In today’s newsletter:
Breakfast: Can we sit down again?
AI: Chatbot shows the future
Grocery: Stop believing in aisles
Dinner: How guilt relief may be your brand’s next strategy
A RETURN TO SIT-DOWN BREAKFAST?
Premier Protein (a Post Holdings company) will be launching frozen protein pancakes in 2023 via a partnership with De Wafelbakkers. The pancakes will reportedly have 15 g of protein per serving and come in packs of 12 or 24. No word yet on distribution (I’m guessing Costco).
Tropicana has launched a Mimosa Maker (basically a spray nozzle for their existing containers). The Maker has three settings, 'Whisper,' 'Spritz,' and 'Shower' to allow users to customize their champagne. The maker kits come with two straws, two glasses, and one serving of Tropicana orange juice (currently sold out).
Brooklyn-based tea company Dona is selling a gift box called The Breakfast Set. The set contains the brand’s masala chai concentrate, Zero Waste Chai Spice Dust, and Chai Streusel Granola by Jamie’s Farm.
So What? AI trend spotter TasteWise is out with their top flavor and ingredient trends for 2023. One that is quite interesting is the move (especially among Gen Z) toward elevated, ‘gourmet’ breakfast. This might signal a cultural movement away from grab-and-go, one-handed AM eating and a return to a sit-down event. More consumers are seeing this morning ritual as a positive step toward better mental health.
AI JUST GOT REAL
My first cell phone was a red candy bar model. LCD screen, simple keypad, and the iconic Spanish guitar Nokia ringtone (0:12; wait for it). I bought it as an emergency phone, not something I used every day, and definitely not something I used for work. Perhaps that explains why, when I bought my first iPhone, I didn’t see how it would forever change my relationship with my job. It wasn’t until I was able to text and email colleagues and log onto systems anywhere, that I realize the impact this technology would have on my life.
That ‘cell phone moment’ might be happening again, this time with artificial intelligence (AI). While you’ve undoubtedly used AI in aspects of your life and work, you probably dismissed its potential as limited and overblown. However, I’m here to tell you that that is about to change. In the very near future, AI tools will be placed in your hands that will RADICALLY change the way you work. To be clear, I’m not talking just about work done in fields like engineering or computer science, but also for people in R&D, marketing, sales, PR and advertising (areas where you thought you were shielded from AI’s reach because your work was ‘creative’ or ‘people-focused’).
Last week, OpenAI released a free-to-use (for now) version of their conversational chatbot ChatGPT . If you have not used it yet, I HIGHLY suggest you give it a try (it’s a free sign up). It’s one of those technologies that, as soon as you use it, you realize that you are experiencing the future. Ask it to write anything (e.g., provide a recipe based on the contents of your fridge, write a children’s story about a friendship between a vampire and an aardvark, or ask it the pros and cons of transitioning to a plant-based diet) and it will return a result that is shockingly human.
However, beyond entertaining writing, I want to show you a brief glimpse into how this technology could impact the CPG industry. Using OpenAI’s recent beta release of DALL-E2 (AI that creates images from any prompt) and ChatGPT, I imagined that I was tasked with creating a new breakfast cereal. In total, it took me less than 2 minutes (!) to generate all the content below.
First, I asked ChatGPT what new ideas it had for breakfast cereals:
Then I asked it to describe the benefits of one of its ideas:
I asked DALL-E2 to create a few mock-ups of this cereal (note these are 100% computer generated, not photos):
Then I asked ChatGPT its advice on strategy for marketing this cereal:
Impressed? You should be. While I’m not yet hiring AI to run my brand strategy, the speed and overall content are directionally correct. If these are free, first-gen tools that work on any topic, imagine a system trained on your company’s data (theoretically, an AI system fed your emails and presentations could ‘think’ like your company). Soon, everyone in your company (and every brand in your category) will have access to an AI system 10X more powerful. What will be the implications?
Rethinking Roles: If AI can generate ideas, create copy, develop product formulas and even create package images in an instant, where does that leave today’s marketers, developers and designers? Will AI technology replace people? Undoubtably, yes. However, it’s more likely that AI increases productivity of existing workers. Instead of creating everything from scratch, people use these systems to jumpstart their thinking.
Question Askers and Editors: All this raises serious HR questions. What type of people will thrive withn an AI-assisted company? The more you play around with AI systems, the more you realize that their output is only as good as the input. The best employees of the future are those that ask the best questions! Then, once they receive AI output, are good at editing and modifying to make it their own.
Startup Renaissance: The early 2000’s saw a boom in CPG startups as processing technology became cheaper and more available via co-packing. AI technology might reinvigorate startups by allowing a very small group of people to produce professional content much faster.
Lightening Fast R&D: What you see above can be replicated for any technical process, including creating formulas for products (or highly technical scientific tasks—see Galactica by Meta). If an AI system is trained on enough past formulations, it can create novel formulas with a simple prompt (these already exist in a few companies). This will not eliminate the need for R&D and engineering, but it may make their job 80% faster (see companies like Turing Labs).
PR and SEO Implications: ChatGPT is being offered free by OpenAI (we can only assume to drum up interest and business). Google has their own conversational chatbot called LaMDA that is likely even more impressive (in fact, it is so good, one of Google’s own software engineers went public saying that they thought it was sentient). Once these are released, they could replace (or at least augment) current search engines and customer service. This raises new issues. Unlike search, which gives you pages of returns, the chatbot is more singular, bespoke, and eerily confident in its response (even when it’s wrong). Ask it for a gluten-free chocolate chip cookie recipe that does not have eggs—no problem—it supplies ONE. In the future it will scrape the web, and cobble together an answer absent of brand or author. Brands will need to adjust to a post-search world.
A Sea of Sameness: One potential downside to everyone using these systems is that they start making all products, marketing and messaging sound the same. Have you noticed that you get a lot of emails or texts with similar responses? You can thank autosuggest technologies, in Outlook and Apple, that prompt users with potential responses. This forced sameness could pop up in a world where AI is too heavily used.
THINKING BEYOND THE AISLE
Last week, the Italian multinational Ferrero Group (owner of the brands Nutella, Kinder, and Tic-Tac) announced that they were acquiring Wells Enterprises, the Iowa-based ice cream company (makers of Blue Bunny, Halo Top, and Bomb Pop). This acquisition is part of the Ferrero’s continued North American expansion, following earlier purchases of Fannie May, the Ferrara Candy Company (makers of Nerds and Trolli), as well as select Campbell’s and Kellogg cookie and fruit snack brands (e.g., Keebler, Famous Amos, and Stretch Island).
Keurig Dr. Pepper (KDP) announced that they are buying a 30% equity stake in Nutrabolt (an estimated $3B company, owners of the energy drink and fitness supplement brands C4 Energy and Xtend Energy) for $863 million. Earlier this year, KDP invested in energy beverage A SHOC and nonalcoholic brand Athletic Brewing. Back in 2018, KDP purchased enhanced water company CORE for $525 million. As part of Nutrabolt deal, KDP will provide long-term sales and distribution for the company’s brands.
So What? Grocery stores aisles are disappearing.
Yes, structurally your local Safeway or Walmart still has racks and endcaps, but psychologically they are quickly becoming irrelevant. As more consumers shop online, pick up groceries curbside, or hybrid shop with a phone in their hand, the physical reality of the aisles is receding.
Not that long ago, if a consumer wanted to shop for snacks, they went to the snack food aisle and surveyed the shelves. Categories were mostly aisle dependent. This reined in consumers’ search but also impacted CPG companies’ thinking. Your competition came to be defined by its physical proximity to you. Yoplait and Dannon were competitors not only because they were both yogurts but because they fought for the same square footage.
However, try typing the word ‘snack’ into Kroger.com. What pops up is not a listing of the traditional residents of the snack food aisle but instead anything that could be eaten as a snack. In an online search, snack bars sit next to Gushers, which sit next to jerky, Doritos, and applesauce. The virtual shelf is as fluid as a keyword, constantly morphing based on the whim of the consumer.
Nevertheless, brand teams continue to operate like its 1985, obsessing over the boxes, bottles and brands physically in their aisle. At best, this focus keeps you treading water to gain incremental category improvement, but at worst, it blinds you to the greater forces that are happening with your consumer and the occasion.
No wonder we are seeing big brands make massive investments in their keyword adjacencies (e.g., Ferrero acquiring Wells, Keurig Dr. Pepper in Nutrabolt, etc.). Future CPG growth brands must actively think beyond their shelf.
STOP PARENTAL DINNER GUILT
Lunchables is appealing to holiday-stressed parents with a new LTO three pack. The labels (for parent’s eyes only) speak to parental issues this time of year while provide a quick meal/snack for the kids. The products (available only online) are titled: “Son of a Nutcracker! I Forgot to Hide the Elf!” (Extra Cheesy Pizza), “It’s December 24, Where’s the Wrench?!” (Turkey and American Cracker Stackers with cookies), and “How is the Gift Still Two States Away?!” (Ham and Cheddar Cracker Stackers with cookies).
Boulder-based Grown As* Foods has launched a line of vegan mac&cheese that targets both parents and kids. Available as Classic or Truffle, the product is available online from the company’s website.
So What? Millennial parent site Romper had a great article last week titled The Way To Solve Family Dinner Is To Embrace Kid Food. The piece argues that much of the stress of dinnertime with young children is based on the outdated societal pressure to adhere to a particular definition of dinner. Why does it have to be ‘meat and two veg?’ Or need to be served in a specific way?
Kids can get much of the same nutrition by eating a cold plate of sliced fruit, deli meat, pita bread and dip as they do from a meal that took 45 minutes to prep---and they’ll actually eat it! However, what stops parents is the guilt they feel for not putting in the work. There is a strategy here for brands to assuage the guilt of parents and make them feel better about spending less effort on dinner.
TIDBITS
Could the lawsuit over the stated cooking time of Velveeta Shells and Cheese make manufacturers more conservative on their written prep times?
The recent Hallmark/GAC Family battle hightlights how massively popular the streaming holiday movie market is with coveted demographics. Case in point, Coca-Cola has starting making Christmas movies. Will other CPG brands start doing the same?
Pepsi is trying to get in on the ‘dirty soda’ craze with a push for Pilk (Pepsi+milk). It’s certainly on-trend, but I’m not so sure about that name.
A sign of the impact inflation has had grocery buying. In Morning Consult’s fastest growing brands of 2022, Great Value Cream Cheese comes in at #8! In front of Gatorade and Chobani. High-priced commodity + private label = potential disruption.
And finally: 7-Eleven tries their hand at ‘butter’ boards, HelloFresh makes Buddy the Elf spaghetti dinners, and maybe you need a Franzia holiday lawn ornament