Brands Questioning Categories
UK-based Nuud Snacks Ltd has launched Nuud Gum, a plant-based chewing gum. The brand’s package and website proudly proclaim that the gum is ‘plastic free’ and explain that typical chew gum is “quietly made from plastic –as much per piece as in a drinking straw.” Instead, the company uses chicle (the plant-resin originally used in chewing gum) and is biodegradable—leading to their slogan “Chew plants, not plastic.” Available DTC in Peppermint and Spearmint (if you live in the UK, you can get a free trial pack).
Israeli sugar reduction company DouxMatok is launching a line of hazelnut spreads sweetened with their Incredo sugar. This ‘sugar-based sugar’ uses the company’s technology to match the sweetness of normal sugar with the bulk of added fiber and protein to allow it to cook and act the same in applications. The company sees an opportunity to go after Nutella, offering Incredo Spreads with half the sugar and 8X the protein. The company is looking to introduce the spreads into the US market at the end of 2021-beginning of 2022.
So What? Talk to enough consumers, and you realize that most people aren’t too sophisticated about categorizing the health of their food. They may study nutrition panels and follow nutrition influencers but, in the end, they typically bucket foods into three general categories: 1) Always healthy food (e.g., vegetables); 2) Never healthy food (e.g., cookies) and 3) Unhealthy if eaten in excess (e.g., red meat). Accordingly, most companies looking to invent an innovative health product aim at either improving categories 2 and 3 (i.e., they make better-for-you cookies or turkey burgers) or they find more convenient ways to deliver category 1 (e.g., bagged salad mix). All of which are lucrative and sound strategies.
Occasionally, brands realize there is another approach: making the consumer question the very foundation of their categorization. While it doesn’t happen often but when it does, it usually shakes up incumbents. It happened in the 80’s with fruit juice. Seen as an ‘always healthy’ category by consumers, the nutrition of fruit juice came into question due to ad campaigns by smaller brands. ‘Juice,’ they said, wasn’t always just fruit, but could mean fillers, extra sugar, artificial colors and ‘from concentrate.’ The juice category faltered and, even today, their purity is always in question.
In the 90’s, consumers were informed that their cooking oils and butter were secretly not all the same. Some had saturated fats which led to heart disease. Soon cooking oils and butter became suspect and olive oil began its rise. In the ‘00’s it was yogurt’s turn. Always seen as a health food, upstarts like Chobani made people question the nutrition credentials of the major yogurt producers, leading to a shake up in the dairy case.
Therefore, I think brands like Nuud Gum and DouxMatok are on to something by making consumers question the health of seemingly innocuous categories. However, a caveat is needed here. Sometimes this strategy backfires. In 2008, Campbell’s released a series of ads attacking competition and informing consumers that the soup category was loaded with MSG. This upended consumer beliefs that (as Campbell’s had always told them) “Soup is Good Food.” The problem was that while Campbell’s released an MSG-free line, they never removed MSG from almost 100 of their soups! The category fell, but Campbell’s fell the worst. Three years later, Campbell’ssales were still down 5%. The lesson being: making consumers question the health credentials of category is an effective strategy for repositioning, but first make sure are on the right side of that new categorization!
You’d think after so many categories have flip-flopped from ‘always healthy’ to ‘sometime healthy’ or ‘always unhealthy’ and back again, it would fail to be a good strategy. However, it only seems to be increasing. Today, eggs are the latest victor in the re-categorization war. Once seen as the perfect food, then demonized for cholesterol, today eggs are back on top. What’s on the docket for the next flip-flop? Maybe honey. Long seen as nature’s perfect sweetener, rumblings of microplastic contamination may cause consumers to rethink the category.
Will the Carbon Message Work?
EverGrain (an Anheuser-Busch backed sustainable company) has partnered with Post Holdings (via their subsidiary Bright Future Foods) to launch a new line of snack crackers called Airly Oat Cloud Crackers. The new product combines the repurposed barley protein and fiber of EverGrain with the ‘climate-positive’ oats of Bright Future. The result is a ‘negative carbon footprint’ snack. The brand claims that each box purchased removes greenhouse gases from the atmosphere via the company’s unique oat supply chain and carbon credit offsets.
Impact Snacks is rolling out its first line of snack bars after their very successful KickStarter campaign. The bars claim to offset 1lb. of carbon with every purchase and are packaged in 100% home compostable bio-plastic. Through a partnership with Clearloop, the company has traced the greenhouse emissions of each of its production steps and utilizes renewable resources and carbon credits to reverse their impact. The company currently sells the bars in two flavors: Dark Chocolate Brownie and Iced Caramel Latte.
Mondelez innovation hub SnackFutures has recently released their own carbon neutral snack brand called NoCOé. Launched in France, the crackers are locally sourced with 95% organic ingredients and packaged with recyclable and compostable materials. Current flavors include Rosemary and Fleur de Sel.
So What? Environmentally motivated benefits are promising to be the next megatrend within CPG. While recyclability and green marketing have been around in food and beverage companies for decades, these new ‘metric led’ initiatives that promise ‘carbon neutral’ or ‘carbon negative’ results are breathing new life into the cause. Will they work or just be another eco-gimmick? Personally, I believe they have the best chance of succeeding compared to any initiative so far. However, they still have issues to resolve.
On the positive side, this new marketing has taken a very nebulous and distant issue and made it tangible and close. In the past, eco-messages were always about ‘making a difference’ on, what seemed like far away, unwinnable problems; stop the ice caps from melting or save the polar bears. However, now the messaging is much more focused, with clearer goals and outcomes that resonate with the individual. For example, Airly speaks about their impact not as just being generally greener, but about every box removing 19 grams of CO2 from the air (or, as they illustrate, generating 2,900 beach balls full of “fresher air”). This is smart because, unlike a few hardcore eco-minded consumers, most people are not internally motivated to attempt to solve a vague problem that has little, if any, tangible effects on their lives. People struggle enough tackling issues that are much closer to home and more immediate (e.g., smoking cessation, weight loss, healthier eating, etc.).
Interestingly, what makes these new eco-tactics so intriguing also highlights their potential weaknesses. One way to categorize these new metric-led marketing initiatives is that they are a derivative of the SMART management method, a process that reframes objectives so that they are Specific, Measurable, Achievable, Relevant and Time-Bound. A popular business system, SMART is a great way to turn grandiose and vague management goals (e.g., “we need to be more innovative!”) into actionable results. However, as any good manager of people knows, SMART can easily fall apart in the details.
While companies have succeeded in turning environmental issues more specific (i.e., focusing on carbon vs. the environment in total) and measurable (pounds of CO2 removed or offset), the work has only just begun. Carbon appears to be a powerful focal point for environmental impact, but measurement can prove less than consistent. While accurate methods of measurement exist, not every company uses the same methods or reports out the same, potentially leading to claims that are not ‘apples to apples.’ While potentially not an initial issue, if carbon reporting becomes popular, consumer scrutiny will definitely follow and any inconsistencies found could destroy good faith.
Additionally, companies will need to work on messaging the tangible end goal they are trying to achieve, how these are truly relevant to consumers and in what amount of time results should be expected. That’s not to say that these new ‘carbon neutral/negative’ products are doomed to failure—in fact, quite the opposite—but innovation in this space is likely to be fast and brands need to keep up.
The Ingredients are Winning
Blue Diamond Growers, a cooperative of California almond growers, has launched a new line of almond-based baking mixes using almond flour. The gluten free line currently contains mixes for Brownie, Chocolate Cake, Chocolate Chip Cookie and Yellow Cake. In addition to the boxes of mix, the brand has also launched Tasty Little Cup, a line of add water only, microwaveable cups (Molten Chocolate Cake, Brownie with Diced Almonds, Chocolate Cake and Confetti Cake.)
Chocolate manufacturer Guittard is launching a new line of chocolate baking chips made with coconut sugar. Advertised as keto and paleo friendly, the new chocolate has 72% cacao and only 1g net carbs.
So What? Some of the largest food companies in existence today started out as purveyors of basic food commodities. Hormel was a meatpacker, General Mills sold flour and Nestle began by selling canned milk. However, over time, they each sought greater profits in producing more value-added goods. Their brands became less associated with minimally processed ingredients and more with the experience of the total product. Few consumers today are thinking about the flour when they buy a Betty Crocker baking mix, the aura of the total brand has now subsumed the importance of the individual ingredient.
However, perhaps that’s changing. As consumers interest in product purity increases and specialty diets become commonplace, its possible we are seeing a power shift between branded products to branded ingredients. In fast food and QSRs you are seeing this play out in interesting ways with ‘ingredients’ like Oatly and Impossible taking top billing on menus at Starbucks and Burger King.
The question is, will value-added companies CPG brands allow this to happen? Just as major Hollywood studios have pulled their titles from Netflix and established their own streaming services, we are seeing big food companies rethinking their use of branded ‘power ingredients.’ Why give these ingredients star billing and excessive licensing fees when they’ll likely use their newfound fame and profit to launch a competitive product.
Therefore, while we are currently seeing more branded products touting their use of branded ingredients, my guess is that this will soon retract. CPG companies will instead look to create proprietary ingredients that minimize feeding the power of specialty, branded ingredients.
The Rise of Restaurant Brands
NYC famous Levain Bakery has now launched pre-baked frozen cookies at Whole Foods. The cookies only need 5-7 minutes in the oven to get a bakery fresh flavor. The cookies come in three flavors: Chocolate Chip Walnut, Two Chip Chocolate Chip, and Dark Chocolate Chocolate Chip. Each box offers eight cookies for $10.
Texas restaurant Mason Dixie has launched a line of biscuits, scones and cinnamon rolls. ‘Scratch made’ with real butter, the products are available in Whole Foods nationwide.
Manhattan’s famous Italian restaurant Carbone is the latest eatery to launch a premium pasta sauce nationwide. Available on the company’s website, through Amazon and at regional Stop & Shop supermarkets, the sauces come in three flavors: marinara, tomato basil and arrabbiata flavors.
So What? Restaurant-inspired products are not new to grocery stores, however COVID has definitely accelerated their pace. With dwindling revenues and no sign of relief, restaurants have had to get scrappy with leveraging their brands. However, my guess is that unlike the sporadic releases of years’ past, we’ll likely see bigger, bolder restaurant-themed launches in the post-COVID future. That’s for three reasons:
1. Diversifying portfolios: Operating a restaurant has never been for the faint of heart, but COVID was a shock even for industry veterans. Those that make it through this will likely never again rely solely on dine-in table service for all their revenue. You’ll see restaurants exploring carry out, catering, edutainment, and retail to avoid putting all their proverbial eggs in one basket.
2. Instant brand: Creating a retail brand may not be the arduous task it was 30 years ago, but there still is an amazing amount of marketing and advertising that goes into brand building. Utilizing an existing restaurant brand can migrate the social media and real-life cred of the brand instantly to a packaged product. For many CPG investors, this is proving to be more of sure bet than other start-ups.
3. Price Reframing: Levain cookies are retailing for $10 for eight cookies, an amazing price point when you consider that Pillsbury sells refrigerated cookies for $2.99 for a similar amount. However, Levain’s cookies seem like a steal when you consider that they sell their cookies in their shop for $4 apiece. Its this type of reframing that restaurant brands are hoping for—premium prices that seem like a deal.