Culture Matters
How Alternatives are Disrupting Incumbents; Why You're Confusing Consumers about Sustainability
Alternatives for the Win
General Mills has launched a new brand, called Bold Cultr, through their internal accelerator group (G-Works). The brand, being rolled out to select Hy-Vee stores and tested in foodservice, currently consists of an animal-free, lactose-free cream cheese alternative made using Perfect Day’s microbial fermented whey protein. While only available in Plain right now, two more flavors are currently in development, as are casein-free cheese slices and shreds.
Perfect Day has announced they are utilizing their animal-free whey protein powders (the same used in their new Brave Robot Super Hero cake mixes) to usher in two new retail products through a partnership with protein powder manufacturer Natreve. The first is a sports nutrition RTM (ready to mix) supplement marketed via California Performance Co. The second brand is Mooless, a nutritional mix in fun flavors. Both brands are coming through Perfect Day’s retail umbrella The Urgent Company, and both brands mention similar, higher order benefits about reducing the overall environmental impact of whey protein production.
Supplant, a company that produces sugar made from upcycled fiber, has partnered with Chef Thomas Keller to produce limited-edition, small batch milk and dark chocolates bars. The Supplant sugar acts like normal cane sugar within the chocolate, but has half the calories, lower glycemic response and prebiotic properties. The product is available through the company’s online store.
Spero, makers of sunflower cream cheese spread, is launching PepitaEgg which, as the name suggests, uses pumpkin seeds as the base of a liquid egg alternative. Slated to launch mid-2022, the new alternative is meant to not only be healthier than other egg alternatives on the market, but healthier and more nutritious than standard eggs.
Billie Eilish has launched a vegan milk chocolate bar named after her new album Happier Than Ever. The bars are made from a mix of rice milk powder, raw cane sugar, tiger nut powder, hazelnut paste, and chocolate liquor. The chocolate, wrapped in a compostable cardboard box and nature flex foil, is made from sustainable raw materials. Currently the bars are on pre-order and are available for $10 a piece.
So What? There are numerous reasons why alternatives are popular with consumers--ethical, environmental, and nutritional. However, while this partially explains the recent spike in interest in plant-based and cell-based food products, there is another, less discussed reason: alternatives are a ‘once in a generation’ opportunity for food companies to disrupt established, mainstream categories.
Typically, CPG companies don’t venture into a category if they don’t have a differentiating benefit. Even then, most new entries aim for niches and hope for large margins by targeting unique targets. For example, Sir Kensington made a splash in ketchup, but it was never going to displace Heinz as the category leader. No company in their right mind tries to ‘out milk chocolate’ Hershey or ‘out cream cheese’ Philadelphia. These iconic brands would squash any upstart trying to make a run for mainstream dominance through every marketing, positioning and distribution lever possible. Ultra-premium chocolate? Maybe you have a chance. Exotically flavored cream cheese? You’ll do well in boutique stores. However, don’t try to enter mainstream grocery categories with a product targeted at mainstream consumers.
But that is where alternatives have changed the playbook. While they may have started out in niche circles, companies like Impossible and Oatly have shown that mainstream consumers—not niche consumers-- are readily embracing plant-based burgers and oatmilk. In fact, research in 2019 showed that 51% of consumers had purchased alternative meat, milk or dairy in the previous three months.
The other factor at play is that heritage industries are often slow to displace themselves. History shows that many big companies and brands go down defending the products and technologies that they’ve spent decades sinking capital into, even when the new technology or form is the heir apparent (see Kodak). That’s why alternatives can serve as a rare entry point for non-incumbents to enter mainstream categories. Few companies are going to go all-out creating products that will eventually disrupt their cash cow, there is just too much corporate inertia. Yes, JBS can purchase a cultured protein company, but the mandate is not to completely displace their current businesses, more likely it is an attempt to not look ‘out of touch’ to the Street.
So, if alternatives are a way for non-category players to make an end run around industry strongholds, why haven’t we seen the toppling of category incumbents en masse? Because mainstream consumers, unlike niche groups, will not compromise on taste and texture, and the categories we are talking about are extremely difficult to mimic with alternatives.
There is an old joke that asks “how do you know that it was a vegan’s house that burned down? Because their cheese was the only thing that didn’t melt.” Vegan cheese is notoriously bad, not displaying any of the desired characteristics of real cheese. Chocolate isn’t much different, a complex system with little margin for consumer forgiveness in quality. However, if these systems get perfected by outside players, there is real chance that they can made significant mainstream moves.
Reclaiming Kid Categories
The first launch from Gooder Foods, Goodles is a boxed mac & cheese made specifically for adults. Helmed by a powerhouse team (Cerebelly founder Jennifer Zeszut; Annie’s co-founder and former president Deb Churchill Luster; Paul Earle, former Kraft brand executive; and actress Gal Gadot), Goodles not only has adultified flavors (e.g., cacio e pepe) but also contains 15 grams of protein, 6 grams of fiber, prebiotic inulin flour, and 21 nutrients extracted from organic vegetables. Currently the brand is selling DTC, but will be launching in retail in 2022 with additional product innovation.
Applegate Naturals, a Hormel brand, has launched the Do Good Dog, “the first nationally available hot dog made with beef raised on verified regenerative U.S. grasslands.” The beef for the product comes from N. California’s SunFed Ranch and is certified regeneratively sourced by the Savory Institute's Land to Market Seal.
Kellogg’s Pop Tarts has teamed with Atlanta small-batch butter maker Banner Butter to create a LTO Pop Tarts X Butter Kit (currently sold out). Building on the craze among Pop Tart aficionados of putting butter on the iconic toaster pastry, Kellogg’s worked with Banner to create unique combinations. The kit contains three standard Pop Tarts (Frosted Strawberry, Frosted Brown Sugar Cinnamon, and Frosted Chocolate Fudge) but comes with specialty butters for pairing (e.g., Honey Habanero, Cinnamon, Cardamom and Ginger, and Balsamic Fig and Caramelized Onion, to name a few).
So What? What does it mean to be an adult today? We have, according to my count, three different archetypes. First, we have the stoic and responsible ‘grown up’ that older generations have in mind when they chastise Millennials and Gen Z that they’re ‘doing it wrong.’ Never mind the cultural changes of crushing student loan debt, overheated housing market and unfulfilling careers, this adult ‘ideal’ is still strongly embedded in our society. The second archetype of ‘adult’ is the stereotypical Millennial, the one that has held on to childish things for ‘too long,’ still plays video games, eats junk food and is basically the man-child of popular culture (see Seth Rogan).
Interestingly, it is only these two archetypes of adulthood that CPG products have tried to market to. Either you are a ‘real’ adult and care about ‘adult’ things (like nutrition, fine wine and intellectual pursuits) OR you are the man-child who lives in your parents’ basement, eats kids cereal wearing Yu-Gi-Oh pajamas while playing X-Box.
Of course, both archetypes are ridiculously reductive, but it hasn’t stopped brands from using them as target markets. However, I’d like to suggest that there is a middle ground that we are missing, a third adult archetype that blends the straight-lace aspects of one with the fun aspects of the other. This third archetype recognizes that being an adult doesn’t mean that you have to give up childhood items (like boxed mac & cheese, hot dogs, and Pop Tarts), but it does believe that you don’t need to surround them with childish themes. You can proudly and unapologetically enjoy boxed mac & cheese, but that doesn’t mean you have to settle for blue box.
I’m anxious to see what other kid’s categories can be made ‘adult’ without losing the child-like joys that make them so pleasant to experience. Any company can load up a kid-favorite with hidden veggies and adult flavors, but can they still keep the pleasure intact?
Sustainablity Confusion
Del Monte Foods has announced that they have become the first major canned vegetable producer to be Upcycled Certified by the Upcycled Food Association. The company is now messaging that two of their products, Del Monte® Blue Lake® Petite Cut and Blue Lake® Farmhouse Cut Green Beans, are made with 100% upcycled and sustainably grown green beans from Wisconsin and Illinois.
Berlin-based meal delivery system HelloFresh has launched a new eco-friendly labeling system trial in Germany and Austria. Each week, five of the company’s recipes will be labeled ‘Climate Hero’ (i.e., those with the lowest CO2 emissions of their offerings--at least 50% lower than the others). HelloFresh calculates their meals CO2 emissions not only on the ingredients and production, but also transportation and packaging (calculated by using the Agribalsye database). While no plans have been announced to roll this labeling out to other regions, the company currently is in partnership with TerraPass in the US to offset 100% of their carbon production.
Hill’s Pet Nutrition and Bond Pet Foods, Inc. have announced a strategic partnership to enhance the sustainability of Hill’s pet food formulas with fermented animal proteins. Using a one-time blood sample from a Kansas hen (named Inga), Bond then uses food-grade yeast and a fermentation process to produce meatless animal proteins comparable in texture, appearance and nutrition to traditional chicken proteins. The companies say that this partnership will help increase the sustainability of their product lines.
So What? Qualitative and quantitative surveys are clear that consumers (at least tell us that they) want more sustainable food and beverage products. A recent Kerry survey found that 49% of consumers consider sustainability when purchasing food or drink.
However, that doesn’t mean that all sustainability claims are created equal. In fact, as sustainability claims grow in popularity, consumers seem to be getting more confused. Recent research by Hartman Group identifies what they call an ‘Opportunity Gap’ in Sustainability. While their research finds that 72% of consumers are willing to pay more to support companies that share their values, only 22% can identify a sustainable product (only 17% can identify a sustainable company). Research by the International Food Information Council had similar findings, with 63% of consumers agreeing that “It is hard for consumers to know whether the food choices they make are environmentally sustainable.”
I think part of the problem is that the developers, marketers and everyone surrounding the brand are much more eco-minded than their target consumer, especially within large CPG companies. Of course, that itself, is not a problem; it’s their passion and energy that has kept the topic of the environment at the top of the docket for years. However, the problem arises when these extremely eco-minded folks try to implement a sustainable message for the masses—they shoot too high and confuse the message with jargon.
Take the Del Monte example above. I’m in the industry and I didn’t understand what Upcycle Certified meant when it came to canned green beans. When I think of upcycled, I typically think of products being repurposed that normally would have been wasted (e.g., spent grain, fruit/veg pulp, etc.). In fact, the Upcycled Food Association—the very company that certified the Del Monte product-- defines upcycled foods as “those made with ingredients that otherwise would not have gone to human consumption, are procured and produced using verifiable supply chains, and have a positive impact on the environment.” So, are these green beans that weren’t originally going to be used for human consumption (aka waste)? Are they ugly beans? Beans whose quality normally would have been rejected but are now ok? You can see how some consumers—especially those that aren’t normally purchasing sustainable products—might look at these and assume the worst.
I’ve done a lot of research with mainstream consumers on sustainability, and I can tell you that they aren’t picking up a fraction of the claims, validations and metrics companies are messaging. It’s admirable that you and your team are ‘super green’ and live your values, but it’s very possible that your distance from the average consumer’s perspective on the topic is hindering your brand’s long-term impact. My advice: talk to a mainstream consumers, drastically simplify your sustainability message, and stop with all the confusing eco-jargon.
Digital Design Future
AdWeek profiled the shift among CPG companies to reimagining their logos in the digital era. Velveeta has ditched their blue and white adornments for a much cleaner and flatter aesthetic. While some companies, AdWeek points out, have done this to better represent the expanse of their portfolio (see Smuckers new abstract logo that distances themselves from just jams and jellies), the article points out that the main reason is digital media. Old-school logos are too busy for small screens. Velveeta’s bolder, simpler logo is indicative of the new school of designs heading our way.
So What? All this talk of the digital influence of logo design seems quite advanced for CPG, but its lightyears behind categories that have been living in digital for almost 20 years. If you want to know how the digital ecosystem will influence CPG design, we should be looking at books.
Once thought to be on the edge of extinction, print books have achieved a renaissance recently. However, their death and resurrection through e-commerce companies has meant that their fate is now intimately tied to the platform that almost killed them. Because the great majority of print books today are sourced through Amazon (50-80%, depending on where you get your numbers) the types of books and the look of books that end up getting published are highly influenced by Bezos’ algorithms.
Exhibit A: the ‘blob book’
If you are a reader of fiction, you are likely familiar with this aesthetic. Also called the ‘unicorn Frappuccino cover,’ it’s one of many motifs that have exploded in popularity as the feedback loop of online algorithms has pushed cash-strapped publishing houses to default to a common, generic appearance. Amazon suggestion software AB-tests what makes users click, winnowing down book covers until their appeal is instantly telegraphic (and extremely similar).
Given enough time, the data feedback loop will likely do the same for CPG design, algorithmically perfecting its appeal. The next step, I predict, will be a disconnect between online design and IRL packaging. Who said that your snack packaging must look the same online as it does in the store? Just like Netflix changes movie thumbnails on their site based on who is searching, CPG companies/retailers could display a different look to a package based on the profile of the shopper, personalizing the design based on functional and emotional cues proven to get their attention (e.g., if their profile shows they are on Keto, the package would automatically elevate the protein burst).
This could even happen in store. Walgreens recently started using refrigerator/freezer doors with digital screens. The technology, developed by Cooler Screens, not only provides for an active display, but also has cameras and sensors inside and out. Soon, it could be possible to have these cooler screens change their display based on a quick scan of a shopper (or their phone’s identifying info). In fact, technology now exists to beam different images to different people looking at the same display (so called, parallel reality displays).
So, new ‘Instagram-friendly’ logos are just the beginning. The digital world and the physical world will merge even more in the years to come.
Brands I’m Watching
Dishtory is a new app that allows users to quickly and easily upload audio stories to accompany family recipes. Both a time capsule and a family connection, Dishtory serves as an audio archive were people can save grandma’s recipes and her voice telling you the history and story behind it.
The Puratos Group has announced a new app called Digital AdvisAR that provides AR-guided assistance for professional bakers, patissiers and chocolatiers. Using the phone, BOH professionals can aim their phone’s cameras at misbehaving pastries and chocolates and be connected to Puratos’ network of 600 technical experts in 71 countries who can guide them through fixes. The help can come through AR where the expert can show how to alleviate the problem in real time.
So What? I dislike talk of the metaverse. Not just because Mark Zuckerberg uses BBQ sauce as a bookend, but because its always spoken of as if its not real yet. In fact, I believe the metaverse already exists for most consumers. Whether through their AirPods, video games or Google Maps, many consumers are already living in two worlds. The future will be about magnifying these worlds in ways that really help consumers—not just through gimmicks. These two new apps above are great examples of adventures in the metaverse that bring value to the consumer. Products like these are where manufacturers should be looking as they built their metaverse strategies.