Culture Matters
Innovating the Core; Are QR Codes the Future (Again)?; Delivering on Consumer Expectations
McDonald’s is reporting a 6.1% increase in same store sales in their third quarter. As grocery stores prices increased by 13% and restaurants by 8.5%, McDonald’s believes that consumers are responding to their good value. Items like their Adult Happy Meal, celebrity meals, and the (final?) return of the McRib have bolstered the bottom line. The adult Happy Meals promotion “re-engaged our fans to our core food, including Big Macs and Chicken McNuggets,” said CEO Chris Kempczinski during the company’s earnings call.
Kraft-Heinz is partnering with plant-based TheNotCompany (aka NotCo) for a vegan version of their classic American cheese slices. The slices are the first launch in a joint venture between the companies (called the Kraft Heinz Not Company), with a debut in thirty Cleveland, Ohio stores. The product is made with a mix of water, coconut oil, modified corn starch, and chickpea protein. In the coming year, the joint venture is expected to release slices in Provolone and Cheddar, as well as vegan mayo and other products (similar to their ‘plant pantry’ items in the UK?)
Mondelez International Foodservice is launching a new program called OreoID. The program allows foodservice operators to easily design a custom-made Oreo (complete with colored crème filling, dip, and exterior logo/saying of their choosing) for their establishment. Mondelez sees this personalization as a way for foodservice companies to provide customers a familiar product that elevates their own brand.
Newman’s Own, makers of CPG products whose profits go to helping kids in need, has announced Newman’s Deal. The company is offering the limited-time use of Paul Newman’s likeness on any brand’s product (e.g., clothing, cologne, automobiles, etc.) as long as 100% of that company’s profit from that item goes to helping kids. Companies must apply for the chance to use Newman’s image by November 24. This campaign comes at a time when the Newman’s Own brand is undergoing a radical refresh.
Innovate the Core
While the popular press is currently proclaiming that CPG companies and restaurants are enjoying record-breaking profits and reveling in consumers’ infinitely low price elasticity (even as inflation skyrockets), there is another story not being told. I consult for a lot of food company teams, so I can tell you that, inside the walls, people aren’t rolling on piles of $100 bills and patting each other on the back. Instead, in a growing number of boardrooms, the mood has quietly shifted to one of concern.
If you’ve worked long enough in the corporate world, you know that in turbulent times a chant often arises from the C-suite: protect the core. When the environment is uncertain, innovation is reassessed, experimentation is curtailed, and teams shift toward shoring up the real engine of the company’s profits. So, as we come to the end of 2022, with the food sector supposedly riding high after 2+ years of pandemic profit, it may come as a surprise to hear that talk of ‘the core’ is suddenly everywhere at food companies. However, unlike in previous years, when re-focusing on the core was a retreat to familiar territory, today more companies are fixating on their core for the opposite reason. The predictability of the core, it’s business and its consumers, has come into question.
The issue is that wide ranging uncertainty is now impacting previously steadfast core brands:
· Supply chain volatility is making long-term forecasting and costs for core brands challenging
· The economy is pushing consumers into value brands and services (some that did not exist during the last downturn)
· Shifting and splintering demographics are cutting into the core’s previously loyal targets
· Social media, ecomm and retailers’ growing strength is upending the core’s power in traditional retail
· Cultural shifts, paired with technological possibilities, are putting pressure on the dominance of traditional ingredients (e.g., the move to plant-based, sustainable, etc.)
All of which calls into question the conventional ways that businesses manage their cores, as well as the financial returns and stability execs expect from them. The conventional tools for core renovation are looking less and less effective in today’s climate. Instead, I’m seeing (and encouraging) more companies switch to an innovation playbook for their core. Innovation is set up to deal with uncertainty, to manage risk effectively, and provide an agility not often associated within these businesses. Some companies are struggling through the ambiguity, while others are actively searching for newer, higher margin cores or building technical moats to secure them.
So, while profits may be up, so is internal angst. If companies don’t radically rethink how they manage and innovate their cores, the near future may see food corporations stumble as their internal engines cease to function.
QR or Not QR?
CPG company Haven’s Kitchen, known for their sauces in convenient, transparent squeeze pouches, has revamped their packaging and shippers to include a QR code. The code is part of a strategy to drive more consumers to the brand’s website and original content (e.g., cooking videos) created to show users how to make use of their products. The company hopes that the info gained through QR codes will provide deeper insight into consumer patterns and needs.
Malmgård Manor is a Finnish producer of small-batch flours for retail sale. Recently, the brand partnered with another Finnish company, Second Thought, to utilize their UPIDS.IO technology. The Second Thought technology not only expands the digital storytelling that Malmgård Manor is looking to do for its artisan brand, but the UPIDS.IO tech allows the company to present interactive feedback forms, NPS, panel surveys and rich text documents. Malmgård Manor believes the tech is so important, they are placing it front and center on their packaging.
Veritas, a Denver-based cannabis company, is introducing QR codes on its packaging as a way to educate consumers about the category and provide product transparency. Consumers that follow the code can see lab results for the product, strain information, as well as a searchable list of retailers that carry the strains they are looking for. The QR codes also allow the company to collect data on the consumers and understand regional, time, or seasonal differences in consumer interest.
OOH media company Outfront Media announced the launch of the new technology called OutFront QRad. The technology allows consumers to scan the QR code on the company’s LiveBoard screens (i.e., large video kiosks) and interact and change its content to one of several options. The company sees the boards triggering greater engagement with advertisers as people seek more interactive content.
Researchers at Osaka University have created a system that creates edible QR codes (called interiQR) on the surface of baked goods, specifically a cookie. The researchers see the new technology as allowing consumers to gain information about the product (e.g., food label, sourcing, etc.) even when the product is separated from its package, as well as reduce additional packaging waste. The process does not change the texture or taste of the resulting product.
peAR Technologies, a startup out of India, has introduced a platform for restaurant patrons to preview orders through AR. Consumers scan a QR code at the table and are presented a digital menu. When they select a dish, the meal is presented to them via augmented reality in their smartphone. They can then zoom in and rotate around the dish to get a closer look.
So What? Back in February, the cryptocurrency exchange platform Coinbase ran a 15-second ad during the SuperBowl that consisted of nothing but a QR code bouncing around and changing color like an old Windows screen saver. So many people scanned the code that Coinbase’s website crashed.
QR codes are having a resurgence. Invented in 1994, they had a moment of hype in the West during the early aughts, before almost completely disappearing (versus in Asia where they quickly gained and still maintain prominence). Of course, the no-touch environment of COVID-19 brought QR codes back to the forefront. Recent data from Blue Bite shows that QR code reach among consumers in the US has grown by 96% from 2018, with growth in the number of interactions growing by 98% in the same period. Business Insider predicts that US smartphone users will increase their QR code scanning from 83.4 million in 2022 to 99.5 million by 2025.
All that is great news for marketers wanting to increase engagement with consumers, drive traffic and gain insight on habits, but are QR codes the future? I think QR could open exciting possibilities for brands, but only if a few bad actors in the industry don’t spoil it for everyone else.
QR codes are not like traditional advertising or marketing. An ad you’d see on a billboard, in a magazine or on TV, is passively consumed. Conversely, QR codes require consumers to go out of their way to lift their phone and tap. Even though small, energy is expended, and there is an expectation of a return. My concern is that brands will become so enamored with the promise of using QR codes to collect data, spur dialogue and maintain engagement, that they will fail to provide enough incentive (enough joy) for consumers to continue clicking (see also quishing attacks and UNFI’s work with Smart Shelf Tags) .
Great Expectations
General Mills announced that they are launching three mini versions of their most popular cereals. Trix, Reese’s, and Cinnamon Toast Crunch now come in tiny, round varieties of their originals. The new varieties may be small, but they come in a full-size box “which means more cereal in your bowl, more cereal on your spoon and more cereal in your mouth with every bite.”
Frito-Lay is launching mini versions of their iconic snack brands. New Frito Lay Minis will be available as Doritos, Cheetos and SunChips. Each variety will come in an easy pour canister, not bags. The company sees this as a stark differentiator in the snack aisle. Frito-Lay is ‘going big’ with Minis, launching several flavors of each right out of the gate (Doritos Nacho Cheese, Doritos Cool Ranch, Cheetos Cheddar, Cheetos Flamin’ Hot, SunChips Harvest Cheddar and SunChips Garden Salsa.
So What? What do think these new mini products taste like? Yes, I’m sure Trix will taste like Trix and Doritos like Doritos, but really stop a second, close your eyes and envision taking a spoon or handful. How would you describe that experience? Compare it to the ‘normal size’ of these products.
When I asked a very unscientific sample of 10 people this question, I got an interesting response. When I really pushed people to describe the experience that they were expecting, one theme kept coming up: intensity. While people felt all these products would taste like their namesakes, many people felt that they would taste stronger. If I had to guess, I’d say this expectation is based on our lived experiences. Before these products existed, when have you ever had tiny pieces of cereal or chips? Probably when you’ve reached the bottom of the bag! Who hasn’t relished the moment of tipping the bag of Doritos or Cinnamon Toast Crunch and getting an intense blast of seasoning powder. So, as strange as it might seem, I think our bottom-of-the-bag exposure may have unconsciously conditioned us to associate tiny pieces with bolder flavor.
As more and more iconic products twist, turn, combine, shrink and enlarge themselves to meet trends, there will be challenges. Consumers’ emotional and sensory familiarity with iconic products means they have the mental ability to create vivid expectations of what these transformations will do. This adds an extra layer of difficulty for R&D and sensory teams. They aren’t just creating new products, they are formulating to meet the taste expectations of consumers’ imaginations.
Brands I’m Watching
Target is partnering with British retailer Marks & Spenser for the holidays. This season, Target will offer a limited variety of M&S merchandise in store and at Target.com. In total, 15 holiday-themed products will be available, everything from Santa’s Magical Light Up Chocolate Workshop to a Shortbread Biscuit Bus Tin shaped like a double-decker London bus.
Premier Foods, one of the UK’s largest food manufacturers, is expanding its line of Cadbury cakes with two new additions. The Cadbury Dairy Milk Caramel Layer Cake and Cadbury Crunchie Celebration Cake are available now in UK stores.
So What? If your child watches so much Peppa Pig that they’ve picked up a British accent, you may be aware of the overall Anglocreep that has occurred in the US in recent years. Americans are picking up more Britishisms (e.g., ‘dodgy,’ ‘gutted,’ ‘on holiday,’ ‘queuing up,’ etc.), watching more British dramas, and following British politics, so a trend toward British foods is not out of the question. While the Great British Bake Off enjoyed immense popularity in the States, for some reason, the US has yet to see British sweet flavor/texture profiles going mainstream on our shores. The translation seems like an immediate win. However, most Americans have never had a Flake, experienced the texture of honeycomb, seen a Curly Wurly, or had the pleasure of a rhubarb & custard sweet. Perhaps Target’s M&S partnership signals a new British invasion?
CauliPower, maker of cauliflower-based products ranging from pizza crusts to nuggets, is expanding into frozen meals. The brand is launching a line of frozen, bagged, ready-to-cook meals that use cauliflower-based gnocchi and pasta. A portion of each gluten free product contains 2-3 servings of vegetables and 300 calories. The company recently told Food Business News that the impetus for the products was consumers’ desire for a greater variety of cleaner meals with more servings of vegetables and fruits. The line includes three varieties of meals: Cauliflower Gnocchi with Savory Pesto, Spinach-Gnocchi with Tuscan-Style Marinara, and Cauliflower Penne Pomodoro.
So What? Beyond the servings of veggies, low calorie, and gluten free profile of these meals, the thing I appreciate most about them is that they didn’t forget one of the primary purposes of dinner: satiety. While I’m not sure if 220 calories will fill up most diners, I like that brand subtly acknowledged this by concentrating on forms that typically signal fullness. Gnocchi is not known for its lightness, so its use here can’t be a coincidence. CauliPower stayed on brand while subtly addressing a primary concern of families.