombucha, then craft soda, then coconut water, then enhanced beverages. For more than two years, the brand struggled not because people didn’t like it, but because no one knew where it belonged.

Richards is facing the same issue from a different angle. His line of fermented nuts, designed to deliver gut health benefits, doesn’t fit neatly into existing retail logic. In some stores, they’re grouped with functional snacks. In others, they sit alongside raw foods or traditional nuts. Each placement changes how the product is perceived, and ultimately, whether it’s purchased.

The constraint isn’t just conceptual but literally physical. If the shelf can’t understand you, the customer won’t either.

This is where many early-stage failures are misunderstood. When a product doesn’t sell, the assumption is often that demand isn’t there. But in new categories, the issue is just as often positioning. The product may not be wrong. It may just be unclear. And in retail, where speed and familiarity are paramount, confusion is enough to kill momentum.

The Best New Categories Feel Familiar, Not Revolutionary

You may assume that the most innovative products win. But the opposite can also be true. Products that are too new may require significant behavior change and can be harder to adopt and sell.

“Sometimes it’s too revolutionary for where the consumer is at that moment,” commented Ellsworth. He also found that the products that succeed are often only “15 or 20% better than status quo.” That philosophy shaped Poppi. Rather than eliminating sugar entirely, Ellsworth said they were willing to include four to five grams per can.

Poppi succeeded in part because it didn’t ask consumers to abandon soda entirely—it offered something familiar, just slightly better. Instead of replacing soda, Poppi reframed it. It looked like soda, tasted like soda, and fit into the same daily habit, but with less sugar and added functional benefits. The improvement was meaningful, but not disorienting.

Richards, on the other hand, is introducing something less familiar, which requires more education and a greater shift in consumer behavior. Fermentation is widely understood in foods like yogurt or kimchi, but applying it to snack nuts introduces something unfamiliar. To succeed, the product can’t feel like a departure from snacking—it has to feel like a better version of it.

From a financial perspective, that difference matters. The more behavior change required, the slower adoption tends to be, and the more capital and time are needed to support growth. The most successful businesses don’t force change; they bridge the gap between what consumers do today and what they’re willing to do tomorrow.

That tension becomes even more pronounced when price is involved. Products in new categories are often more expensive because of better ingredients, more complex processes and smaller scale. Poppi launched at a premium to traditional soda. Fermented nuts are inherently more costly to produce than standard snack nuts.

Which means consumers aren’t just being asked to try something new. They’re also being asked to pay more for something they don’t yet understand. That’s why familiarity matters so much.

What You Compare Yourself to Defines Your Ceiling

In established markets, value is anchored by comparables. Real estate is a simple example. A house isn’t priced in a vacuum. It’s valued based on what similar homes in the area have sold for, considering square footage, number of bedrooms and recent comps. Without those reference points, pricing becomes guesswork.

The same problem exists in new categories, except there are no comps at all. For Richards, that means building a narrative from scratch. For example, to estimate his total addressable market, he has to triangulate between adjacent categories—snack nuts, fermented foods, functional snacks—none of which fully capture what his product is.

“It’s a paradox,” Richards said. “You just kind of have to do it and see what happens.”

Even the available data can be misleading. Industry reports often undercount emerging categories because they only track what already exists. In some cases, reported market sizes are smaller than the revenue of the companies operating within them.

This lack of comparables creates a second problem: without a clear category, investors struggle to evaluate opportunity, and retailers struggle to justify shelf space. So, companies sometimes make a strategic decision to anchor upward.

As mentioned, Poppi didn’t position itself as a niche wellness drink. It positioned itself against soda, competing—at least conceptually—with giants like PepsiCo and The Coca-Cola Company. And later, it’s PepsiCo that acquired Poppi for $1.95 billion. Richards is doing the same, aligning his product with the broader snack nut category rather than confining it to fermented foods.

These decisions aren’t just about branding. They determine how big the market appears, how investors underwrite the opportunity, and how much shelf space a retailer is willing to allocate.

Final Thoughts: What Starts Out as Crazy Feels Obvious in Hindsight

At the beginning, category creation rarely looks like innovation. It looks confusing, misplaced, and even a little absurd. People don’t quite get it, because there isn’t anything to compare it to yet.

But building a new category isn’t a single breakthrough moment but a process of iteration and alignment. You adjust how it’s framed, where it shows up, what it’s compared against. Slowly, the edges sharpen, the story becomes clearer and the market begins to understand.

And over time, something shifts. What once needed explanation becomes intuitive. What once felt foreign becomes familiar.

Eventually, the strangest ideas don’t just gain adoption—they become so obvious that people start to wonder how they ever lived without them.

By True Tamplin, Contributor