Culture Matters
Functional Indulgences; The Supermarket of the Future; Making Work More Inefficient
Functional Indulgence
Icelandic startup Responsible Foods has launched a new snack brand called Næra (Icelandic for ‘nourish). Made of crunchy dried cheese or skyr, and flavored with natural herbs and fruits, the bite-sized snacks are high in protein and calcium. Flavors include strawberry crunch, sour cream & herb, and garlic & herb.
Nestle has parlayed their freezer case success with their Outshine brand into a new line of shelf-stable pouched smoothies. The new products are made with a mix of non-fat yogurt and fruit puree. Each serving contains less than 10 grams of sugar, no artificial colors, non-GMO ingredients, no added sugar, and no artificial flavors. Flavors include Strawberry Coconut, Peach Raspberry, Pear Vanilla and Blueberry Pear.
Available for pre-order via Indiegogo starting February 22, Popadelics is a new mushroom-based snack flavored with bold seasonings. Made via vacuum frying technology, the new snacks are ultra-crunchy and claim to contain much less oil and retain more nutrients than similar products. Flavors include Trippin' Truffle Parm, Twisted Thai Chili, and Rad Rosemary and Salt.
So What? A recent study by the consulting firm The Food Group identified that Gen Z and Millennial consumers were looking to balance their comfort food consumption with a healthy dose of functional products (especially plant-based). Nearly 6 in 10 surveyed consumers said they were looking to buy more functional foods, with half indicating that they plan to eat more plant-based in the future. At the same time, The Food Group points out that comfort food sales for this demographic jumped during the pandemic and are predicted to grow in 2022.
Studies like this always perplex me. While they seem to point out a rising trend, they really only highlight a longstanding consumer truth. People always want to have their cake and eat it too. Whatever the demonized macronutrient is of the day that we are avoiding (i.e., fat, sugar, etc.), we will always look for a way to still enjoy it. That’s why products like Diet Coke, Snackwell cookies and Halo Top ice cream exist. The diet food industry was built on providing the forbidden in a permissible format.
However, what is often missed in the race to provide mayonnaise to low fat dieters or candy to keto followers, is considering whether consumers looking for heathier alternatives really need a faithful facsimile of their favorite foods to be satisfied. Today, what I’m noticing, is that a new crop of food makers aren’t so much as making taboo foods functional, but instead offering heathy foods that satisfy the taste and texture cues of consumers’ most coveted eats.
While there definitely is still a market for making better-for-you potato chips and high protein chocolate chip cookies, there is also a trend in making foods that provide the crunchy umami we crave in snack food, but in a totally new form (e.g., dried mushroom), or delivering on creamy sweetness without the artifice of traditional dairy desserts (e.g., smoothie packs). By working backward from the sensory stimulation consumers crave, but not being locked in to strictly mimicking indulgent comfort food forms, these new products go one level deeper and open new possibilities in better-for-you eating.
The Great Open House
Anderson International Foods has introduced Stuff n’Roll fresh mozzarella sheets. Made from whole milk, the thin, fresh cheese is positioned to be used for quick appetizers or snacks. The product is keto and low-carb friendly, and suitable for both sweet and savory applications.
Artful Apps has launched a new product line called Crackerology Cracker Kits. The kits contain a mix of crackers, spreads and toppings to make quick appetizers or fancy snacks. For example, the Jalapeno & Chipotle Kit contains jalapeno and chipotle crackers, creamy schmear, salami, spicy mustard, and sriracha. Tripple Chocolate Dessert Kit contains triple chocolate cookies, almond spread, nutty coconut brittle, plus sweet & salty flakes. Available nationally at upscale grocers, wine shops and Hy-vee.
Recently, McCain Foods announced that they will invest $169 million to expand its appetizer processing plant in Plover, Wis. The new expansion will produce cheese-based appetizers and operate 24 hours a day, 7-days a week. The 135,000-square-foot expansion project is expected to begin in the summer of 2022.
Food Network has announced the launch of a new show entitled Be My Guest with Ina Garten. The show follows the popular host as she prepares for an intimate cocktail/dinner party with one or two guests. The show will be available in three formats: A 60-minute streamable version on Discovery+; a 30-minute, food-focused version airing on Food Network; and a companion podcast version.
So What? After over two years of no dinner parties, barbecues or birthday parties, the next year is poised to see a significant upswing in the number of get-togethers. According to a survey by online meat purveyor Butcher Box, 46% of Americans say they are very excited to host a dinner party in their home. The same survey showed that consumers want to host smaller, more intimate, parties with friends and family, focusing less on preparing big meals and more on choiceful food and drink that stimulates conversation. Surprisingly, restaurants were less in-line with consumers post-pandemic get-together plans, with the home being seen as more convivial.
I would predict that 2022 is the year of the artful cocktail party, where sophisticated (but easy) appetizers reign. While pre-pandemic the focus of an evening might have been watching a sporting event or dinner, post-pandemic consumers have a lot of catching up to do; intimate entertaining is in. This will likely mean appetizers/snacks that spark conversation and provide the complexity and interest that dinner provided in the past.
The Supermarket of the Future
GrubHub announced last week that their branded convenience pilot with 7-Eleven was going national. GrubHub Goods will now provide convenience items via the popular c-store chain. Items such as energy drinks, ice cream, personal care products can now be delivered by GrubHub drivers in addition to their typical restaurant fare.
Business Insider recently obtained secret documents from Amazon pertaining to the existence of Project Bowser. The 2020 project apparently aimed to build 10,000 cashierless stores+ gas stations in suburbs throughout the US. According to the report, Amazon saw this as a way to disrupt suburban America’s grocery cycle—offering a variety of goods in a convenient, nearby location. The report indicates that Amazon had initial partnership talks with BP but did not come to an agreement (potentially due to the threat of consumer backlash on sustainability as it relates to the oil giant). However, Business Insider suggests that this project may still be ongoing.
Grabandgo, the #1 provider of cashierless technology for existing formats, has announced a partnership with convenience store owner MAPCO to place their technology in its 330 locations throughout the southeastern US. This partnership will allow customers that have the MAPCO app to walk into a store and purchase items without waiting in line.
At the House Committee on Agriculture hearings last month regarding the implications of electric vehicle adoption on rural America, gas stations and convenience owners were bullish on their role in the transition. Trevor Walter, the vice president of petroleum supply management for Sheetz, testified before Congress on behalf of the National Association of Convenience Stores (NACS). He said, “The companies that currently provide transportation energy to motorists are well positioned to play an important role in decarbonizing the transportation sector through the sale of cleaner liquid fuels and alternative technologies, such as electricity.”
So What? For all the talk of the move to online grocery shopping, the statistics appear to show that consumers are sticking with brick-and-mortar supermarkets for the near term. While the pandemic increased the number of people trialing delivery, only curbside pickup is maintaining its numbers as COVID turns endemic (grocery delivery down 8% since this time last year, curbside up 2%).
However, that doesn’t mean supermarkets are safe from disruption. As is true with CPG products, just because you haven’t seen a dip in sales, that doesn’t mean that consumers are satisfied. It could just mean that they haven’t found a better alternative yet.
A lot of people dislike grocery shopping in general. According to statistics from Nielson, 47% of consumers either outright hate grocery shopping or try as hard as possible to minimize their time in store. When given an alternative option, consumers often vote with their dollar to go elsewhere. 2021 data on consumers favorite grocery stores reveal some interesting retailers in the top spots: Trader Joes (#1), Aldi (#2) and 7-Eleven (#4). While there is something to be said for the curated and quirky products at Trader Joes, and the value offerings at Aldi, the surprising showing from 7-Eleven in this survey should make it clear what really matters to consumers: convenient access.
Qualitatively this makes sense. When I’ve chatted with consumers, they often tell me that they dislike big stores because of the time involved in shopping, the inconvenience of checkout and the parking. Ideally, people would like to park their car, walk a few steps, shop for all their household needs, and get out of the store in under 15 minutes. Currently, consumers must make concessions on this fantasy grocery trip, often trading speed for selection (Trader Joes >Walmart) or convenience for cost (7-Eleven > Kroger).
The takeaway from this is that the formula for the perfect grocery shopping experience exists, we are just waiting for technology (and the retailer) to create it.
If I had to predict what the supermarket of tomorrow would look like, I’d say to take the footprint and ubiquity of today’s convenience stores and combine that with the selection of the today’s Walmarts. While that might sound fantastical, it could be closer than you think. Imagine a store, about twice the size of today’s gas stations, loaded with EV chargers in the parking lot. The inside would consist mostly of small fresh stations (deli, produce, bakery, etc.), but would also have a variety of shelf-stable goods, the latter chosen analytically based on the neighborhood’s purchasing data. Around back, the store would serve as a curbside pickup of previously ordered staples (delivered to the store throughout the day and timed to coincide with the customers’ availability).
If retailers build this, consumers will come. Not just because it combines ease of access, speed and selection, but also because of the EV element.
Currently, the number one vehicle in the US is the Ford F-150 truck, a mainstay of the American landscape. This Spring, Ford will start production on their F-150 Lightening, an all-electric version of the popular truck. Advanced sales for the Lightening are so unprecedentedly high that Ford is allowing dealerships to the sell the vehicle with a ‘no sale provision,’ restricting buyers from selling their Lightening at a profit for one year post sale. Net-net: we are on the cusp of EVs no longer being a niche category.
If EV sales dramatically rise, and gas-powered vehicles fall, it will represent a potential revolution on street corners around the nation. Today, 93% of Americans live within 10 minutes of a gas station, so as gas stations look to revamp, it will have a dramatic effect on our landscape. It will also be a chance for gas stations to change their image and their purpose (or be bought out by companies looking to get into the sector).
For CPG companies, this move could represent a massive shift in priorities. Will your product be a front-of-house brand or a curbside staple at these new stores? Does this change your communications architecture? Your pack size? Your pricing structure? Companies must start considering their strategies in the supermarkets of the future.
Planned Inefficiency
Five years ago, if you were benchmarking companies and their supply chain strategies, you would be struck by the constant reference to one word: lean. Coined in the early days of auto manufacturing, ‘lean thinking’ promotes minimizing times within the production system, tightening the supplier window to reduce inventory, and keeping costs down. You’ve probably heard about by its alternate name, ‘just-in-time’ manufacturing.
Then 2020 happened and ‘just-in-time’ showed its weaknesses, and manufacturers were forced to rethink whether lean was the correct strategy for the future.
There is nothing inherently wrong with lean manufacturing, it’s actually a brilliant model that revolutionized the world. The problem arises less in its concept and more in its application. When ‘lean’ became the North Star of every company, and all KPIs were calibrated to reward the leanest result, we arrived at a supply chain that had virtually no slack. Perfectly acceptable and profitable when everything is running smoothly, but disastrous when disruption (e.g., a global pandemic) occurs in the system.
Supply chains of the future will likely still embrace aspects of just-in-time, but with more ‘play’ in the system to factor in unexpected risk. ‘Play,’ in this sense, is just another way of saying ‘planned inefficiencies,’ at least from the perspective of the lean manufacturing days of yore. Its about leaving a little more inventory in warehouses, a little more time between shipments, and a little less reliance on everything seamlessly coming together at the last minute.
As companies rethink their supply chains, and the idea of putting slack in the system becomes more acceptable, I’m hoping it extends the concept of ‘planned inefficiencies’ further down the stack. I want to extend it into how we all think about work going forward.
The pandemic offered us all a pause to reassess the world of work. Pre-COVID we were all living in the shadow of a business culture built in the 1960’s, 70’s, and 80’s, an era obsessed with efficiency and social Darwinism. It’s the reason why ‘hustle porn’ (i.e., our fetishization of the non-stop work lifestyle) still dominates the bestseller list and our social media feeds, and the reason why being over-busy is seen as a badge of honor.
I’ve worked with scores of CPG and retail companies in my career, and I’ve noticed a trend at just about all of them related to this slavish addiction to efficiency: no one has time to think. Most people’s calendars are a constant stream of 30–60-minute meetings devoted to fire drills and near-term tactical issues; people often don’t have time for lunch much less pondering big strategic issues.
If we want to outthink competition, be ready for the next big disruption, or retain the best people in our organizations, we can’t get there using the old ways of thinking. Just as with supply chain management, we need to realize that a ruthless focus on efficiency may not be the best strategy going forward. We need slack in the system, we need planned inefficiency. That means allocating real ‘think time’ in our days, time to tinker, time to reflect and time to contemplate the big issues stressing our organizations. The first step will be removing the social stigma of unscheduled time and resisting the personal urge to fill every waking moment with executing close-in ‘to-dos.’ Or, to put it bluntly, ‘Busy is the new stupid,’ as Warren Buffet taught Bill Gates a few years ago.
Brands I’m Watching
Frito Lay’s Doritos has just launched a series of dips flavored to match their iconic chips. The new creamy 10-oz dips come in Cool Ranch and Spicy Nacho. According to sources, the dip has yet to be announced by the company, but the internet always finds a way.
General Mills has launched a Limited Edition Betty Crocker Lucky Charms cupcake kit. The cross-over product includes cupcake mix, green frosting, cereal toppings, and cupcake liners.
So What? The CPG world is full of specialists and generalists. Specialists are experts at one form or category (e.g., Danone) while generalists offer a variety of offerings in many categories (e.g., Conagra). The power of specialists is that they can concentrate resources in a very narrow field, often developing a product and investing in it for the long-haul. Generalists don’t have this luxury. They often have fewer resources spread over more brands and categories. The problem arises when generalists try to beat specialists at their own game (e.g., Yoplait trying to compete with Danone), it’s difficult to match the specialists’ resources and their investment in the market.
The generalist’s solution is to use their diversity to win. As in the examples above, Frito Lay or General Mills use their portfolio insights and manufacturing know-how to go up against competitors like Kellogg’s that don’t have internal dip or cake mix production.
More CPG companies seem to be recognizing the power of leveraging their entire portfolio in their struggle to compete. While it might appear simple to do on paper, it often requires organization changes and a realignment of metrics to break down internal silos that stop collaboration (i.e., the portfolio is useless when each brand jealously guards their P&L).
Charcoal maker Kingsford is out with a new series of briquets, pellets and ‘flavor boosters’ that consumers add directly to their barbecue grills to help season their cooking. Made from a mix of spices, herbs and vegetables plus hardwood, the products create a seasoned, time-released smoke while cooking. Varieties include: Basil, Sage & Thyme, Cumin and Chili, and Garlic, Onion & Paprika.
So What? Consumers don’t spend much time actually thinking in the supermarket. While that might appear to be a derogatory statement, let me assure you I include myself in this critique. Most people operate on autopilot, filling their cart, checking off items on their list and getting in and out quickly. For this reason, I’ve found that consumers operate with strict ‘category expectations.’ This means that their mind is only open to expecting certain products that perform specific functions in each aisle. Go outside of these expectations and you are in for trouble. Take for example, dessert pizza. It looks like a pizza, and has pizza in its name, but if you put it in the pizza section it will never survive. Why? Because people aren’t going to the frozen pizza section for dessert. They aren’t in the right sweet ‘mindspace’ when staring into this savory section.
Which takes me to Kingsford’s new product. I think it’s going to be a tough sell. While I know there are specialty wood products (e.g., cherry, hickory, mesquite, etc.) that are meant to enhance the meal, and the practice of putting dried herbs on a fire isn’t unheard of in BBQ culture, it feels like a giant leap to move to briquets made with garlic and herbs. Additionally, while mesquite or hickory feels like a flavor that goes with many cuts of meat, cumin and chili seem much more specialize and niche—likely not worth buying a whole bag. While I applaud Kingsford for trying to create a differentiated product in the category, I’m skeptical that consumers will be in the ‘right mind’ to even see this product.