…and I assume you think so too. Unless you deeply understand your consumer, you’ll never successfully be able to create products, brands, packaging or messaging that is truly impactful. Too often, as CPG experts, we begin to believe that our consumer is just like us—same tastes, same lives, and same paycheck. That leads us to to start making decisions with little or no empathy for our true consumer.
Culture Matters is Malachite Strategy’s weekly email newsletter meant to counteract this tendency and keep you in touch with consumer culture. Every week we publish a status report on some of the newest launches in CPG along with a thoughtful and thorough analysis of what this means for your business. Want to apply this type of rigor to your business? Contact Malachite today.
Trader Joe’s has launched Neapolitan Puffs, a chocolate, strawberry and vanilla flavored cereal made with beans and brown rice. Wegman’s, the American east coast supermarket chain, has launched Vanilla O’s and Chocolate O’s cereals made from a mix of garbanzo beans, navy beans and red lentils.
Legumes in cereal are not new. A number of small companies, most notably Love Grown Foods, have been producing breakfast cereals made of garbanzo, lentil and navy bean for several years now. However, with a few minor acceptations, the big 3 (Kellogg’s, General Mills and Post) haven’t shifted away from grains as their main carbohydrate. That’s what makes this move by two retailer brands so interesting.
While historically retailers have used their own brands to copy big manufacturers, those days are ending. Today, retailers are innovating, creating new to the world offerings based on their own consumer insights. For that reason, big cereal companies should be alarmed because, when faced with creating a new breakfast cereal (without the need to utilize existing capital), these brands choose beans over grains. What should that tell us?
Since its inception, cereal has been seen as healthy. Oats, wheat and corn were hearty, wholesome grains that were made easier to eat by breakfast cereal processing. Prior to the 1950’s, most breakfast cereal was just that, cereal grains. However, in the 1950’s pre-sweetened cereal (and its accompanying mascots and bright colors) bifurcated the breakfast cereal landscape into two camps: healthy and fun.
As mainstream grain has become stigmatized and even demonized by recent diet trends, the once noble carbohydrates that make up the base of cereals is now suddenly circumspect. While many cereal manufacturers have responded to this by incorporating ‘ancient grains,’ seeds and nuts into their product, this latest move by private label has got me thinking: can breakfast cereal ever regain its ‘health’ side without jettisoning its stigmatized base?
As cereal sales slip and consumers gravitate toward either indulgence or health, I wonder if breakfast cereal can continue to play ‘both sides of the fence’ by just changing its over-the-top add-ins? If Frosted Flakes (i.e. Frosties) has basically the same ingredients as Corn Flakes, is that sustainably credible? I would contend that major cereal manufacturers need to work harder to drive a serious wedge in their portfolios, separating their healthy and fun sides at the base ingredient level. Legumes, full of trendy protein and nutrients, seems like a smart place to start.
If retailer brands are going to win against big name brands, its on battlefields like this. Unable to upend decades (or centuries) of investment into brand meaning or machinery, big brands might be stuck playing perpetual catch-up to more nimble store brands. However, through bolder, faster innovation, and the development of technological insulation, I believe brand names still have a chance of winning the war.
The Hyper-Real Future
Atomo, an entrepreneurial startup brand out of Seattle, has been fully funded on Kickstarter for their ‘molecular coffee.’ Founded by ‘food scientists, biochemists and entrepreneurs,’ the brand claims they have “reverse engineered’ coffee and can deliver the same flavor and aroma using sustainable, all-natural ingredients.
Keith Belling, the inventor of PopChips, is launching RightRice exclusively at Whole Foods and Amazon. Made from a mix of lentils, peas, chickpeas and a little rice, RightRice turns the ‘empty calories’ of regular rice into a ‘high protein, high fiber, low carb’ powerhouse. ‘For the love of rice, we made it right-er.’
So What? The first time most of us saw CGI being used on the big screen was in the original Jurassic Park. For decades after, CGI allowed us travel to distant worlds, watch our superheroes achieve the impossible, and to bring the monsters of our nightmares to life. In all of that time, we knew it was Hollywood illusion, computer-aided smoke and mirrors. However, we suspended disbelief for the sake of entertainment.
Today, CGI infiltrates everything we watch, most of it in ways we least expect. For example, did you know that many car commercials today don’t use real cars? That just about every furniture catalog is computer generated (>75% in an IKEA catalog)? Or that nature documentaries often get boosted with CGI? Somewhere in our adoption of this amazing technology, we went from using CGI to make our fantasies a reality to using it to make reality fantastical. Just as with perfectly air-brushed models and auto-tuned singers, we’ve developed a taste for a more perfect world than the one we actually live in.
‘Fake food’ started out in much the same way as CGI. Its purpose and motive were usually clear and it rarely was mistaken for the real thing (see Tofurky, Boca burgers, mock apple pie, and sugar substitutes). Today, as with CGI, we are seeing a new breed of faux food that isn’t gaining popularity specifically because of one ethical, health or economic trend. Instead these products are becoming popular because they offer food/beverage that is better than the item they are mimicking or they promise a more consistent result.
For example, unlike real beef, it’s OK to eat an Impossible Burger while its still pink. Even if you cook it longer, its been engineered to stay juicy. The new Just Egg substitute, according to Bon Appetit, creates a perfect French omelet every time—no matter your skill. With Integrated Beverage Group’s chemically perfected wines, you get the taste of the best varietal from the best vintage—at a consistent price point. Similarly, Atomo advertises that their coffee will never have the ‘burned flavor’ that sometimes occurs with over-roasted Starbucks, just great coffee every time. RightRice says their product makes rice ‘right-er,’ improving on the nutrition and is ‘faster (and easier) to cook in a saucepan than traditional rice.’
Each of these brands are breaking ground on a new category: hyper-real food. Always consistent, always the best and always available (i.e. we are at risk of losing many ingredients due to global warming). While currently considered a novelty in the world of food and beverage, I think we’ll see a lot more of them in the future. Just like CGI and air-brushing, once we’ve been exposed to consistent perfection (plus moral, health, or cost benefits), it’s going to be hard to go back to reality (**cough, cough** that would be your product).
The Road More Traveled
Earnest Eats, the California company known for their high protein oatmeals and trail mixes, has launched PRO Toasty, a ‘Pop Tart’-like pastry loaded with 10g of protein (collagen protein and almond butter) and probiotics.
Have you been to the snack bar aisle of a big box grocery store lately? What started out 20 years ago as a sleepy 3ft section next to the cereal is now 15ft of confusion. What diet are you on? What are your lifestyle goals? What activity do you like to participate in? Somewhere in this section is a chewy rectangle with your name on it!
Realizing the need for differentiation and incrementality, manufacturers have tried mini-bars, giant bars, balls, chunks and every iteration of texture you can think of but, in the end, they’re all just snack bars. Some bold companies have attempted protein cookies, and the somehow classier breakfast biscuits, but they haven’t reached the dominance of snack bars. I would contend that moving beyond bars has been difficult because all of the other forms have required expensive re-education, something not in the cards for cash-strapped CPG. “You see this giant chocolate chip cookie,’ we are saying, ‘think of it now like a granola bar. It’s healthy, you should eat it every morning.’ As for morning biscuits, while a common coffee or tea accompaniment in Europe and with an older American demographic, they have a dry, crumbly texture that necessitates the constant presence of a beverage; not very conducive to the morning commute or texting.
That’s why these PRO Toasties intrigue me. If you grew up in North America in the last 55 years, Pop Tarts were part of your childhood. While likely novel at their inception, the Kellogg marketing machine of the 1960's, 70's and 80's efficiently indoctrinated all of us on how and when to eat toaster pastries. For legions of kids, Pop Tarts were the original grab and go food. At the bus stop, on the walk to school, or in-between classes, Pop Tarts were a ubiquitous part of childhood snacking. Therefore, for today’s adults the education into how to think about and use them comes pre-installed. All you have to do is rebrand and reformulate them for adult taste and nutritional sensibilities, and you can be a kid again.
The larger lesson here is about letting the marketing efforts of others benefit you. Instead of forging a new path with your consumer, consider what other products and brands have already done the hard work for you. Is there an existing behavior that you can attach yourself to?
The Burden of Knowledge
Postum, a 100+ year old coffee substitute, has been acquired from Kraft and is now showing some market momentum under new ownership. In fact, a number of coffee substitutes appear to be popping up—toasted chicory and dandelion roots, grain blends, herbal, mushroom coffees, etc. Consumers appear to be trying to cut their ties to the perceived negatives of traditional coffee (addictiveness, acidity, etc.) while maintaining the morning ritual to do something “healthy.”
Danone North America has announced the launch a line of oat-based beverages called Oat Yeah under their Silk brand. As other alternative milks have shown a slowdown (e.g. soy, rice) or a plateauing (e.g. nut milks), oat milk is accelerating. Pinterest claims oat milk was the top trending alternative beverage of 2018. Fresh Direct, the US online grocery deliver company, reported a sharp spike in oat milk popularity as Swedish brand Oatly became available stateside and new products from Quaker and Pacific entered the market.
Nestle has announced that they will be releasing a vegan burger alternative called the Incredible Burger in 2019. This is part of coordinated effort by the Swiss company to push their vegan businesses past $1 billion in the next 10 years. Nestle is facing a strong headwind as other big players (like Unilever, Beyond Meat and the similarly named Impossible Burger) are attacking.
So What? In 2015, Nigel Richards was crowned the winner of the French Scrabble World Championship, beating out thousands of expert Parisians, Québécois, African and Caribbean players. The odd thing is, Mr. Richards, a New Zealand native, doesn’t speak French. In fact, he admits that most of the conversations happening around him at the tournament were indecipherable to him.
While this may seem surprising, it isn’t an isolated case. The international Scrabble world is full of players that successfully win tournaments even when they are not fluent in the language (the Thai contingent is famously strong). In fact, some hypothesize that not speaking the language is an advantage. While Scrabble is often thought of as a language game, in truth, it’s just as much one of mathematics (i.e. the points you receive from extra vowels) and letter geometry. If you speak English, you’d likely not play a word like BOUZOUKI, WEIGELIA, IBOGAINE, or BAUHINIA, but to a non-native these are just as viable as EQUATION, AUDIENCE, and BEAUTIES. Knowing too much becomes a detriment.
The same can be said for all of these new alternative products. It took disruption from small, fringe players (i.e. the non-native speakers) for giants like Danone and Nestle to see the potential in the “fake” dairy and meat categories. This is because companies only tend to see a future that maintains their status quo. So dairy companies give short shrift to alternative milks and alcohol companies dismiss the potential of cannabis disrupting their business. Part of the recalcitrance is to protect fixed assets and part of it is due to an existential blindness (i.e. its hard to imagine a world without you in it).
Whatever the explanation, the failure to think beyond their current portfolio is often detrimental to a corporation’s bottom line--I’m guessing Danone would have loved to have bought Whitewave for less than the estimated $12 billion they paid.
Unlike any other time in corporate history, leaders must focus on problems, not products, to maintain the right portfolio for the future. Instead of asking themselves how their current suite of products best answers a particular consumer need or marketplace dynamic, they should instead be thinking more holistically. Asking yourself ‘what’s the best answer to this problem regardless of our capabilities’ can free you to see the potential threats in your future and potentially pinpoint new avenues of growth and acquisition.
More Exclamation Points
CES (the Consumer Electronic Show) has opened again this year in Las Vegas. Among the newest in OLED TV screens, voice assistants and self-driving tech, there has been an early (and unusual) fan favorite: the BreadBot. The machine, created and presented by Wilkinson Baking Company out of Walla Walla, WA, starts with dry ingredients and then mixes, kneads, shapes, proofs and bakes loaves of bread (churning out 6 loaves a minute) all in a transparently housed spectacle of modern engineering. The company is currently testing the machines in select grocery stores, with plans to roll them out across the country this year.
So What? In high school English class, I specifically remember Mrs. Chambers chastising me over my frequent use of exclamation points in my essays. She often told the class that ‘you are only allowed a handful of exclamation points your entire writing life, so choose your use of them wisely.’ Therefore, I was pleasantly surprised this week when I read a report that indicated that times have changed. Today, according to linguistics professionals, when people are writing texts or posting to social media they feel the need to use three exclamation points in order to truly exclaim something!!! One exclamation point, apparently, is so common that it fails to express more than a standard period. What happened? Technology happened. As less emotive and less emotional forms of communication (i.e. Twitter and text) were prioritized for the sake of convenience, users struggled to fully express themselves. Perhaps this explains the proliferation of excess exclamation points and the increasing popularity of videos and GIFs.
Tech has had a similar effect on CPG. For the sake of convenience, consumers have started to move away from traditional grocers and sit-down restaurants. E-commerce, c-stores and food delivery are easier and faster for our busy lives, but these convenient offerings have removed the emotionality from food and beverage shopping. Picking tomatoes from a screen dropdown or retriggering your mobile sandwich order is a sterile act. The sensorial excitement of food selection (most likely embedded in our DNA) has been removed.
If grocery stores, restaurants and cafes want to reengage customers, they’ll need to add more of those sensorial exclamation points back into the conversation. I predict we’ll be seeing more BreadBots in grocery stores for this very reason. An emotional and performative spectacle will be the new reason for people to physically come back to brick-and-mortar—otherwise why even leave your house? Perhaps that is why Target and HEB have experimented with vertical farming in select stores, not because they could ever hope to grow a store’s produce section, but to pump up the sensorial element of the in-store experience.
Whether you are a manufacturer, a retailer, or somewhere in between, you must start considering how you will add emotional and sensorial exclamation points to your products and experiences. Yes, the future will have advanced automation and AI but don’t dismiss the power of tapping into the primitive drivers of your consumers’ psyche.
Are You The Master of Your Brand
Chobani announced that they will be launching 9 non-dairy SKUs this month. The coconut-based products—both cup and bottle format—have 25% less sugar than other non-dairy alternatives.
So What? For those of you who haven’t been along for the crazy ride in the yogurt category the last decade, let me start with a brief overview on Chobani:
In 2005, Hamdi Ulukaya got a loan from the Small Business Administration and bought an old Kraft Foods plant with the goal of making yogurt similar to what he’d grown up with in Turkey: low in sugar and thick in texture. That year Greek yogurt commanded a scant 0.8% market share. In less than five years, Chobani realized over $1 billion in annual sales and became the leading seller of Greek yogurt in America. Today, Chobani (which means ‘shepherd’ in Turkish) is the market share leader in the $9 billion yogurt space with over $2b in sales.
How’d Chobani do it? While I hate backward analysis (it rarely factors in the power of luck), there was a definitely strategy at play in the early days. First, Hamdi was prescient to the changing taste of Americans. The market for ‘simple ingredients’ and ‘less processing’ was niche in 2005, but it had momentum that Hamdi was willing to bet on. The yogurt category, with its health halo and processed characteristics, was ripe for disruption. Second, producing high protein yogurt isn’t easy. Most mass-produced yogurt at the time had no ‘straining’ step, and putting in the proper equipment would be a huge capital investment for big companies. Hamdi knew that if he could gain shelf space fast enough he could displace the bigger brands before they could make the necessary investments. Lastly, there was Chobani’s pricing strategy. Most yogurt at the time was selling for ~$0.65 a cup, with artisan Greek brands going for ~$1.65. Chobani came in at ~$1. Greek yogurt is much more expensive to make—more protein equals more money—but Hamdi realized that taking the margin hit would provide a (temporary) competitive advantage. Together, amplifying weak consumer signals and digging a technical and pricing moat, pushed Chobani to amazing success.
However, all is not well in yogurt-land. Greek yogurt sales are down 5% and dollar sales of yogurt in general dropped nearly 2% last year. Have we reached ‘peak yogurt?’ Possibly, although I think it’s a momentary pause as the big players in the category reassess their strategies. Which brings us back to Chobani’s new non-dairy offerings.
As the dominant player in Greek yogurt, Chobani is feeling the pain with this segment decline. In the last several years their actions have indicated that they desperately know they need to diversify their offerings or risk sinking as the Greek segment tumbles. They’ve launched flavor variations, pushed into smooth yogurt (the very yogurt they originally disparaged), launched—and then dropped—a line of savory, yogurt-based meze, offered a sour cream alternative and, just a few months ago, made an advancement into kids with Gimmees. Non-dairy looks like another attempt to maintain relevance…but what if its more than that?
Look closely at the label of these new non-dairy offerings and you’ll find something strange. The cup and bottle products just say: coconut-based Chobani. Nowhere do you see the word ‘yogurt’ or ‘milk.’ Executives claim this is for legal reasons, which I’m sure is mostly true. The battle between dairy companies and alternative dairy producers is heating up and Chobani likely sees it not ending well. However, I think there may be an ulterior motive, one that points at Chobani’s longer term strategy. By walking away from labels, and leaning into their name, Chobani could be setting themselves up for a massive brand stretch.
In terms of food, if I say Philadelphia you likely think ‘cream cheese.’ However, did you know that much of what’s labeled Philadelphia in the supermarket isn’t cream cheese at all? Other than its iconic, silver-boxed original, most Philadelphia products (e.g. fat free, 1/3 less fat, etc.) don’t fit the cream cheese ‘standard of identity.’ Kraft-Heinz has, for years, been playing up the Philadelphia name and minimizing any mention of cream cheese. I’d conjecture that this was done to reposition the brand in consumers’ minds, moving it from a ‘commodity’ dairy product to profitable and ductile masterbrand. Today, Philadelphia stands for creaminess, richness and amazing flavor, characteristics that Kraft-Heinz has extended into Philadelphia Dips, RTE cheesecake cups, Philadelphia Snacks, dual textured spreads, snack bars, and Philadelphia Cooking Crèmes.
I believe Chobani is following Philadelphia’s lead. The only permanent relief Chobani can hope to receive from the volatility of the yogurt category is to diversify and escape it. Accordingly, Chobani is setting themselves up to be a ‘lifestyle brand’ broadly associated with less processing and clean ingredients. I predict they will push strongly into the rest of the refrigerated dairy category next, slowing shedding their Greek yogurt shackles (Chobani cottage cheese or Chobani snacking cheese?) before moving to frozen dairy—I think Chilly Cow’s (the ultra-filtered milk light ice cream) arrival signals a potential weakness and white space forming in Halo Top’s current reign. From there, Chobani could extend into a number of categories that have too much sugar, are overly processed or (if this coconut execution is a success) are in need of a plant-based overhaul.
Bob’s Red Mill, the Oregon-based grain and flour company, has launched Bob’s Better Bar, a line of snack bars featuring the company’s famous oats. Flavors include: Peanut Butter, Jelly and Oats, Peanut Butter Banana and Oats, Peanut Butter Chocolate and Oats, Peanut Butter Coconut and Oats, and Peanut Butter Apple Spice and Oats.
Bush’s Best, the Tennessee-based canned bean company, has launched a line of snacks based on their famous legumes. Bean Chips combine their navy beans or black beans into tortilla-like crisps (Chile Lime, Sweet Mesquite or Sea Salt), Crisp Roasted Chickpeas are toasted beans coated in seasoning (Sriracha Lime, Roasted Garlic and Black Pepper), and Bean Dips are what you’d expect (Original and Black Bean).
Well, we should have seen this coming. For years now, in an attempt to emphasize the naturalness and simplicity of their products, the CPG industry has been falling all over themselves to make ingredients the heroes. Today, if you look at a chip bag, more real estate is spent talking about the provenance of the stone-ground corn or the maker of the cheese than the chip. Likewise, ads for a new ice creams give more air time to the cream and Tahitian vanilla beans than the ice cream itself. If you are a consumer in today’s marketplace, you’d be forgiven for thinking that an ad for potato chips is really an ad potatoes due to the over emphasis on the latter.
If you a marketer or developer at Cargill, Bush’s, King Arthur or Simplot (I know you’re on the distlist!), your time is now; use your credibility and authenticity to take centerstage.
However, if you are traditional CPG (i.e. don’t own a raw ingredient company), let’s have a chat.
You need to romance your craft. While current trends compel you to use precious copy talking about ingredients, in the end it’s the magic that happens in your factories that will keep you relevant in the long-term. You need to balance difficult to defend messages about “whole almonds, real maple syrup and Saigon cinnamon” with ownable ways that you bake, blend, form or strain these ingredients to make your product special. You must start focusing again on the differentiating aspects of your product that are under your control and the expertise your company brings. Otherwise you’ll see your market share slip as commodity companies use co-packers to climb the value chain and private label offers all of the same ingredients in a product half the price.
How might you market who you are in an ownable way?
The New Organic?
Render, a Berkley, CA-based startup, debuted a new line of beverages at the Winter Fancy Food Show. Touting themselves as a “chef-to-shelf” food company, Render created two beverages (Weyla and Bryner) made from the leftover whey and pickle brines common in restaurant kitchens. Similarly, the company’s other product—State Bird Crunch—was inspired by leftover quinoa from a restaurant’s night of service.
So What? When I moved to Seattle a few years ago, one thing that surprised me was the rigorous recycling efforts common throughout the city. While other towns may be seen as progressive if they have three bins for separating refuse into appropriate categories, it’s not uncommon in Seattle to see five or more bins when you get to the trash. Containers stating compostable, paper, glass, mixed plastic and landfill are the norm, but I’ve also seen bins sub-segmenting each of these categories even further (e.g. clear glass and colored glass, PET plastic and HDPE plastic, etc.). Therefore, imagine my surprise the first time I hauled all of my multiple bins to the curb and ran into my new neighbor. “Excuse me,” I began and introduced myself,” do you happen to know if these Costco plastic apple packages should be in this bin or this bin? It’s not very clear.” “It doesn’t matter,” my neighbor replied, “it all goes in the same place anyway—the landfill.”
While that might seem like an isolated comment from a disgruntled individual, you might be surprised to learn that it isn’t an uncommon sentiment. A 2016 survey by Keep America Beautiful found that 33% of Americans are skeptical that the material they put on their curb actually gets recycled, with Millennials the most skeptical at 43%.
For a population that is getting more concerned about the state of the environment, this doesn’t bode well from a trust perspective. Therefore, is an upcycled product like Render’s a good one? I think so, here’s why:
Consumers are still looking for their food choices to “do good” from an environmental and social sense, however the commercialization of causes and the abuse of so-called “slacktivism” (where companies say they will donate on a consumer’s behalf) have taken their toll on consumer trust. Case in point: organic labeling. A 2017 Mintel report found that only 26% of American consumers say they trust that organic food labels are telling the truth (just 26%!). It appears that the ubiquity of “natural” and “organic” labels on everything from candy bars to soft drinks and everywhere from grocery stores to gas stations, may have caused some consumers to call BS on the whole thing.
But I think upcycling is different. Upcycling is activism for the “fake news” generation. Unlike organic or natural claims (where the evidence is in “invisible” pesticide residue) or pay-it-forward products like TOMS shoes (where the after-the-fact giving is difficult to track down), with upcycled products the “good” is in the product! Producers aren’t saying buy our product and we’ll recycle the whey from our cheese, they are putting the whey in the beverage you’re drinking. This tangibility turns a potentially dubious proactive action from the company (“we promise”) into a more believable reactive action by the consumer (“I’ll pay you to continue”). Plus, consumers understand the win-win aspect of upcycling for a company’s bottom line, making its long-term feasibility much easier to swallow.
My recommendation: start looking at your waste stream and give serious consideration to how you might convert aspects of it into consumer-facing evidence of upcycling. While it might not have the health or nutritional halo of natural or organic, I believe upcycled ingredients are a solid trustmark in a skeptical landscape.
The Project Generation
The Farmer’s Dog, a startup founded in 2015, has raised $39 million in their latest Series B round of funding (the most for any pet-related startup). The company offers personalized, freshly made dog food delivered directly to your home on a weekly basis. Unlike meal-kit startups (like Blue Apron) that famously struggled with maintaining subscribers, Farmer’s Dog reports that a majority of their millions of customers are hanging on after more than two years. The company’s founder claims that they’ve staying power is due to understanding how Millennial pet owners see their pets like children not animals.
L’Oreal has announced a prototype of an upcoming product at the 2019 Consumer Electronic Show in Las Vegas. Called My Skin Track pH, the device consists of a small, wearable patch that monitors changes in skin pH and relays it a smartphone app. A spokesperson for the company indicated that the patch could help consumers track the effectiveness of their skincare regime or chose the best regime for their particular skin type.
So What? Glance quickly at all of the marketing efforts made toward Millennials in the last decade and you’ll notice two (seemingly) diametrically opposed trends: either a product, service or event is billed as “an experience” (immersive, spectacular and over-the-top) or it is radically efficient (stripped down, mindless and friction free). In other words, we are to believe Millennials either want to be at Burning Man or holed up in their apartment ordering everything on the internet. OK, that’s absurdly simplistic, but not far from the perception, and it seems to be true. If your product isn’t pushing experience or efficiency, it doesn’t have a chance. But what if these two extremes had an underlying connection? What if experience and efficiency were somehow linked and exposed a greater truth?
Millennials are often teased for being the generation where “everyone got a trophy.” Where, no matter the task, they were told “good effort” “way to go” or “great job.” While many insist that this “coddling” resulted in a generation of “snowflakes,” current sociology is indicating something much more profound. Some clinicians believe that Millennials, raised with rigidly structured schedules and constant feedback and encouragement on even the most mundane of tasks, lack the ability to just be. A vacation can’t just be a trip, it has to be “epic” and the “best ever.” An evening out can’t be good, it must contain amazing moments worthy of Instagram. A moment is never a moment, it is flattened into a series of tasks that must be completed to make it better. Opposingly, if a task or activity can’t be raised to the level of an achievement, or if it takes time away from achieving something else, it is best to remove all effort from it. No one “wins” at buying tube socks and toilet paper, so why not make it mindless.
Therefore, experience and efficiency exist in the allusive quest to find “the best life.” In this quest, everything in your life—even the mundane-- becomes a project, broken down into smaller, win-able tasks that must be achieved to result in perfection (see the recent organizing craze of Marie Kondo). Which brings us back to dog food and skin care patches (and lots of other CPG products).
There were generations for whom caring for pets was just an efficiency play. The cheapest, fastest, most effortless way to get kibble into a dog was sufficient and ideal. However, based on sales, the days of inexpensive, generic dog food are numbered. For the Millennial fur parent, pets have become a project, something they can improve, iterate on and (as an extension of themselves) make “the best.” Standard dog food, even if it is organic or grain-free, is a static offering. It may promise to keep your pet healthy, but can it help you make your pet “the best” they can be? I think products like Farmer’s Dog, are a push in new direction. The promise of customization down to the detail of a dog’s medical conditions, breed and temperament, allows an owner to “work on” improving their pet, always iterating and improving.
Of course, the same goes for skincare and other products. If you are a CPG developer, marketer or advertiser, you must realize the role your products play in the projects in your consumers’ lives. Personal health is now a project, children are projects, and cleaning is a project. That means your product must feel like it can be customized to their particular problem (“picky eaters”), that it offers feedback, metrics and iteration as progress is made (e.g. pH measurements), and it clearly states the end goal.
Are your products project-able?
Coca-Cola has launched Bar Nøne, a line of cocktail-inspired, nonalcoholic bottled drinks. According to Atlanta magazine, the products are the brainchild of Coke’s director of portfolio strategy and innovation Sabrina Tandon, a 17-year veteran of the company. Tandon says the drinks were developed because she felt there was a lack of choices for the non-drinker or even for the occasional drinker who wanted a non-alcoholic offering. Varieties include: Sparkling Sangria, Dry Aged Cider, Bellini Spritz, and Spiced Ginger Mule.
New Age Beverage Corporation is releasing a line of CBD-infused beverages under the Marley brand. The first product to rollout in the Marley+CBD portfolio will be Marley+CBD Mellow Mood, relaxation drinks in 15.5 oz cans with 25 mg of pharmaceutical grade CBD per serving. Initial market rollout to customers will be in Colorado, Oregon, Washington, and Michigan where cannabis is legal. Since conversations began in 2018, New Age has received commitments and confirmation from major national accounts and distributors encompassing more than 125,000 outlets, including two of the largest U.S. retailers in the convenience and grocery channels.
So What? My office used to be right across the street from a Bulletproof Coffee shop. For those of you that aren’t familiar, Bulletproof Coffee is the MCT oil-infused, butter-laden drink that was all the rage with Silicon Valley folks a few years back. I wandered into the shop of few times, mostly because I was curious about who drank this stuff and why. After striking up a few conversations with patrons, and chatting with the barista during off-peak hours, I discovered a major reason people actually consumed this 600-calorie drink: fear.
Ok, maybe fear is too strong a word, let’s go with deep worry. People were worried that they might not be sharp enough, prepared enough or have enough stamina to catch their big break, land the right account or work harder than their colleagues. Bulletproof Coffee devotees believe they can “hack” their brains and bodies to give them the edge to compete.
We live in the 24-hour world. Unlike days past, you can’t afford to turn your brain on at 9:00am and off at 5:00pm. Somewhere in the world, markets are open, a consumer is waiting and an opportunity is closing. You have to be prepared.
While all of the news coverage about the decline in alcohol consumption (include this latest from the WSJ) often cites consumers increased interest in health and wellness, I’m very skeptical. Sure, there will always be a group of ascetic individuals that reject alcohol for moral reasons. And yes, there will be those that have weight concerns. However, I refuse to believe that scores of consumers are rejecting a ‘vice’ because they have issues with nutrition or ingredients (let me remind you that global chocolate sales are growing at a 4.2% CAGR). Instead, I think alcohol sales are declining because of the same deep worry that Bulletproof Coffee drinkers have: the worry that today you can’t lose your edge. Its almost as though the whole adult population has turned into on-call physicians. One drink may be ok, but they have to limit themselves and stay sharp and focused just in case something should happen; enter non-alcoholic and CBD drinks.
The 24-hour world is also a 360 world. Not only do you have to be “on,” you also have to be on your best behavior. Have a few drinks and drunk tweet or drunk ‘Gram and you’ll have to live with that forever.
Perhaps that is why we started seeing the antecedents of this trend immerge as ‘always on’ technology and social media took hold. The late 1990’s craze of energy drinks with alcohol (e.g. vodka and Red Bull, Four Loco, etc.) allowed some people to drink more, but it also (dangerously) allowed people to stay ‘on’ (“have wings”) even while drinking. As the Millennial population has matured, so has the trend.
All that being said, I’m skeptical that non-alcoholic beverages—at least how they are currently being marketed and produced-- will be able to adequately fulfill the need for stress release, the compulsion for group bonding or the pleasure we receive from vice, quite the way alcohol does. Therefore, as this trend for non-alcoholic beverages plays out, I see opportunities opening to fill the void. Cannabis is the most obvious heir apparent. However, while I think cannabis (and its derivatives) will grow exponentially, its legal status is still limited and niche. In the meantime, for the brand or company that understands the developing consumer psychology here, alcohol’s (temporary?) decline represents a rare chance at a lucrative market disruption.
Jon Sebastiani’s Sonoma Brands (the people behind Smash Mallow and Dang coconut chips and bar) have released Peckish, a new take on hard boiled eggs. Available both in retail and via subscription, Peckish comes in Peck Packs containing two individually wrapped eggs, plus a container of sprinkles/crumbs in one of five flavors: Everything (yes, like the bagel), Fried Rice, Rancheros, Salt & Pepitas, and Maple Waffles. You just dunk your egg, bite, and repeat. The toppings are all gluten and refined sugar free, paleo, keto, and Whole30. They’re made from things like organic quinoa crispies, roasted pepitas, and dehydrated veggies.
Journey Foods, the startup founded by former Google entrepreneur in residence Riana Lynn, has launched their first snack product called Journey Bites (available on Amazon). Funded by Soylent Innovation Labs, Google, and Arlan Hamilton from Backstage Capital, Journey Foods’ mission is to identify and source a wider variety of nutritionally dense ingredients and incorporate those into snacks. Using AI, the company claims they are creating better tasting snacks that are exponentially more biodiverse than traditional snacks.
So What? A lot of attention is given today to America’s crumbling infrastructure. Our roads, bridges and viaducts are in bad shape and many people are pushing our government to redouble their efforts (or looking to brands ). However, many people don’t know that our digital infrastructures are in similar dire straits. Take banking computers. Many modern banks are running on code from the 1960’s, in a computer language (COBOL) that is basically extinct. The issue is that these computer systems (much like our roads and bridges) weren’t built for modern lives. Banking computers were built to keep track of pension funds, your grandmother’s checking account and bank-to-bank transfers, not you sitting in bed with your tablet moving money around willy-nilly or Robinhooding on the side. Modern life is pushing banks to upend their systems, to retool for new habits and lifestyles. Surprisingly, modern life is stressing another infrastructure to its breaking point for similar reasons: snacking.
The problems with snacking, like so many other things, happened slowly then quickly. About 20 years ago, traditional breakfast stopped happening. In our daily rush out the door, sitting in a nook and eating a bowl of cereal became a quaint and endangered activity. Instead we grabbed bars, yogurts and Tarts, called it breakfast, and ate it in pieces over the next 5 hours. Then came lunch. Because meetings ran late, reports were due and you’d just finished your last breakfast snack, lunch got postponed and invariably canceled. Instead, we just started finding a vending machine around 2:00pm.
For a long time, we felt guilty about this. Snacks, we told ourselves, were something we should only eat occasionally between meals and now they were become something we ate instead of meals. But slowly, the guilt has subsided. As sugary candy bars and chips have been replaced with protein bars and kale crisps, we’ve come to accept this reality of eating continually not periodically. However, something is still not quite right. The traditional snacking infrastructure—the forms, shapes, ingredients and flavors—is proving unable to ‘carry the load’ of modern snacking.
Talk to a super consumer of this new snacking mentality and you’ll quickly see the strain. Snack bars, originally created as an occasional ‘tide you over’ nibble, can’t sustain someone when used several times a day. They’re too mono-textured, too sweet and just too boring compared to the gustatory delight that is a proper meal. To compensate, we’ve seen bar developers change up textures and try their hand at savory, but I think they are missing a fundamental possibility: maybe bars don’t work in a post-meal world? For that matter, maybe chips, popcorn and pretzels don’t either. Instead of trying to push the old snacking infrastructure to work harder (e.g. protein chips and Himalayan Sea Salt popcorn) maybe we should be considering building a brand new one?
That’s what I’m starting to see with products like Peckish. I see a complex set of rules and possibilities for this new type of ‘snacking’ developing, too complex to go into here. However, at its heart it echoes parts of a meal while maintaining elements of a snack. It is slow to eat, requiring mindful deliberation, not mindless consumption. It is built around whole food, like a meal is, but culinarily finds ways to make that interesting. And it is nutritionally constructed with the assumption that it will be just one of 5-8 other ‘snacks’ you’ll eat in a day, not a calorie bomb lacking in nourishment.
Will ‘old snacks’ survive? Of course, we will always find joy in them. However, I foresee the market for ‘new snacks’ eclipsing the current snacking category many times over. As we settle into this new way of eating, and more people replace meals with ‘snacks’ (we really need a new word), the old snacking infrastructure will quickly give way. The brands that are out ahead of this will reap the rewards.
Post has launched Chicken & Waffles cereal in Canada. According to the company, they will release the cereal in the US on March 7th (National Cereal Day). Sub-branded ‘Honey Brunches of Oats’ (get it!), the cereal is reported to be maple flavored puffs with an agreeable, but noticeable, savory note.
Jenny Craig, the weight loss company, has announced their new program for 2019. Their new Rapid Results meal plan takes a new approach to dieting by timing their products’ consumption to consumers’ circadian rhythms. Focusing just as much on ‘when’ their clients eat as much as on ‘what’ they eat, products come with instructions for what time of the day they are best to consume. According to the company, the program is based on Nobel Prize winning research into how the human body best processes food based on the time of day.
So What? What is going on with the people at Post? First they launch Sour Patch Kids cereal and now chicken-flavored? What are they up to? I think, two things:
1. Post is recognizing the changing palette of the general population. Just as yogurt transitioned from sweet pudding to sour stucco (sorry Greek friends!), flavor boundaries overall are in a state of transition. One-dimensional flavors are out as consumers have been exposed to more complexity through fast food, food TV, and retail (e.g. Trader Joes). First we had sweet & sour, then sweet & salty and now sweet & hot. Post likely realizes that to keep consumer interested they need to push the envelope into sweet and savory.
2. Post sees the world as it is, not how they’d like it to be. While many other cereal companies are still trying to push cereal consumption as a regular morning (or maybe evening) meal or snack, I think Post sees the writing on the wall. The days when a consumer would eat a bowl of cornflakes every morning are gone. Instead, cereal now (to paraphrase Cookie Monster) is a ‘sometimes food.’ When seen in this light, cereals needn’t be designed to be sustaining products, but rather as constant ‘in and outs.’ That means flavors must be bolder, more eye-catching and less care given to ‘flavor burnout’ (i.e. the inevitable boredom that comes from eating the same flavor every day). Post is playing off a new script that’s more in-line with the way consumers are actually buying and consuming cereal.
I think this second point is likely the bigger insight and the one that Jenny Craig is also utilizing. After years of trying to educate consumers on their system of losing weight, and counseling clients to give up their beliefs, they are now giving in to their consumer. As anyone that has ever done diet research knows, it’s a commonly held belief that eating at certain times of the day packs on the pounds (e.g. “never eat after 8.”). Instead of fighting this, Jenny Craig has now embraced it and weaponized it. Think of it as ‘consumer judo,’ in that you are pushing your consumers’ own beliefs right back at them to get leverage in the marketplace.
How many beliefs in your company only exist because you want them to be so? How many categories are you playing in where you are ‘ignoring’ the consumer realities and telling boardrooms that downturns are temporary behavior, that your product and message are still relevant and you should continue ‘business as usual?’ Isn’t it time that you accept the fact that, no matter how many more times you say it, consumers are not going to use your product your way, think of you like your advertisement, or accept you in your current form. Give in already! There is a time for thinking ahead of the consumer, for pushing innovation and discovery, and there is a time to just be the product your consumer believes you to be.
Nightfood, the company that previously launched sleep-inducing snack bars, has introduced a line of ice cream to the US market. Founded in 2010 by Sean Folkson, the company utilizes the work of sleep experts to formulate products that “complement the human sleep cycle.” For example, Cherry Eclipse uses a specific type of cherry high in natural melatonin, and the chocolate varieties contain Chocamine, a cocoa-based ingredient that tastes like the real thing but without the caffeine buzz. The company is hoping to cash in on the $50 billion nighttime snack market (not to mention the $300 billion functional food sector) as the conventional snacking market is in decline.
So What? Have you bought a weighted blanket recently? How about a weighted eye mask? Perhaps you’ve heard commercials for Casper mattresses, had friends tell you about a sleep app (like Pzizz) or maybe you’ve even invested in a BRYTE “self-learning superbed” or a sleep robot. It’s not too hard to notice that sleep is having a moment.
It’s not that sleep hasn’t always been important, but the focus lately on the type of sleep we are getting, the quality, and our sleep hygiene, all seems a bit more intense than years ago. You could rightfully chalk it up to our busy schedules, our stress-filled days or just coincidental marketing, but I think something else is happening. I think sleep has become a ‘keystone issue.’
The first time I came across what I now call ‘keystone issues’ was about 15 years ago. It was the beginning of the anti-soda movement and bottled water was really starting to take off. Everywhere you went, people were carrying around bottles, flasks and canteens—the world was suddenly parched! I specifically remember walking into a meeting where a colleague was sitting in the shadow of a comically large bottle of fancy water. Perhaps sensing our questions, she let loose with an education for us on the benefits of water: “it helps the skin, the hair, and my digestion. It gives me energy. In fact, I’m not tired anymore when I get home and actually played in the yard with my kids last night…and it helps me think better at work, I’m very productive.” Of course, she ended all of that by taking a two-handed swig from her giant bottle. Hydration for her (and many consumers) had become keystone – a pivotal ‘problem’ that, if solved, promises to resolve a multitude other issues in our lives.
Fast forward to today and keystone issues have proliferated. For example, weight loss is no longer tied just to health improvement. Society would have us believe that losing weight is a panacea for everything that ails you. If we drop a few pounds it will supposedly help our careers, make us happier, make us better partners, and turn our social lives around. Now, sleep management is following a similar route. We are now told that getting a good night sleep will help us be more creative, fight arthritis, be a better driver, a better athlete, a better student and lose more weight!
Perhaps we are too busy today to tackle individual issues one-by-one or maybe we are becoming more holistic in our worldview. Whatever the case, the future of consumer health, in my opinion, will be increasingly focused on tackling keystone issues. Therefore, if you are going to invest in a functional food or wellness product, or you are looking to re-position your brand, make sure it is keystone related. With so many little issues bundled together, consumers are willing to spend disproportionally more for products that hold the potential for a cascade of effects.
So, what are the keystone issues are on the horizon? The big one is definitely gut health. In fact, it just might be the keystone of keystones. In consumers’ minds it is connected to weight, sleep and inflammation (another up and coming issue). However, that is a topic for a future newsletter
Bridging the Familiar
Last week, a Forbes reporter made a bold prediction. He believes that the biggest beverage trend of 2019, the most talked about, consumed and Instagrammed, will be cheese coffee. While you might be familiar with cheese tea, the super popular Asian beverage that is de rigueur at boba shops everywhere, cheese coffee is a relative newcomer. This particular reference comes from a very trendy tea chain called Percolate in California. There the drink is made by blending cold brew Guatemalan and topping it with a silky mixture of sweetened cream and whipped cream cheese, all topped with cocoa powder—they call it BST: Bittersweet Tiramisu.
So What? Last week, at the Sundance Film Festival, there was a screening of the documentary Memory: The Origins of Alien, a chronicle of the making of the now famous Sigourney Weaver classic. While today the idea of a movie about a rampaging lifeform aboard a spaceship sounds commonplace, almost boring, the documentary details how, in 1979, the concept was revolutionary. Studios are famously timid for not wanting to invest millions in an unproven genre and, up until Alien, sci-fi horror was virtually unknown. However, according to Hollywood legend ,two screenwriters walked into the office of Gordon Stulberg (president of 20th Century Fox) and said three words that sold the idea of Alien: “Jaws in Space.”
Today this approach to pitching, sometimes called bridging, is commonly taught to screenwriters. It takes advantage of a fundamental truth of human nature: we don’t like new things. While we might see ourselves as adventurous and open-minded, nature has instilled in us a failsafe that has protected us from potential harm for millennia: stick with what you know (your tribe, the path you always take home, those berries your family has always eaten) and you probably won’t die. ‘Bridging’ short circuits this inclination, introducing the new in the guise of the accepted old. In 1979, Alien was foreign and unbankable, but Jaws was the blockbuster of 1975 and anything in space was in vogue due to a 1977 movie you might have heard of: Star Wars. So, “Jaws in space” was easy to swallow.
For most Americans, the concept of ‘cheese tea’ is just as scary as a chest-bursting monster. Say the words to a consumer and you can watch their faces contort as their brain tries to find intersections where they’ve encountered both ‘cheese’ and ‘tea’ together in a pleasant, non-savory context. Honestly, this beverage never had a chance of jumping into mainstream menus. However, the small shift to ‘cheese coffee’ is profound because it opens up the context for the perfect pitch with the perfect bridge: ‘tiramisu as a beverage.’ Yes, I agree, this is going to be a hit.
Consumers don’t want surprises in their food or beverage, surprises can be unpleasant. However, they also get tired of the familiar, the day-to-day becomes boring. What they really want are products that are surprisingly familiar, items that represent the known in the guise of the unknown. A way to feel adventurous while really being safe.
When I’m advising clients on launching a new product, I often ask them: “what’s your pitch? What’s your bridge?” If they struggle, it’s a sure sign the consumer will to.
Procter & Gamble Co., Nestlé SA, PepsiCo Inc. and Unilever PLC are just four of the 25 international CPG companies that are partnering on a new pilot program called Loop announced at the January Davos conference. The experiment focuses on repackaging popular goods into reusable cartons and containers—similar to the delivered milk model—where the consumer pays a deposit and receives a refill (or gets a refund when the empty container is returned). For example, Haagen Dazs ice cream comes in a metal cylinder and Pantene shampoo in a metal pump bottle. The experiment goes live in NY and Paris this May.
So What? Even with all of the hybrid and electric cars on the market, if you say ‘hybrid’ to a consumer, they often think ‘Prius’. Around 2008, when Toyota’s success proved that gas-guzzling Americans would invest in environmentally-friendly vehicles, other car makers scrambled to launch their own hybrids. However, few fared well, and by 2010 nearly half of all hybrids on the road were Priuses. Was that because of Toyota’s superior technology? No, according to follow-up studies, it was because of Prius’ shape. Other car companies simply placed their hybrid technology in existing chassis, with only a decal to indicate that it was a hybrid. Consumers, research found, wanted their environmental efforts to garner attention. The unique Prius shape, versus the less obvious decal, allowed for ‘conspicuous conservation,’ a social badge that shouted a consumer’s ethical persuasion.
The lesson here is that consumers typically don’t operate out of altruism. While they may tell you on survey, or directly to your face, that they care about the environment and would absolutely buy a ‘green’ product, the truth is less clear-cut. In my experience, when it comes to putting their money where their mouth is, few consumers are willing to pay extra or accept trade-offs for an environmentally-friendly product unless it has added benefits that the less green version does not. In the case of CPG products, this is even more pronounced because they are usually consumed behind closed doors, removing ‘conspicuous’ from any ‘consumption.’ Therefore, personal cost (e.g. LED lights), style (Method products), quality (e.g. Patagonia) or comfort (e.g. AllBirds) must be over-delivered to make environmentally-friendly CPG really work.
I say all of this because when I look at the Loop product line-up, I don’t see obvious benefits beyond being green. Hopefully those will be explored in the upcoming test. For example, does the Haagen Dazs metal container keep out freezer burn longer? Does the restyled shampoo bottles give you more product? The one item that gives me hope is the Colgate toothpaste. Seeing that it would be hard to create a re-useable pump, the company designed dissolvable toothpaste tablets that a consumer pops in their mouth before brushing—that’s more like it! The convenience innovation and lack of mess immediately sell me on the product, and the side benefit of reduced packaging waste is greatly appreciated.
We all want green initiatives to succeed, but we can’t labor under the belief that our consumers our purely philanthropically driven. By all means, lead your marketing with an environmental message, but don’t forget what really sells.
Remember What You Stand For
Halo Top announced last week the launch of a new line of "snackable mini ice cream pops.” Called Halo Top Pops, the treats are 50-60 calories each (but are listed as “three pops per serving”) with 7-10 grams of protein. Flavors include: Mint Chip, Chocolate Chip Cookie Dough, Strawberry Cheesecake and Peanut Butter Swirl.
So What? When I was a kid, I made a lot of mistakes. I’d miss strips of grass when mowing the yard, fail to get all of the crud off the pans when washing dishes or forget about picking the weeds on the side of the house. My fallback excuse was that I was “close” to getting it right, to which my father always said, “close only works in horseshoes and hand grenades, Kevin, do it again” (that’s some serious Boomer parent tough love right there).
Halo Top was so close to getting this right, but seeing that they’re not playing lawn sports or in combat, that’s not going to cut it. It appears that in all of their excitement to extend their amazing winning streak from the pint space to the frozen novelties segment, they failed to internalize their core benefit. It’s not protein—that just makes them permissible. It’s not their huge range of flavors—that’s just table stakes in the category. And it’s not even calories specifically—although they play an important role. No, their core benefit is permissible deviance. Halo Top pints took an action that so many people already do and feel bad about (i.e. eat a whole pint in one sitting) and made it ok. Through a wink and a nod (“don’t stop ‘til you hit bottom!” printed on the lid) and the reassurance of high protein and low calories per pint, Halo Top was the friend that helped them beat the system!
However, these new Pops are something else entirely. Yes, the calories are per three Pops, but the outside of the box lists them per Pop. Plus, the beauty of pint Halo Top was that it allowed mindless self-indulgence—tuning out as your spoon keeps digging. With mini pops, the mindless act of eating gets interrupted with the mindful act of opening another Pop and then another. Halo Top is in the “indulgent volumetrics” space (a category name I just invented). If they were true to their core benefit they should have launched an ice cream sandwich 3X bigger than a Klondike bar, but only 300 calories. Or they could have enrobed small bonbons of their ice cream in “chocolate” and filled a giant bag (“don’t stop ‘til you hit bottom) for 300 calories! Both applications would have allowed consumers to indulge without flipping on their analytical brains and counting (because counting is dieting and it makes the ice cream taste terrible).
Will these mini bars be successful? Potentially. Because of their brand inertia, Halo Top may be able to steal business from Yasso and brands with very similar offerings. However, I predict they’ll just get some decent incremental volume with some OK tasting “me-tos.” They could have done so much more! Which means there is some serious low hanging fruit for competitors to take here.
For everyone not in the ice cream business, the lesson is clear: know what you stand for in the consumer’s mind. Don’t get lost in your supporting benefits, your own marketing spin or the category dynamics. Be bold enough to utilize innovation to expand your core benefit and not rely on ad copy (or nutrition fact labels!) to deliver on what your consumer really wants.
The Meal Kit Insight
Struggling Blue Apron has revamped their strategy with the launch of a new line of meal kits on Walmart’s Jet.com. The new offerings, called Knick-Knacks, cost $7.99 each, a huge saving compared to their normal kits available on Jet.com which come in at $16.99-$22.99. They achieve this pricing miracle by having the consumer supply the produce and the protein.
Michael Angelo’s, newly acquired by Advent International/Sovos Brands, has launched Meal Starters, a line of frozen proteins (chicken and shrimp) with an accompanying sauce. Consumers simply heat the dish, prep a starch or vegetable, and serve. Flavors include: Chicken Parmigiana, Chicken Piccata, Chicken Bruschetta, Spicy Chicken Marinara, White Wine Lemon Chicken and Spicy Marinara Shrimp.
So What? A lifetime ago, I wrote a cookbook. While creating the recipes and writing the copy was fun, the most memorable experience was doing the media circuit. I was booked on local affiliate morning talk shows and national broadcasts as part of a whirlwind tour. At every stop I’d have ~5-7 minutes to talk about and showcase some recipes from the book, the host would then gush at how wonderful and easy everything was, and then we’d be off to commercial. At one of my first stops, a seasoned food stylist schooled me on the best game plan. “Don’t waste time chopping anything,” he said,” that’s the least exciting part of cooking. People want to see it all coming together, garnished and ready to eat. Don’t ever let cooking look like drudgery—it should be quick and painless assembly.”
That experience made me realize that food media has significantly warped consumers perspectives and expectations when it comes to getting a meal on the table. Every cooking show exposes viewers to amazingly complex cuisines, but the chicken is usually pre-cut, the veggies pre-chopped and the dish is already plated. Raised on a steady diet of Food Network and restaurant meals, today’s consumers have developed ‘champagne wishes and caviar dreams,’ but have instant ramen skills and Pop Tart patience.
This is the insight that Blue Apron continually misses. They conflate knowledge of a dish such as ‘Beef over Za’atar-Spiced Rice with Lemon Labneh’ with the skill set, time and will to prepare it. Their latest move, while financially logical, takes them in the wrong direction. At least with the $22 meal kits, the produce and protein came semi-prepped (although likely not enough). Now, sourcing, cleaning and cutting these items is pushed onto the consumer—raising the hurdle even higher to get a meal on the table.
As that food stylist taught me, consumers want to quickly get to the exciting bits of cooking and skip the tedium. In other words, a little sizzle, a little drizzle and poof! restaurant payoff. Do you know who really gets this insight? Trader Joe’s. At TJ’s, the same target consumer as Blue Apron can enjoy Capunti Pasta with Butternut Squash Alfredo Sauce and Grilled Chicken Strips in about 15 minutes—no knife or skillet required. All the labor in TJ’s food is shifted to the back end of meal prep, most of their meat is cooked (or sliced, marinaded and ready to cook), most fancy sauces are easy to heat, and all that’s left is effortless accompaniments and flair. The ‘freshness’ component that Blue Apron tries to obtain through having consumers cut up meat and veg is conveyed at TJs through their marketing. From clean ingredient decks and ad copy (“Made with pumpkin and butternut squash purées (together, they make up 40% of the recipe), we’re not messing around when it comes to fall flavor in this orange-hued Alfredo”), TJ’s lets consumers feel good about outsourcing the drudgery.
Perhaps that is why the frozen section of supermarkets are making a comeback. With the help of Trader Joe’s (who makes the least favorite aisle in the grocery store the most exciting one—I think it’s the candy!) and manufacturer innovation, frozen foods are starting to be seen as an acceptable way to get to the payoff faster without feeling guilty.
Seeing Opportunity in the Tension
Little Spoon, a direct-to-consumer baby food company, has just closed first round funding for $7 million with support from Kyle O’Brien, former executive vice-president of sales at Chobani. The company’s delivery service offers a rotating menu of 50 recipes and 80 ingredients, because “exposure to a wide range of ingredients expands your baby’s palette and ensures they are getting a balanced diet during this most formative time of brain and physical development.”
So What? I’m shocked more toddler and adolescent snack companies haven’t leaned into this. The world of kid’s snacks is amazingly homogenous—cheddar snacks, a few fruit flavors and potentially a cinnamon or chocolate. While I know that much of this is driven by finicky kids, a constant refrain I hear from parents is the concern that they aren’t raising well-rounded children. They worry, especially in our polarized times, that their kids won’t be accepting of other beliefs, other cultures and other ways of thinking. For many parents, the remedy is exposing their children to a wide variety of stimuli—ethnicities, religions and food.
Just last week, the Chicago Tribune reported on a growing trend in upscale Chicago restaurants to revamp their children’s menus to move away from bland chicken fingers and mac and cheese. Speaking to parents in the Lakeview neighborhood, one couple told the paper, “We will certainly reward places that treat kids like they can handle quality food and flavorful food.” At Eden, a chic restaurant in the West Loop, executive chef Devon Quinn said that when they were rethinking their kid’s menu, “We did not dumb down flavors at all.” All of which has prompted one Chicago couple to start a business called Little Diners Crew to help parents expose their kids to new flavors and new cuisines.
The best opportunities are born within tensions, and I think that in this tension—pleasing a picky kid today vs. raising a well-rounded adult for tomorrow—there is a distinct and emerging opportunity for CPG. I can see a few possibilities here: (1) a range of snacks for kids that have fun themes from different world cuisines; (2) snacks that educate kids on unique vegetables and grains; and (3) a line of snacks that gradually weans kids off of traditional kids snacks and towards a broader palette.
Duncan Hines has launched two new microwaveable ‘Perfect Size for 1’ cakes. One contains Oreo cookie pieces and the other Chips Ahoy cookie pieces.
Hidden Valley Ranch is adding to their ranch dressing line with Blasted Creamy Ranch Dipping Sauces. Each sauce plays on consumers’ favorite use for ranch dressing. Flavors include: Bold Buffalo, Zestier Ranch and Ranch-Dipped Pizza (i.e. ranch dressing flavored like pizza).
So What? In 2018, seven of the top 10 movies at the US box office were sequels. The other three (Black Panther, Dr. Seuss’: The Grinch, and Aquaman) were based on pre-existing popular books/comic books. If you’ve been to the movies in the last ten years, you realize this isn’t an anomaly; the big screen is full of reboots, sequels and mash-ups. In Hollywood, all of these are called pre-sold concepts—films that contain storylines or characters that audiences already know and love—and the reason we’ve seen so many of them in the last decade boils down to cost. Getting a movie made is extremely expensive, a box-office bomb can bankrupt a studio. As costs have risen, production companies have become more risk adverse in greenlighting films that are wholly new.
This strategy has worked extremely well, as the most recent box office numbers indicate. However, there are growing concerns. ‘Franchise fatigue’ is setting in, brands such as Pirates of the Caribbean, Transformers and even Star Wars are showing signs of wear. Studios have a dilemma, push high performing franchises to the breaking point or gamble on new ones in hopes of future success. On top of it all, their hand is being tipped by the rise of streaming services like Netflix and Amazon. Huge investments by each company have yielded original programing that has performed as well as the big studios. Roma is up for Best Picture and Bird Box got 45 million viewers its first weekend (tantamount to a $200 million box office draw).
You all know where I’m going with this, CPG is in the same predicament as Hollywood. The glut of mash-ups, revivals and guest stars (e.g. cake with Chips Ahoy) is proving extremely successful at lowering risk and raising profit. Honestly, I think it’s great. It’s making new use of some brands that haven’t been utilized enough. However, there is danger lurking. How many more SKUs of Oreo can consumers swallow before we see consumer boredom and abandonment? Also, as in Hollywood, side players (small companies, retailers, etc.) are starting to drive original content and pull consumers.
What is the correct path? CPG should learn from Hollywood’s dilemma here. Instead of waiting until full franchise fatigue and diluting your core, utilize the profit made from ‘sure bets’ to proactively invest in deeper/smarter innovation. Lean into a mix of big data consumer analytics and qualitative learnings to develop larger platforms, not one-offs, and trial through new channels to help ease the cost of experimentation.
Tide, the detergent brand owned by P&G, is launching a full-service, mobile app enabled, on-demand laundry solution. Through a service called ‘Tide Cleaners,’ consumers can drop off their laundry (or have it picked up) and then retrieve it from shops or from a 24-hour locker. P&G is rolling out the service to 2,000 locations by 2020.
So What? This is not a test. P&G is playing the long game and, only now, are the full details of their strategy becoming clear. If you haven’t been following along for the past several years, P&G has been making escalating levels of commitment into expanding the Tide brand beyond detergent into cleaning services. Starting in 2010, P&G began opening Tide Dry Cleaners across the US (currently there are 125 24-hour dry cleaning stores across 22 states.) Developed by the company’s FutureWorks group, the company invested heavily into expand their big brands into fragmented service industries they saw as ripe for disruption (Mr. Clean Car Washes also exist).
However, in retrospect, the move into dry cleaning was likely ‘phase one’ of a much larger plan. As P&G undoubtably knew in 2010, dry cleaning has been on the decline since the late 1980’s with little hope of a turn around. More casual attire, wrinkle-resistant fabrics and ‘disposable fashion,’ doomed the industry long ago. Instead, I would contend, P&G invested in the business to learn and grow. They used their brand, their might and their logistics to scale while gathering data on consumers to help coordinate ‘phase two’, the grand prize—everyday laundry. According to a 2018 report, the mobile on-demand laundry service business is globally valued at ~$9B (with the US driving the highest demand at 32%) and set to reach $97B by 2024, a 34% CAGR.
Why is P&G striking out into such a risky and, for them, uncharted territory? Most likely because they’ve read the tea leaves of retail and don’t like what their future holds. Retailers are squeezing them on margin at one end and their cost of ingredients, manufacturing, shipping and storage keep rising on the other. Before their brands become diluted by a sea of increasingly popular private label offerings, they are using their remaining cachet to slingshot themselves into what they hope is a more long-term profitable and protected area.
If you are in CPG and not actively looking to diversify into the service industry or alternative channels, you should be. While there are definitely ways to survive in Retail 2030, the landscape of that time will look much different than today. Much as in Global Warming, in the coming Retail Warming, the changes will be small at first and brands will adjust—lower profits one quarter, a significant margin hit the next-- but over time, even with massive cost cutting (see Kraft-Heinz), whole categories might become uninhabitable for large manufacturers as private label raises the temperature. Co-packing strategies and stronger technology moats aside, making the serious, significant, long-term investment now to move your brands into other sectors—a’la P&G—might be the best bet for long-term survival.
Hormel has announced that they are selling CytoSport, makers of Muscle Milk, to PepsiCo for $465 million. Hormel bought the high protein sports nutrition company in 2014 for $450 million but saw continued difficulty with the brand, including a recall in 2016.
So What? Many years ago, I owned a catering business. Most of my profit came from bulk orders of pastries, with the majority of sales being in the AM --cinnamon rolls, Danishes, croissants, muffins and scones for offices and businesses. One day, a friend of mine who owned a wedding cake company called me up with a proposition. She was thinking of retiring and wanted her company to continue on successfully. She felt that I had the business track-record and talent to take over her shop, would I be interested. Her price was great but, with very little thought, I turned her down. In my mind, I saw my business as morning pastry, up at 3:00am and done by 9:00am. What did I know about wedding cakes?!
Fast forward one year. My catering business was doing well but the offer of the wedding cake business still nagged at me. One day, over dinner with a mentor of mine, the topic came up. “Kevin, you don’t have the luxury of only thinking about your business from the perspective of your consumer,” he told me. “Broaden your perspectives and consider the synergies of your ingredients, your distribution network, your contacts, and your equipment. Your strength is not just in pastry, it’s in managing the throughput of giant ovens, creative pastry artists, baked good logistics, and sales to high-income consumers.” Within a month, I started selling wedding cakes. Within a year, my profit on cakes eclipsed my AM sales 3:1.
What business are you really in? Not what you currently make, but where do your strengths really lie? No matter where you sit in an org, you should ask yourself that question. It can help you find opportunities and avoid pitfalls. When Hormel bought CytoSport, I assume the M&A rationale was that as a protein company they should diversify to trendier proteins beyond meat (likely why they also bought Skippy and Justin’s nut butters). However, should Hormel think of themselves as a protein company? Sure, they sell raw and canned meat, but as last week’s earning call reiterated these commodity areas are increasingly a weakness. I would contend that, looking at the historic successes in their portfolio of brands like Wholly Guacamole, Columbus charcuterie, Fire-Braised Meats and Fontanini Italian sausages, they are really more a deli company (adept at the processing, transportation and sell-in of refrigerated meal components) and a food service company (packaging and solving back of house solutions).
Taken from the perspective of inherent strengths, Hormel was at a disadvantage from the start with Cytosport. Despite its name, Muscle Milk doesn’t contain milk, so unlike the rest of their portfolio, Muscle Milk isn’t converting a commodity into a value-added product. Rather, its the combination of highly processed protein powders and vitamins into a finished good--a radically different margin structure than their normal business. Additionally, Hormel had little experience (besides some healthcare products) in the technology of producing aseptic beverages, a lack of scale efficiencies on materials (ingredients and packaging), and no c-store beverage sales history. Shoring up one of these weaknesses would have been possible, but taking them all on appears to have proven too difficult. However, Hormel’s recent moves into foodservice investment and new M&A tells me that they’ve quickly recognized their true strengths and made a smart move in selling CytoSport after just owning it a few years.
So, ask yourself, what business are you really in?
The Dirt on ‘Clean’
P&G has finally announced, after 10 years of development, the launch of their DS3 waterless cleaning system. Slated for full launch in late 2019, DS3 consists of small, dry ‘swatches’ that consumers simply add water to activate. Once activated the swatches expand, turn to foam and are ready for cleaning. Each swatch comes with a simple graphic imprinted on its surface to indicate its use. For example, the hand soap swatch has a picture of a face, the laundry cleaner a graphic of a shirt, etc.
Elmhurst, the former NY dairy that stopped producing cow’s milk and started making plant-based beverages, has launched a non-dairy shake with 20 grams of protein. The shake is labeled as ‘the cleanest protein shake on the planet.’
So What? I used to work with someone that, after tough conversations or meetings, would unconsciously grab a bottle of Purell (ever-present on modern conference tables) and cleanse her hands. As she rubbed the alcohol solution between her palms, you could visibly see her relax. This ritual served to separate her from the previous moment, drawing a line of mental demarcation and disengagement, that allowed her to refocus on the next conversation.
Psychologically, cleaning is about boundary setting. Ritually we do ‘Spring cleaning’ to separate the winter from the New Year and we shower before/after work to remove ourselves from one world and transition into another. At the granular level then, ‘dirty’ can be defined as things outside of their boundaries, things out of place. Interestingly, that means ‘clean’ things can contaminate ‘clean’ things if they are not where they belong. For example, your newly washed and ‘clean’ hair, if it falls into your soup, makes it ‘dirty.’ It also explains the disgust most of have when we see the Taiwanese restaurant where diners eat soup out of toilet-shaped bowls. Everything is biologically ‘clean,’ but the lack of proper boundaries disturbs us.
It’s with this mindset that I look at P&G’s and Elmhurst’s new products. While very different, I see them both playing on the same boundary psychology of ‘clean.’ First, consider household cleaners. Even though we employ them to help us rid our houses of invading dirt, we worry that, after they have done their job, the cleanser itself (its ‘residue’) becomes a foreign body. Many all-natural cleaners on the market attempt to get around this by using food ingredients, things that belong in our kitchens and homes, things that aren’t seen as ‘out of place.’ DS3 takes another tact. Because the ‘swatches’ are so ephemeral, they give the illusion that any foreign ‘chemical’ employed is ‘used up’ in the act of cleaning. If you watch the video on their website, when water is added to a handwashing ‘swatch’ it magically turns into suds (the cleaning bit) which are washed away as the hands are rinsed.
Surprising, there are similarities in food. ‘Clean’ eating is about keeping the chemicals we associate with other modern processes separate from our food (such as the current concern about the presence of weed killer chemical in beer). Elmhurst’s ‘clean’ protein plays on the angst that, much like the cleansers example above, the very protein that we use to make us healthy may actually be making us sick. ‘Clean’ protein, then, is protein that is meant to be in our food absent anything unnecessary (and therefore ‘dirty’). So, for example, Elmhurst says the protein in their Chocolate Peanut Shake is ‘clean’ because all of it comes from the peanuts (i.e. what is supposed to be there) and not added protein or the dreaded soy (i.e. unexpected protein). Plus, the shake is absent of other foreign ‘chemicals.’
In our modern world, we often celebrate the fact that traditional boundaries are being broken; that we have seamless integration of work, school, home and entertainment. However, I would contend that this increasingly unified world is driving a renewed need for ‘clean.’ Therefore, as we all pursue the modern making and marketing of products and services, I believe the psychology of ‘clean’ will become increasingly important to our language, our advertisement, our marketing and product development.
Muddy Bites, chocolate-filled waffle cone bites, have re-launched on Kickstarter. The tiny cones are intended to mimic the tips of waffle cone treats (aka Drumsticks, aka Cornettos) that often come dipped or filled with chocolate to prevent the melting contents from leaking. “After eating hundreds of sundae cones throughout my life, I noticed that a ton of people loved the bottom part filled with chocolate,” said the 21-year old inventor. Muddy Bites was fully funded in 72 hours!
Hershey’s has launched Reese’s Thins in the US. The iconic chocolate and peanut butter cup now is available 40% thinner than traditional Reese’s cups.
Talenti is introducing Gelato Layers, a ‘decadent stratified combination’ of sea salt caramel gelato, chocolatey cookies, a layer of dulce de leche, and caramel truffles.
“If you don't eat yer meat, you can't have any pudding”—Pink Floyd, Another Brick in the Wall
My wife and I don’t have children. For that reason, we eat like children. Sure, I’ll make a nice dinner on the weekends or when we entertain, but most evenings you’ll find me eating a bowl of oatmeal, a peanut butter and jelly sandwich or a snack bar while standing over the kitchen sink. I eat only what I like and my wife eats what she likes—no compromises. Kids, and the social eating of the collective table, are a forcing function for compromises and rules. As Pink Floyd so eloquently pointed out, you were never allowed to eat the good stuff until the less good stuff was gone.
However, we live in a world where the social table is disappearing and people are eating solo more frequently. Now we don’t have to eat the lowest common denominator of food combinations, we can have every bite be our ideal bite—less of the bad stuff, more of the good.
Did you know Reese’s now gives consumers eleven different ways to enjoy their peanut butter/chocolate alchemy (i.e. World’s Largest Cup, Big Cup, Standard, Thins, Minis, Miniatures, Pieces, Eggs, Trees, and their new Chocolate Lovers and Peanut Butter Lovers Cups), each with their own ‘ideal’ ratio? Looked at in this light, perhaps this partially explains the food world’s current obsession with ‘minis’ (mini cupcakes, mini cakes, hamburger sliders, etc.). Minis offer a different ratio than standard offerings, perhaps giving a more ideal bite.
In the future, as we see more solo eating, I think we will also see more of this ratio changing by brands to produce everyone’s ideal bite. Sometimes it’s constructed (as Reese’s attempts) and sometimes the control is given to the consumer (as Talenti’s layers suggests). How might you idealize your product or portfolio? Which bite do consumers say tastes the best? How might you offer a range of ideal ratios?
The Rumbling Field of Gut-Friendly Products
ESPA, the luxury skincare company, has launched a suite of ‘ProBiome’ products that ‘harnesses the power of probiotics’ to provide advanced skin rejuvenation. By support the good bacteria on your skin, and excluding the bad, the product claims to help reduce acne and other skin blemishes.
Scrumbles is a new all-natural dog and cat food out of the UK. Developed after their rescued cat had ‘smelly poos’ and the vet prescribed an expensive probiotic paste, Scrumbles contains a gut-friendly mix of ingredients that keeps a pet’s digestion in order. Recently the company launched a #checkthepoo campaign as new pet owners tried Scrumbles.
Probiotics products seem to be everywhere today. From Danone’s new pro- and pre-biotic shots (Activia Dailies) to Kellogg’s Happy Inside cereals, shelves keep filling up with gut-friendly merchandise. However, the more branding and ad copy I see, the more skeptical I become about this trend’s staying power. Don’t get me wrong, I’m a convert to the power of gut-health, but the approach many companies are taking to message to the mainstream consumer seems incomplete.
Ask a consumer what fiber does and they’ll say it ‘keeps you regular.’ Probe enough with them and they will share with you a visualization of tiny fibers (think rough rope) bulking up and cleaning out their system. Or ask a consumer about fat. The reason it was denigrated for so long was that people could easily picture it coating and clogging their arteries. My point being, the most effective nutritional messages, the ones that intuitively work for consumers, contain an easy to understand mental model.
Probiotic messaging, so often legally shrouded in carefully constructed sentences, rarely provides these mental models. Instead consumers are fast-forwarded to vague benefits like ‘digestive wellness’ and ‘energetic mornings.’ What we are all failing to recognize is that, unlike nutrients like protein which have been intuitive since kindergarten, probiotics have to overcome several hurdles to be understood. First, consumers have to understand that probiotics are a type of bacteria. Second, they have to overcome their bias that bacteria are bad. Finally, they have to understand why eating bacteria (or smearing it on your face) could be a good thing.
This is why I like these two new products above (ESPA ProBiome and Scrumbles). Their ad copy builds on consumers’ existing beliefs to create a simple mental model around their benefit. Consumers know that bacteria cause acne, so ESPA’s product is using good bacteria to keep bad bacteria in check = no acne. Mental model achieved. The foul odor of ‘smelly poo’ is caused by junky pet food creating bad bacteria. Scrumbles makes pet food that only feeds good bacteria = no more smell. Mental mode formed.
Kombucha, kefir and similar products all started their life within a niche audience of health-focused, nutritionally aware consumers. For them, education about probiotic’s benefits wasn’t necessary (in fact it might have been considered insulting). However, to make the jump to mainstream consumers, more work needs to be done. Marketers need to build on consumer’s existing beliefs and create intuitive mental modes to quickly communicate their benefits.
Whitney Port, perhaps better known for her role on the reality show The Hills, has been named Chief Brand and Strategy Officer for 1908 Brands, a company with a portfolio of ‘clean and healthy’ brands centered around the family. Port joined 1908 Brands last year with the acquisition of her pre-natal nutrition company Bundle Organics.
Icon Meals, the Texas-based meal delivery program that started out as nutrition system for bodybuilders, has expanded their snack offerings into US Vitamin Shoppes. Their new flavors of Protein Popcorn (each serving has 10g of protein) include: Dark Chocolate Sea Salt, Ghost Cereal Milk, Peanut Butter Vanilla, Cotton Candy Krunch and Caffeinated Kernels.
Healthy Meals Supreme, a company out of Princeton, NJ, has launched a meal delivery service catering to people with medical health issues. Designed by nutritionists, the company claims the meals provide the correct nutrition for consumers dealing with diabetes, heart disease, kidney impairment, Alzheimer's/dementia, and general geriatric care. Currently the service is only available in the Northeast US.
So What? I buy my socks, underwear, t-shirts, and other “basic clothing” on Amazon. Subscribe and Save, little thought made, done. Socks are socks, and I don’t see the point in spending my time in store searching for such an ordinary item. However, I’d never buy my shoes online. I ran long distance for years and, somewhere along the way, I screwed up my knee. Therefore, unless I want to be in pain all day, I only buy my shoes or inserts at a handful of small specialty shoe stores. While Amazon and Zappos sell similar products, I feel like I’m ‘rolling the dice’ if I trust my health to anyone other than niche experts.
Recent articles in the New York Times and Forbes tell me that I’m not alone in my behavior. While millions of shoppers have started to gravitate toward ‘all in one’ online marketplaces and big box stores for everyday merchandise, specialty shops are holding their own and even thriving. ‘Small is the New Big,’ as Forbes recently put it, when it comes to luxury goods, unique clothing and one-of-a-kind jewelry. I’m betting that specialty food and personal care could also be added to that list.
The last several years have seen many of the big players in meal kits fall from grace. Logistics issues, tight margins and a lack of customer repeatability have bankrupted startups and pushed many into the arms of large retailers (e.g. Home Chef). As QSR, grocers and fast food get into the prepared meal delivery game, and retailers make fresh grocery delivery increasingly easier, the trajectory for getting everyday meals to consumers is becoming clear. However, what if these ‘everyday meals’ are becoming the sweat socks of food? With their automation, logistics and distribution systems, I have no doubt that consumers are becoming more comfortable with the idea that large retailers and restaurant giants can consistently produce quality Caesar salads and fettucine alfredo for the masses; the everyday, thoughtless lunches and dinners. But what about the special meals for my aging grandmother with Alzheimer’s and diabetes? What about my wife’s pregnancy meals if she has a history of preeclampsia? Or my vegan brother’s meals as he trains for a marathon? Will people trust mass-meal producers for these specialty needs?
To look at this another way, I believe that consumers’ definition of ‘staples’ is widening. In the past, there were consistently needed foods (typically commodity items like flour, sugar, eggs, milk, etc.) that we mindlessly added to our shopping carts and, if possible, were more than happy to have delivered. With the advent of automatic replenish services, this list is growing and I think soon it will encompass whole meals. However, I think there will continue to be room for those foods and meals that require thought and consideration, ones we can’t trust to large producers’ mechanization and mass production. This will remain an oasis for ‘smaller’ producers and potentially a large business for the CPG companies and startups that jump in now and ‘un-staple’ themselves to produce trusted, niche products.
The Bold Rush
Trader Joes has launched two new products. Buffalo-Style Hummus is creamy hummus with the bold flavors reminiscent of Buffalo wings. Mushroom & Company Multipurpose Umami Seasoning Blend, a mix of mushrooms and other umami heavy ingredients for use on sandwiches, soups and other foods.
So What? The internet was abuzz earlier this month regarding a story of retail arbitrage. Apparently, a couple from LA have developed a side hustle making ~$30K a year reselling Trader Joe’s Everything But The Bagel Seasoning on Amazon. This story sparked my interest for a few reasons, but primarily because I had just read a series of articles and Instagram posts where people were freaking out about both Costco and Walmart selling giant bottles of Everything bagel seasoning. Why, I wondered, was a bagel sprinkle in such high demand?
For those of you not familiar with this ‘condiment,’ Everything bagel seasoning is exactly what it sounds like, a hodgepodge of all of the most common bagel toppings mixed into one. Namely the mix consists of poppy seeds, sesame seeds, onion flakes, garlic flakes, pretzel salt and pepper. In the past several years it has found its way out of bagel shops and onto…everything. Food blogs and cooking sites proclaim “it is the most versatile seasoning in our kitchen” and listicles have been created with the “19 Ways to Use Everything Bagel Seasoning.” However, it doesn’t take much culinary sleuthing to figure out the ‘patient zero’ of Everything seasoning, the breakout star that caused the original flight from the bagel shop: avocado toast. It seems that some gourmet somewhere decided that avocado toast needed a little something extra.
In the last several years, the food landscape has radically changed. Processed food has been denigrated, resulting in a massive shift toward less industrialized, simple ingredient, organic and natural products. At the same time, likely because of this backlash, there has been a movement in popular culture celebrating extremely processed food. For example, Ultimate Milkshakes , Rainbow/Mermaid colored food, edible cookie dough, and Milk Bar Tang Toast, just to name a few. My hypothesis is that as the mainstream has moved away from processed food, its allure has become amplified. This all speaks to the fact that the people who are now eating cauliflower crust pizza and bean-based chips were, just a few years ago, eating Totinos and Lays. They aren’t old-school natural foods hippies, but instead recently converted junk food junkies! (No offense Totinos and Lays!)
That explains a lot. As the food supply has shifted from brightly-colored, MSG-amped, amazingly flavorful processed products to natural ingredient, simple, earthy, plain food, we are encountering a problem. For generations raised on extreme flavor, they are craving BOLD. As products move to replace, augment and reduce the ‘bad’ ingredients, they are subbing in bland and boring bases like cauliflower, garbanzo beans and almond milk. To tickle the taste buds of this generation, producers are being forced to pull out all the stops. Hence, the natural umami powders, buffalo-style hot sauces in bland hummus and Everything bagel seasoning. The seasoning is especially interesting because it incorporates texture on top of taste. My guess is that lacking the amazing, over-the-top delicious flavors that chemistry can create, consumers are gravitating toward stimulating other senses (i.e. texture/touch) in order to add an extra zing. My guess is we’ll is a lot more crunch and texture in the near future.
All of this points to what I’m calling the Bold Rush in the mainstream healthy food space; a new race to re-populate newly ‘cleaned’ categories with just as much stimulation and flavor as their processed forebearers.
Obey the Unspoken Rules
Frito-Lay announced last week the launch of a new line of Flavor Shots, portable and poppable snacks with the familiar flavors of Doritos and Cheetos, all in a package that easily fits in your hand, cup holder or easily tipped into your mouth. Included among the four flavors is Cheetos Flamin’ Hot Asteroids, tiny, round versions of the snack classic and a returning fan favorite.
Chicago Bar Co., the corporation that makes RX bars that was purchased by Kellogg 18 months ago for $600 million, has changed its name to Insurgent Brands. Additionally, the company has announced a new line of savory, chickpea and lentil-based snack bars called TIG. The bars come in barbecue, buffalo, chili lime and pizza flavors.
So What? The snack bar category is definitely dominated by sweet, and if you talk to consumers there is a desire to get more savory flavors into the mix. However, I don’t think a savory bar is the way to do this. KIND has tried this, Mediterra has tried this and each time the results have been less than stellar. I don’t think it has anything to do with formulation, I think it is because the snack bar shape (the common rectangular, beige block) has become indelibly associated with sweet in consumers’ minds (In fact, you may have noticed that KIND has slowly altered the language on their savory bars to include the word ‘sweet’ to potentially transition consumers; I think that might make matters worse).
Instead of bar shape, I would suggest that Insurgent, KIND or anyone else move to a form that telegraphs savory in the snack aisle. Three that come to mind are a snack mix (like the Frito-Lay Flavor Shot), irregular shards (like beef jerky) or extremely narrow/extremely wide bars (like Krave bars or Epic bars). My point being, consumers need a visual cue for telling savory from sweet at a distance and shape is a good proxy. No one wants to absentmindedly bite into a bar expecting sweet peanut butter and chocolate to be hit by pizza flavor.
Larger lesson here: there are unspoken expectations that consumers have around product color, shape and style. You can either spend amazing amounts of money to build new expectations or play within the existing rules.
One of the most common requests I get from my clients is “help make our company more innovative.” Decades of business books promising ‘the secrets to innovation’ have convinced people that innovation can be obtained by following a simple formula, be taught in an afternoon workshop or be installed along with a ping pong table in the break room.
Innovation isn’t a program you implement, it’s a way of thinking that exists at the level of culture within a company (one of the reasons this newsletter has the name that it does). It doesn’t start with high-minded vision statements and corporate directives, it starts with people believing in a common set of goals and practices which are then reflected the habits, norms and mundane conversations that occur in hallways and breakrooms.
There isn’t one model for innovation, I’ve seen amazing things accomplished at different corporations with radically different behaviors (i.e. you don’t have to turn your company into some Silicon Valley startup to be innovative). However, I’ve noticed some common themes among the most successful companies, here are just three:
1. You don’t need more ideas
People covet ideas, the slick concept, the catchy jingle, the pithy tagline; to people in many corporations, ideas are ‘the Precious.’ Real innovators realize, though, that ideas are a dime a dozen. Think back to your competitor’s last big launch. I’m willing to bet that your company thought of that idea years ago, likely even concept tested it, but decided not to pursue it. In fact, in my experience, there are very few new ideas. Which means that you don’t need to schedule more ideations or bring everyone together for more brainstorms. Instead, what you need to do is put your energy into understanding your consumer. Once you do, you’ll see all of your old ideas in a new light and you’ll focus your attention appropriately.
2. Problem focused not product focused
In many companies, the biggest issue with product innovation can be summed up in the old saying, “When all you have is a hammer, everything looks like a nail.” I see too many leaders thinking about their future pipeline only through the products currently in their portfolio. If they are a chip company, they only think about innovation in chips. If they are a bar company, they think ‘how do we give the consumer another bar.’ The problem is that this only creates incremental innovation, not breakthrough innovation. I understand the reality of P&L and capital constraints, but real innovation only comes with companies become consumer problem focused, not current product focused. They must ask themselves, what problems do consumers have and what can we make to solve them, regardless of what they make now.
3. Collaboration not credit
Innovation is not invention. Invention is the ‘aha’ moment of discovery, important but meaningless without innovation. Innovation is about taking an idea and making it scalable and profitable. That never involves just one person or one group, but armies of people working together toward a common goal. However, too often I see leaders make the mistake of rewarding the work of one person or one small team, confusing invention for innovation. While this might feel good in the moment it sets up a ‘getting credit’ culture that guards ideas and resists collaboration for fear of losing out on future kudos. If you want a culture of innovation, praise the idea collaborator and punish the idea hoarder.
The Inevitability of Beauty Foods
Purely Elizabeth will soon be launching Collagen Protein Oats, oatmeal cups containing collagen with a pouch of nut butter to squeeze over the top. Flavors include: Blueberry Walnut and Vanilla Pecan.
Medlie (formerly Zupa Noma) has launched Veggie Mashes, a line of organic vegetable blends featuring a mashed cauliflower base, packaged in grab-and-go cups. Two of the varieties — Avocado Greens and Tomato Tahini — contain collagen peptides.
DPP Pharmaceuticals, an Australian cosmetics/beauty company, has launched a new brand called Coffee Bar. This line of exfoliating bars are made of Robusta coffee beans along with olive oil, cocoa butter, oats and milk.
So What? Fifty years ago, being healthy was mostly defined as being free of illness. Up until the early 1970’s, lack of disease meant you were well. However, starting in the 70’s and ramping up in the 80’s, prevention became the prominent fixture of a healthy lifestyle. Not being sick wasn’t good enough anymore, now averting a potential issue (i.e. not having a heart attack) and outwardly showing your efforts (e.g. going to the gym) was the responsible thing to do. However, in the late 1990’s-early 2000’s we entered into an era of health that we are still progressing through, one focused on wellness.
At first wellness looked a lot like prevention, the list of “good-for-you” foods changed but food manufacturers adjusted accordingly (e.g. fat free became gluten free). But as wellness has matured, the full scope of its differences are becoming clear. Unlike prevention, where it is believed that specific health consequences occur from eating specific foods (e.g. high fat/high cholesterol foods cause heart attacks), wellness is more holistic in cause and effect. Within wellness, avoiding ‘chemicals,’ ‘pollutants’ and ‘toxins’ from numerous sources increases one’s well-being. These ‘toxins’ can be from food or drink, but are also environmental (e.g. the sun or air pollution), social (e.g. relationship or career stress) or even personal (e.g. a negative attitude).
Because the causes of harm are so diverse with wellness, the signs of fitness are equally diverse. No longer is it good enough to just be thin or muscular (you could be secretly skinny fat), now your body must be free of environmental, social and personal toxins. Social proof of this ‘toxin-free lifestyle’ requires followers to exhibit constant signs of fitness in their attire (e.g. the stress-free lifestyle of yoga pants), in their food/beverage choices (e.g. organic, charcoal smoothies) and in their bodies. A beautiful exterior is a sign of a beautiful, well-cared for interior, with many wellness diets making a direct association between consumption and external appearance (raw food diets give practitioners a ‘glow;’ vegans claim to have less acne, and paleo eaters firmer skin tone).
The beauty industry has been capitalizing on the connection between internal wellness and external beauty for years now, many replacing traditional ‘chemical’ ingredients with ‘pure’ food-based ones (see Coffee Bar above, Manuka Honey impurity removing ointments, and strawberry serums). However, the door swings both ways. Food products specifically designed to enhance external and internal wellness are gaining ground. Collagen is specifically well positioned because of its established legitimacy in both the much respected Korean cosmeceuticals industry AND from gut health promoters (where it gained prominence as a special protein through the bone broth trend).
If you had asked me 5 years ago if I thought ‘beauty food’ would be a legitimate, mainstream category, I would have laughed. However, today I believe it is inevitable. There is a huge opportunity for food and beverage companies to siphon off a fraction of the $445 billion beauty industry; collagen is just the beginning. If a mainstream CPG company is not currently mapping out how to tackle beauty, they are already behind.
The Second Order Consequences of Non-Cooking Consumers
You’ve seen the stats: Consumers now eat more food prepped out of the home than in (either eating at restaurants or delivery to home), the purchase of pre- or semi-prepped meals is increasing, and (despite the perception that people are cooking more) consumers just don’t like to cook. All of this info seems to be pointing to future where cooking becomes like sewing—a hobby that few people actually do because the availability of high quality, prepared product is so easiliy accessible and cheap that doing it yourself becomes a quant pastime.
Therefore, allow me to complete the arc of this trajectory and imagine a world 5-10 years out. What would a future world look like where consumers mostly stopped cooking? What would this mean for companies, brands, consumers and society? Not just the business winners and losers, but the second order consequences that this change would have across the board.
As people cook less, the need for a traditional kitchen will wane. Why invest the money or the space in a stove, pots and pans, equipment storage and a large prep area when you could get by with a few simple pans and wall-hanging induction plates? Instead of a full stove, kitchens will transition to intelligent warming units (like the microwave/induction June oven or a smart sous vide machine) that can scan bar codes and utilize internal sensors to heat food to the perfect temperature without the need for monitoring. Companies that aren’t associated with the most popular warming units will fail to thrive (see ChefSteps new partnership with sous vide maker Joule or Tovala Oven’s new partnership with Trader Joe’s and Tyson Foods). Refrigerators will likely become either bigger or break into smaller units around the kitchen to store more semi-prepped, fresh food. Space in the kitchen might be allocated to growing herbs (through automated systems) or vegetables (see OGarden) to be used in garnishing and personalizing semi-prepped items. As cooking wanes, garnishing and presentation of meals will take centerstage. Kitchens will likely be repurposed to have more sitting and gathering space to share meals or just eat alone with more access to a screen.
As at-home cooking decreases and more preparation is outsourced, the need for producers to communicate care in the making of the food will increase. If consumers aren’t cooking it, they’ll want to see the craft of others. Likely, a whole peripheral industry will be created or sustained that produces videos of the assembling and cooking of the available meals. Consumers will be able to pick a meal that sounds good and then double-click into how it was created. Snacks, staples, and beverages will mostly transition to automatic replenishment services, meaning products not getting on the initial order list will result in long-term lockout for brands. However, there may be an opportunity for more interactive, dynamic ordering. Consumers might be able to ‘shop their pantry’ either through large screens on the surface of refrigerators or cabinets or through AR. Looking into their virtual refrigerators or pantries, consumers will be able to see potential items and accept or remove them. Working with in home AI (that has monitored which past meals were consumed or thrown away), personalized menus will be suggested (sponsored by brands who will pay for access to key demographics).
In order to make the delivery of semi- or fully prepped meals as inexpensive as possible, companies will need to cut costs at every turn. Shipping will be reduced by having ghost kitchens scattered throughout the suburbs and exurbs of dense cities. These factories will not be grey buildings quietly pumping out anonymous processed food, but styled as self-sustained farms and kitchens—open for culinary tours. For larger cities these kitchens may contain apiaries and vertical farms producing greens, fruits and herbs to reduce shipping costs. While the face of these kitchens will be chefs, the heavy-lifting will be through serious automation. Deliveries of refrigerated meals will be done by electric fleet vans (eventually driverless). Hot food may be prepared at the kitchen and delivered, or prepared and cooked within the van by robots in route, potentially before items are even ordered via predictive AI (see Zume pizza). The creation of fleets of wandering production+ delivery vehicles is a huge opportunity. To eliminate packaging waste, and the consumer hassle of dishes, reusable materials may be utilized. Instead of the consumer washing or recycling the dishes and utensils that come with meals, all of these will be placed in a package and collected with the next delivery.
With more meals sourced semi- or fully prepared, grocery stores will look profoundly different. While demographically it may differ (lower income consumers will likely continue to do more actual cooking to save on cost), the majority of the market will be as follows. Convenience stores will accelerate their role as a place to get staple foods (milk, snacks, beverages, etc.) as well as fresh items (see Meijer’s Fresh concept), not just for grab-and-go but for last minute needs (see Herbst Markets and Hy-vee’s Fast and Fresh grocery/convenience hybrid concepts). Additionally, convenience stores will become collection points for ordered meals and will house lockers for other ecommerce orders—making c-stores hubs of ‘general store-like’ activity (see Chicago’s FoxTrot Delivery Markets). Dollar stores will look like the grocery stores of today—with large fresh sections and aisles of CPG branded product (see Dollar General’s massive expansion plans and DG Fresh stores).
Large grocery stores will maintain some of their raw commodity perimeters (milk, produce, etc.) and center of store packaged products, but these will be drastically reduced or pushed behind the scenes for click and collect. Replacing these spaces will be fresh deli counters, exhibition stations, large selections of final flourishes (garnish, seasonings and sauces) and big refrigerator bays with prepped product and RTE items. Grocery stores will be food entertainment centers, blurring the line between theater, restaurant and supermarket (see Kroger’s new in-store Pork & Mindy eateries). The humble sample tables of today will be replaced with dozens of built-in demo kitchens where consumers will be able to watch and sample products being prepped (or enjoy full meals on the spot) before placing them into their (virtual) carts to take home now or for future delivery. Computer vision and IoT tech will be ubiquitous, not just for cashier-less checkout but for data collection of consumer’s real-time movements (see Walmart’s in-store audio monitoring, biometric and ‘smart floor’ patents or this patent to gauge consumers’ satisfaction through in-store cameras)the following . For example, a pattern of visiting and sampling cooking stations with Middle Eastern or South American cuisines will be noted and the menus sent to the consumer the next week will silently reflect this propensity. Hesitation over a purchase will be recognized by the system’s AI and a digital coupon or message will be pushed to the consumer immediately to get them over the buying hump. Retailers will have the upper hand here and manufacturers will have to buy into the instant data stream, with each brand bidding (Google AdWords-like) in real-time on the long-term value of each consumer to see whose coupon or message gets instantly pushed to that consumer’s mobile device or the digital display in front of them.
Most restaurants (from fast food to fine dining) will offer the option for any meal eaten in-house to be available as a prepped heat-and-eat meal (take home or delivery). These restaurant meals will also utilize a series of ghost kitchens with cheaper overhead and automated production—again pointing to an opportunity in creating and running different versions of these facilities efficiently (see startup Kitchen United).
The Role of CPG Brands
As the market for prepared and semi-prepared food grows, e-commerce captures a larger share of the basket and traditional grocery changes its operating models, retailers and restaurant brands will have the advantage. Packaged goods will be primarily sourced through next gen convenience and dollar stores or through online ordering. Massive changes in CPG’s go-to-market strategies will be needed to maintain relevance. CPG brands will need to expand and grow their brands further into foodservice either through partnerships or radical brand expansion (e.g. Old El Paso Fresh Meals, Tyson-branded restaurants, etc.). CPG brands will upend their traditional comms architectures and trade spending, utilizing most of their messaging and deals to entice consumers to either stock up on products at c-stores or dollar stores or add them to their ecommerce/’click and collect’ orders. The latter will include a wide array of new vectors including: sponsoring, subsidizing or owning grocery/meal delivery services, freebies in the delivery box, the production/ownership of food entertainment advertising (like Buzzfeed’s Tasty empire), or through machine learning advertising software.
Delaying The Inevitable End
Mars Wrigley Confectionery UK has released protein-enhanced Snickers and Mars bars. The bars contain 10g of added protein and each bar contains less than 200 calories. Mars More Protein has 40% less sugar and Snickers More Protein contains less than 30% sugar when compared to the standard bars.
SuperFat, a Kickstarter funded project, has launched a line of nut butter-based meal pouches. Each pouch contains macadamia, almond, & coconut butter + functional ingredients like coconut, mct oil, probiotics, plant protein and cacao. The products are advertised as “The perfect on-the-go fuel, enjoy first thing in the morning, as a tasty mid-day meal replacement, or throw in your gym bag for the ultimate workout partner.”
Lance Collins, founder of the beverage brands BodyArmor, Fuze and CORE Nutrition, has launched the CORE bar. Called an ‘overnight oatmeal’ bar, CORE is messaged as having “everything you need to keep your core strong” which includes fiber, probiotics, overnight oatmeal and protein.
Wild Earth, a dog food company featured on SharkTank, is producing dog food and treats made with ‘ancient Koji protein.” The company claims that koji, called the ‘national fungus’ of Japan, used to produce fermented soy and rice, is less harmful to the environment, healthier for pets, and ethically more humane because it doesn’t kill an animal to feed an animal.
So What? The Digital Audio Tape (DAT) is a music format most people have never heard of, but it was a magnificent thing. Introduced in 1987 by Sony, the DAT was similar to a standard audio cassette tape but half the size. More importantly, it was higher in quality than standard tapes…significantly higher. In fact, DATs could record at such a high sampling rate that they surpassed most CDs of the time, producing an exact digital copy with no loss (a concerning fact to most studios). However, CDs still surpassed them in popularity and today cassette use has (mostly) faded.
You’d think that a new medium would only replace an old medium after it was able to offer a superior benefit. However, in tech, this is often not true. Airplanes, film, communications—in each situation, the older tech was at its best (even superior) right before it was replaced. Engineers become so proficient and comfortable with the old tech that can push it to astounding heights. Then why replace it? Because even though it was near ‘perfect’ it had also reached its limits. So, while the audio quality of the DAT was amazing, everyone knew that it wasn’t getting any beter. Plus, the audio quality of the formats had surpassed most average users (i.e. tape and CD both sounded ‘good enough’). The next big push was for quantity (i.e. how many songs you could fit), not quality (i.e. streaming audio today has much lower fidelity than vinyl). Whereas cassette tapes had reached the end of their storage capacity.
In this way, market trends in CPG are very similar to tech trends. They both follow an S-shaped curve, they start slow, advance quickly and then slow down again. Most importantly, right at their zenith, they are often the best they are ever going to be, the most ubiquitous, and the cheapest. Counterintuitively, this is where they are at their weakest and where a new format (with greater capacity to perform what consumers need done) enters.
Which brings me back to the products above, and one trend in particular: protein. It’s in every category, the darling of every diet and now cheap enough to put into candy bars. Has protein reached the top of the S-curve? I don’t think so; however, I do think it is in danger of losing its position faster than it should. I see three developing issues with protein that must be resolved to keep protein climbing:
1. Reject Ambiguity
KIND Healthy Snack company filed a citizen petition with the FDA last week asking the agency to update their stance on nutrient claims. KIND, as well as 10 public health experts that countersigned the petition, argue that too many companies are taking ‘empty calorie’ foods and simply adding the required quantity of a nutrient to qualify for ‘healthy’ status. While they don’t call out particular items, the use of ‘over the top’ protein powders sit squarely in this dispute. Products like the Snickers and Mars protein bars talk about protein almost like a flavor, removing it from its origin. I think this collectively weakens protein’s perceived healthfulness. The best thing manufacturers can do is call out the protein source, remove the ambiguity that makes ‘protein’ into a faceless chemical.
2. Job Insecurity
Protein rose to prominence because it did so many consumer jobs well: it satiates, its helps the growth of lean muscle, and it works with modern diets. However, today many ingredients are jockeying for these jobs. For example, fiber is making a comeback. Just last week, Vox highlighted how fiber is the superfood we are ignoring at our own peril. Not only does fiber do protein’s satiety job, it’s also connected to maintaining a healthy gut—an increasingly important new job (and one that protein might be very bad at). Fat, once shunned, is now gaining ground as a ‘clean fuel,’ adopted by athletes and dieters alike (see SuperFat above). One potential way for protein to extend its job security is to embrace the bundle. Instead of trying to claim superiority on all of these jobs, include protein as part of a bundle (e.g. Core Bar) to maintain its relevance.
3. Find a new career
There will come a time when protein is displaced, so now might be a good time for it to be looking for a new career. This might be difficult at the broad level of ‘protein’ (although the trend toward ‘complete protein’ might be attempting this), but as the protein market becomes more sophisticated, there is potential for highlighting specific ‘hero proteins.’ Collagen is the current front runner, and its new job is maintaining skin tone and beauty. However, fungal proteins like the koji in WildEarth above, may also be able to push to a new job (maybe in gut health?)
Leaning into Uncomfortable
In time for March Madness, Buffalo Wild Wings has debuted the Jewel Stool—a specially designed chair (featured at two of their restaurants and in their ads) for men who’ve recently had vasectomies. The chair contains a ‘beer button’ to request an additional beverage, a refrigerated cup holder for the beer and a specially designed cooler for…the recovering patient. BW3 claims that the inspiration for the chair came from research done by Athena Heath that found a 30% increase in the number of scheduled vasectomies during the first round of the tournament. Men, the study found, wanted to time their mandatory downtime with the games.
So What? Sometimes you need to get over your own sensibilities in order to market a product effectively. Years ago, I remember doing a project for the Fiber One brand—brand positioning and brand meaning work. Not long into the conversation I realized that some people in the group were uncomfortable discussing the major benefit of the hero ingredient. They could talk about satiety, weight management and gut health but they became uncomfortable when discussing regularity. Of course, this is an issue because that’s the first thing most consumers think of.
We’ve all worked on brands where we weren’t the consumer. This can be challenging because we can’t rely on our own intuition to pick winning propositions. For example, if you are a health conscious, natural/organic foodie working on a fast food brand, you might have trouble understanding what your consumer wants in a ‘double bacon’ sandwich. However, in addition to the taste barrier, there can be a mindset barrier. What if your consumer has a different sense of humor, a different view of money, health or life priorities than you? Can you still do a good job marketing to them? I think you can.
While sharing sensibilities with your consumer has its advantages, it can also be dangerous. Being naturally simpatico can lull you into a false sense of affinity, making you believe that all of your decisions are in-line with your consumers’ without the need to consult the data. Opposingly, having distance from your consumer can force you to be more thoughtful. However, traversing that distance can often be uncomfortable, forcing you to consider topics or ways of thinking different than your own. In the end, I think it makes you and the brand better when you consciously recognize that you aren’t the consumer and lean into the tension.
Stay In Their Groove
McDonald’s announced that they earned 6.4 million mobile impressions during an 8-week trial period in Southern California when they linked their OOH billboards with the Waze app. Geofenced billboards were able to push full screen ads to mobile devices running Waze once the vehicle came to a stop for a few seconds. If consumers engaged, the app would offer in-app navigation to the nearest McDonald’s. The company indicated that the trial resulted in 8,400 navigations to restaurants and reached 1.2 million unique consumers.
So What? Hundreds of consumer interviews throughout the years have taught me that most consumers don’t think about what’s for dinner until the drive home. Yes, they’ve prepped for possible contingencies but the game plan is nebulous up until the 11th hour—including stopping at the store to pick something else up. That means if you can get to that person in that moment, you can change the course of their dinner history. But you have to squeeze into that moment, that aperture.
People tend to think that consumers are these uni-directional, brand loyalists that never diverge from their use of Colgate, drinking of La Croix or devotion to Skippy peanut butter. Yes, there are still people that say they won’t switch to a different brand, but a growing majority of people say that given the right circumstances they’d switch. The truth is consumers are context driven but fickle. If exposed to the same drive, same office, same cafeteria, same vending machines and same media every day, consumers easily fall into a groove, a groove that only looks like brand loyalty and stability. Find a break in the groove, or make one, and consumers are likely to jump.
What I like about the McDonald’s Waze ads is that they don’t require consumers to get too far out of that groove, plus they promise an easy return back to normal once you’re finished. It’s that second part that I think we often forget. Click on a banner or in-page ad and who knows if you’ll back to your story. Follow a billboard saying “exit now for X’ and who knows how many miles it will take. McD’s is saying, we’ll get you what you want and put you back into your groove, no drama. The future is in these ‘safe detours’ for consumers.
Last month at the International Sweets and Biscuit Fair (ISM) in Cologne, the world’s largest trade show for sweets and snacks, the Hemptastic Hemp Bar was chosen as the best new product. The bar, made by German snack company Katjes Fassin GmbH + Co. KG, is made of 20%+ of raw hemp seeds and other superfood ingredients. Flavors include: Cocoa & Almond, Cranberry & Goji, and Cashew & Coconut.
NutraOrganics, a natural foods company in Australia, has launched Coco Biotics Probiotic Energy Bar. Made of coconut, sunflower seeds, sprouted flax, sprouted mung beans, chia seeds, sesame seeds, plus dried fruit, the bars claim to be a good source of omega 3, MCT oil and probiotic cultures.
Real Bar has launched ‘cold-pressed raw bars’ made with a short list of ingredients and 15 grams of protein. Bars contain almond butter, pumpkin seeds, almonds, pumpkin puree, pea protein, dates and honey. Flavors include: Pea Pumpkin, Almond Cacao Nib, Pineapple Coconut, Mango Banana, Chocolate, and Strawberry Banana.
Nestle SA has launched GoodBe, probiotic rich granola+yogurt bars. The chilled snacks contain crunchy clusters of granola, seeds and nuts with a prominent middle layer of yogurt. Flavors are simply Vanilla, Blueberry and Strawberry.
So What? On September 9, 2004, NBC launched Joey, a Friends spin-off that followed the mis-adventures of Joey Tribbiani (Matt LeBlanc) as he moved to Hollywood to make it as an actor. NBC placed the show in the same timeslot as its mega-hit parent series and spent millions in advertising to convince viewers to tune in. Unfortunately, the series was canceled after less than 2 seasons, the show being pulled mid-way through the second year with the remaining episodes never airing.
On September 16, 1993, NBC launched Frasier, a Cheers spin-off that followed the mis-adventures of Frasier Crane (Kelsey Grammer) as he moved to Seattle to make it as a radio talk show host. NBC placed the show in the same timeslot as its mega-hit parent series and spent millions in advertising to convince viewers to tune it. The series lasted 11 seasons and won 37 Emmy Awards (more than Cheers).
Same network, similar concept, similar support, but radically different results. What happened? If you dig through the trade magazines and get the response from critics, writers and even the main actors, one comment continues to come up: character growth. Neither Joey or Frasier were major characters on their original shows, both were mostly as the butt of jokes or given the occasional one-liners, however in their respective spin-offs, Frasier grew as a character and Joey pretty much stayed the same. This was a conscious choice. Kelsey Grammer specifically wanted Frasier to break from the Cheers mold and be surrounded by radically new characters and situations. Whereas the Joey writers were told to keep Joey the same—to the point that many of his supporting characters were carbon copies of Phoebe, Ross, Chandler and Monica.
Glance through the lists of ‘best loved spin-offs’ on the web, and you start to notice a pattern. Spin-offs that don’t try to remake the original fare the best in the long run. While a few of the core characters might be the same, the new show tells radically new stories that would not have been possible with the show.
Which, amazingly, brings me back to snack bars, the biggest CPG spin-off to date. What started as a minor section of the cereal aisle has now become a major category all its own, with a multitude of its own spin-offs and offshoots (i.e. protein bars, nutrition bars, etc.). However, as the name would imply, granola bars started it all. Perhaps it’s surprising then that the sales of granola bar are starting to slump, down nearly 3% at the end of last year compared to the previous 52 weeks according to IRI. Which makes me ask an odd question: can granola bars learn something from Frasier and Joey?
To be a successful spin-off, granola bars need to break away from their parent series. While the comparison to cereal might have helped launch the category, the comparison today may be limiting its long-term growth. While the ‘character’ of granola has a great health halo, there is a need to add significant breadth and depth to avoid the boredom that surrounds this typically brown, crunchy, grain-based snack. Adding new ‘supporting characters’ (as in the bars highlighted above), especially ones that cereal would have a hard time supporting, would likely go a long way toward reinvigorating the category.
Net-net: granola is at an inflection point as a spin-off, it can either grow and differentiate itself from its parent category or be overshadowed by its more successful offspring.
Getting Back to Connection
What started off at one Chick-Fil-A in Kansas has now spread to hundreds of locations across the country. Last weekend, throughout the US, Chick-fil-A restaurants held a Daddy-Daughter Date Night at their stores. Reservations were taken, dresses were worn and, in some cases, limos were rented. The company says they plan on continuing the event at more locations next year.
So What? Did you know that the word companion literally means ‘to break bread with?’ Or that the word ‘focus’ means ‘domestic hearth’ because it was where food was prepared in the home everyone gathered together. Food has always been social, a connecting force for friends, families and even strangers. Therefore, why has so many brands within CPG walked away from that message and branding? Sure, there are pithy taglines that refer to connectedness or trite commercials with ‘perfect families’ enjoying their ‘perfect meals,’ but in many ways, the CPG industry has come to reflect the individualism of our day. Indulgence, taste, and convenience have become everything—our grand differentiators and major benefits. Even our actions on social media are rarely ‘social’ but echo the braggadocios statements of consumers as they tell their friends ‘look what I’m eating’ or ‘look who I’m eating with’ versus real calls for connection.
For those of you that have followed this newsletter for years, you know I have a pet theory that I occasionally dust off and refresh. I think the days of everyone’s obsession with their little glowing screens (i.e. phones, tablets, etc.) will soon subside. It won’t happen because of the need to physically connect with others (although people will quickly see that as a benefit) but rather it will happen because of class differences. Now that everyone has access to screens, it’s no longer a mechanism to display status. Once TVs were the tech of the rich, but as soon as they were affordable to everyone it became chic to disparage them (i.e. TVs became the ‘boob tube’ and ‘sophisticated people’ insisted they didn’t even own one). I predict that soon the world’s well-to-do (or those just wanting to look affluent) will be bragging about how little screen time they use. Just as no 1%er would be caught dead in a McDonald’s (even though they secretly sneak it), soon the wealthy will be flaunting their unplugged time as proof of their status (but also probably having clandestine iPhone sessions). Already, Silicon Valley parents are raising their kids screen free, and soon ‘I go all day without looking at my phone’ will be the brag of the rich.
CPG, restaurant and retail brands need to get ahead of this trend. Showing that you have time for togetherness, the bandwidth for gemütlichkeit, and the focusing strength needed for long dinners minus your electronic wubby will soon be the mark of a balanced individual. Brands can either own this or be part of the brands that are still trying to disconnect us from those around us.
Into the Wind
I was taxiing to the runway at Atlanta International Airport this week, and it was taking a really long time. We were originally told we were third for take-off, but 20 minutes had passed on a bright, blue day and we just kept rolling down the tarmac. Finally, the captain came on, “Sorry for the delay folks, but as you can see we are still taxiing. While we were waiting, the wind unexpectedly changed direction. Airplanes always take off into the wind so, we’ve all had to move to get back in position.”
We took off shortly after that but I kept thinking about that statement, “airplanes always take off into the wind.” If you’d asked me, I would have said airplanes could take off no matter the wind direction (as long as it wasn’t too strong) or, if I had to give a split-second guess, I would have said ‘with the wind.’ Why? Because our language is full of ‘with the wind’ positivisms: ‘our project has a good tailwind’ or ‘the wind is at your back now.’ But when you think about it, it makes sense. You might need a little more thrust at first, but once you are in the air, the wind under your wings lifts you up.
Of course, I kept thinking about it because it’s a great analogy for business and life in general. When you are new in your career, just starting your business, new to an industry or just starting something anywhere in your life, your first inclination is to go with the strongest wind that blows you. What is ‘follow your passion’ but another way of saying ‘go with the strongest wind.’ So, we take the first job offer, jump at business deals, or take on easy partnerships. While it might all work out, in my experience those wins don’t work out in the end. You’ll likely go fast—the wind is at your back—but it might be in the wrong direction. To have growth (altitude), you often need to go into the wind; you have to take the time to learn the hard skills, have the tough meetings, pass up easy deals in favor of the right ones, and use a little more thrust to push through. Because if you do, it’s those hard fought ‘into the wind’ actions that will help lift you higher and eventually keep you aloft.