FoodStuff by Kevin Ryan
Are Your Products Authentic Enough?; AI in Innovation
Here is a link to my last newsletter, in case you missed it.
In this week’s issue:
CPG+Rising Temps: It’s Getting Hot In Here
Unpacking Authenticity: What is ‘Real’ for your consumer?
Gut Reaction: My quick take on the best (and worst) in new launches
AI for Innovation: Is the hype real?
Finding Your Way-In: Leveraging your assets for growth
Tidbits: The latest in food industry news, from the profound to the funny
Climate Change Meets New Product Development
Cadence is a new “salt-powered” hydration brand from entrepreneurs Ross MacKay (Daring Foods) and George Heaton (Represent). The sugar-free, zero calorie drinks are infused with key electrolytes and mineral salts “inspired by the rhythm of daily discipline.” Available via the company’s website and specialty retailers.
GoodPops has launched Hydrating Juice Pops. The frozen treats come in a pack of three flavors (Tropical Lemonade, Berry Lemonade, and Peach Lemonade), are free of the top 9 allergens, and are made of 100% fruit juice and have no added sugar. The pops contain electrolytes to “help you rehydrate [or] soothe a sick kiddo.”
Unilever-owned Liquid IV is out with three new summer-inspired flavors, cotton candy, rainbow sherbet and a Costco-exclusive Firecracker Bombe Pop, Jr.
SMASHD, formerly Mixoloshe, has debuted new low calorie, low sugar, electrolyte drinks with mocktail flavors. The ready to drink beverages are available in brightly colored cans with cartoon characters. Flavors include: Caribbean Mojito, Raging Mule and Orange Old Fashioned.
In addition to recently receiving $68 million from growth-stage investor Semcap Food & Nutrition, protein bar maker Aloha has also launched a new limited edition bar. The vegan, gluten-free, Pa'akai Bar contains macadamia nuts and Hawaiian sea salt as well as 14g of plant-based protein.
Walmart has announced a pilot project with Israeli crop supply intelligence company AgriTask to help enable sourcing managers to anticipate produce availability. The pilot uses AgriTask’s remote sensing tools and data analytics to help Walmart reduce food waste and manage inventory levels.
Cell-culture company Kokomodo has emerged from stealth with a cocoa powder made without cocoa beans. The cell-based ‘high value’ cocoa is being marketed to food and beverage, supplements and cosmetics companies as a slave-free, climate-friendly alternative that can withstand supply chain shocks and future deforestation issues.
Supplement company Nouri has launched Stay Well, a Passion Fruit Synbiotic drink mix. The powder mix is designed to enhance daily gut and immune health. It combines synbiotics (prebiotics+probiotics+immunobiotics), L-Glutamine, and vitamins in a sachet with zero-sugar and zero-calorie.
Pitaya Foods has launched ‘functional sorbets’ called Sorbetter. Each flavor contains antioxidant and superfood-rich ingredients meant to help with immune support, energy and focus. Varieties include passion fruit, acai, dragon fruit and coconut.
So What? Back in April, the New York Society of Cosmetic Chemists released a statement about how climate change is affecting (and could affect) the cosmetics industry. Put bluntly, climate change will likely upend the cosmetics category because it relies heavily on ingredients sourced from locations threatened by extreme heat, storms, climate-related plant-diseases and flooding.
Of course, the food and beverage industry is just as vulnerable. While some corporations are addressing this through supply chain modification (see Walmart above), the strategic implications of climate must be pushed through the whole company.
One way to tackle this issue is to switch to ingredients that are more likely to survive in harsh climates. The Aloha bar above is a good example. It is made using oil from the pongamia tree. Recently, citrus farmers in Florida, devastated by blights and storms, have been switching to pongamia as a crop. The ancient Indian plant is climate-resistant and produces a high-quality protein and oil (currently being marketed as Ponova culinary oil). Cell-based ingredients, like Kokomodo cocoa, offer another answer.
However, companies must also consider how a warming planet might affect whole portfolios. Case in point: hydration. As the ongoing heatwave ravages the US, hydration and electrolyte-rich products are seeing a surge. For example, Liquid IV has quadrupled sales in the last four years and has created a new market for ‘hydration enhancers.’ Today, hydration-supporting ingredients and electrolytes are growing in everything from beverages to frozen novelties to snacks.
Food and beverage companies should be future-focused in their portfolio planning and consider what needs a climate changed world might need in terms of new benefits. Here is my quick list:
1. Immune Support—hotter temperatures lead to the advancement of more diseases. A warmer world may increase the number of people looking to protect their health.
2. Skin Health—Hotter days and more UV exposure will likely lead to a consumer population more concerned about skin health. Consider more products high in collagen and other skin protecting ingredients.
3. Fast Cooking Foods for Energy Efficiency—While quick meal prep is an evergreen convenience lever, it might also become a marketing hook for consumers looking to be more energy efficient and not heat up a home.
4. No Cook, Ambient Meals—As I write this, massive parts of Texas are experiencing week-long power outages while temperatures reach 100+. Companies like Ready America have seen 83% CAGR in their emergency kits and the emergency food sector is set to grow by $2.8B by 2026. Being a reliable pantry staple in an uncertain world might just become mainstream.
5. Anti-inflammation ingredients—High heat stresses the body and appears to lead to inflammation. Therefore, I can see foods, beverages and supplements marketing anti-inflammatory ingredients to consumers looking to fight the effects of extreme climate.
We Need To Unpack Authenticity
UK company The Spice Tailor is launching a new range of Asian meal kits. The new items, which contain a liquid and spice pack, are designed to serve 2-3 people and be ready in 15 minutes. Each product can be made with chicken, red meat, seafood, or veggies. Varieties include Spicy Kung Pan, Fiery Szechuan Sauce, Classic Sweet and Sour and Classic Chinese Curry.
Mars Food and Nutrition UK has announced the debut of two new lines of shelf-stable ready meals (‘Lunch Bowl’ and ‘Favourites’) under Ben’s Original brand. The range is launching in July exclusively at Tesco and contains eight products.
Funyuns (a Frito-Lay brand) has partnered with Maruchan to make a Hot & Spicy Chicken Ramen flavored snack. The limited-edition product is currently available only on DoorDash but will soon be available at other retailers later this month.
SPAM (a Hormel brand) has launched a Korean BBQ variety of its iconic meat product. The sweet and spicy SPAM contains soy sauce, garlic, ginger, paprika, sesame and gochujang paste. Korean BBQ SPAM is available exclusively at Walmart and Spam.com.
Small-batch candy shop Chaotic Sweetz has launched a line of dulces enchiladas (i.e., ‘sweet-spice candy stew’). The company takes candies like Gushers, Skittles, and Sour Patch Kids and coats them in chamoy (a sweet-salty Mexican chili puree) and sprinkles them with Tajin. Available via the company’s website.
Ruffles has launched a Korean-Style Sweet and Spicy Chip for a limited time. The chips will be offered in both 2.5-ounce and eight-ounce bags.
The Washington Post had a great article recently investigating the extreme popularity of fiery Buldak ramen from South Korean brand Samyang. A social media phenomenon, the instant noodles were recently thrust into fame via the Streisand Effect when the government of Denmark recalled the product because it was too spicy.
So What? Last week, the artisan eCommerce marketplace Etsy announced a radical brand mission change with their ‘Keep Commerce Human’ policy change. This was a long-anticipated response to the erosion of the Etsy brand by dropshippers and mass-produced items masquerading as small makers. The new policy will sort and label all products on the site into four categories:
1. “Made by” (a handcrafted, artisan good)
2. “Designed by” (an original design produced/printed by a 3rd party)
3. “Sourced by” (items that enable buyer creativity, such as craft supplies)
4. “Handpicked by” (vintage items or items from nature, selected/curated by a seller)
Is the Etsy brand salvageable through this new policy? Only time will tell. However, the battle for the brand highlights the importance of curating authenticity. Without rules and guidelines, the meaning of artisan and authentic is easily warped.
Authenticity is especially important for today’s younger food and beverage consumers. According to a recent Datassentials survey, 53% of consumers say that authenticity is critical when trying out a new cuisine or dish and nearly 60% of Gen Z and Millennials say that they increasingly value authenticity in their food more than ever.
So, as a marketing manager or strategist, how should you think about the authenticity of the products and experiences you offer? My suggestion to clients is to first consider the type of authenticity your consumer wants to experience THEN design your product, packaging and marketing around it. Not everyone wants the ‘real thing,’ some consumers are perfectly satisfied with a mass-marketed knock-off. The secret is to know who you are marketing to.
In my work with consumers seeking authenticity, and through research on studies on tourism, I’ve recognized that there are two main vectors to consider:
1. Cultural Adherence: Some consumers are VERY interested in maintaining a direct line to the original culture, using the original spices, or making sure it is manufactured in the culturally correct way. Other consumers are fine with an experience that only vaguely resembles the original. This latter group accepts fusion cuisine and similar mixes.
2. Engagement: There is an aspect of authenticity that requires action on the part of the consumer to feel ‘real.’ A level of inconvenience or work feels more authentic. On the other hand, other consumers are perfectly fine with a quick and easy version of a classic dish.
When we put these two vectors together, we get an interesting 2X2 matrix of authenticity types that can be helpful for brands. Once you know which of these types fit your consumer, you can plot and customize your marketing and product development to fit their expectations. The four types of authenticity consumers want are:
Immersive Authenticity (High Cultural Adherence, High Engagement): Here consumers want to get as close to ‘real’ as possible. Not only do they like it, they also feel that the money spent and high-touch experience makes it more authentic. (Example: Dim Sum Kit from Jing Fong restaurant, shipped on dry ice, includes hand-rolled dumplings, a bamboo steamer, dumpling papers, and dipping sauces)
Effortless Authenticity (High Cultural Adherence, Low Engagement): Consumers here have read the latest about a cuisine and likely follow influencers on social media that are eating the original foods. That means they aren’t going to settle for something that hasn’t been approved by the current gurus of the topic. However, they are looking for quick and convenient ways to get the flavor and experience. (Example: Lao Gan Ma Spicy Chili Crisp Hot Sauce).
Convenient Fusion (Low Cultural Adherence, Low Engagement): This consumer isn’t too interested in the tradition of the cuisine, they just enjoy the flavors and want something interesting and exciting without too much effort (Example: Mings Bings Buffalo Chicken Style)
Experiential Fusion (Low Cultural Adherence, High Engagement): While these consumers aren’t fixated on making sure they follow cultural rules of a cuisine, they want to be part of a trend. So, they are eager to pick up on portions of an emerging cuisine and enthusiastically participate (Example: BobaBam Instant Boba Drink Kit, Green Apple Flavored).
GUT REACTION
AI for Innovation? Tred Carefully
Goldman Sacks published a provocative report a few weeks ago called, “Gen AI: Too Much Spend, Too Little Benefit?” In it, they document how generative AI tools have definite promise, but no where near enough to justify its valuation and attention. Net-net: we are likely looking at an AI hype bubble that is going to pop.
Honestly, I feel the same way about AI in innovation. There is definite promise and potential, but not enough to warrant the current industry frenzy. So, why are CPG companies suddenly turning their innovation attention toward AI?
1. Corporate Innovation FOMO: I’ve had dozens of calls and meetings with CPG execs and many of them are worried that they are falling behind in the AI race. While most aren’t sure what AI can give them in the realm of innovation, they don’t want to regret inaction.
2. The Street Loves AI: Step foot in a CPG C-Suite and you will immediately be surrounded with big screen TVs locked onto business channels with scrolling stock tickers and talking heads. The pulse of the space is tied to Wall Street. Therefore, when these execs see other company’s stocks making gains with the mere mention of AI, they feel the need to join in. They sponsor more AI projects, mention AI more in quarterly earnings calls, and hook the company’s name to more AI usage. All of which causes other companies to increase their talk of AI, and we get to our current fever pitch.
3. Cost Savings: With consumers starting to push back against price increases, and company profits falling to pre-COVID levels, CPG is heading back in the red. In addition to impending layoffs and brand disinvestments, companies are looking for ways to keep margins steady. While it doesn’t immediately look like a cost saving effort, AI is definitely being sold that way internally. “Do things faster,” “do more with less,” and “maximize your current resources.” These are the same phrases used for decades for any cost savings initiative. It’s just this time it also sounds trendy.
However, as mentioned, I think some companies are putting too much faith in AI to fill their pipelines and disrupt their categories. I see three big reasons why companies should be cautious about how much emphasis they actually put on AI in their innovation initiatives (product, package, branding and strategy):
1. A Carpenter Isn’t a Hammer: Talk to any computer scientist and they’ll confirm that AI is only a tool, a fancy one that can fool us with words, but still a tool. And like any tool, it can’t provide you with a skill you didn’t have before you used it. Instead, AI only magnifies your current strengths AND weaknesses. Just like Excel doesn’t make you an accountant, AI doesn’t make you an innovation expert. If your innovation game sucked prior to your use of AI, now it will just suck faster.
2. Innovation Needs EI more than AI: The most critical parts of the innovation process are not the parts that AI excels at. Data analytics, highlighting consumer chatter on trends and idea generation are important in the overall process, but not when it comes to actually getting an organization to focus and commit to launch. That requires more EI (emotional intelligence) than AI to steer the team; the cultural component of innovation management can’t be outsourced to a LLM.
3. AI is Backward Looking and Too Safe: Generative AI is a prediction machine trained on millions of pieces of data. Just like the predictive text function on your phone, when it sees ‘peanut butter,’ it crunches the numbers and suggests ‘jelly’ or ‘chocolate’ as the most likely next word. This means that AI is very good at telling you what has worked well in the past, but not great at suggesting new combinations that might work in the future. Of course, that’s a problem. AI will suggest safe, close-in innovation that companies will be eager to launch, but they won’t suggest anything radical and disruptive.
All that being said, I think AI should have a permanent place in innovation, but we need to be mindful of its strengths and weaknesses. Along with Post-It notes and agile scrums, AI is a tool that can be helpful when used correctly, but more swagger than solution when not.
Find Your Way-In
Nestle’s DiGiorno has launched a Thin & Crispy Stuffed Crust frozen pizzas. In addition to the cheese in the crust, the pizzas come in three varieties: Pepperoni & Sausage, Margharita, and Pepperoni.
Aldi US now has Pez ice cream bars. The stick bars are shaped like the iconic lozenge-shaped candy and are available in both strawberry and lemon flavored.
Jack Link’s has launched a Doritos taco-flavored line of jerky (11g protein/serving) and meat sticks (5g protein/serving). Both are available for a limited time only.
So What? If you haven’t noticed by now, DiGiorno’s point of difference is their crust. Since their inception, the ‘rising crust’ has been their reason to believe on how they are better than takeout. Over the years, the brand has made crust innovation their ticket to owning and expanding the category. For example, three years ago, DiGiorno launched a croissant crust pizza, and then two years ago used this innovation to launch a breakfast pizza. Today, DiGiorno has used every iteration of rising, stuffed, thin, flaky, Detroit, and hand-tossed crust you can think to gain market share.
For companies looking to grow, DiGiorno is a great case study. If you pick the correct vector as your differentiating way-in, you can iterate on it to a profitable future.
Is seasoning a way-in for Dorito’s and Frito-Lay to expand into other categories? It looks like it. But care must be taken in not going down blind avenues. While I’m sure this Pez launch is more a one-off licensing deal, it speaks to missed opportunities. The shape of Pez may be iconic, but it doesn’t have much extendibility. Personally, I think there is major upside in using the nostalgic Pez dispenser and tablets to deliver a modernized benefit for Millennials and Gen Z (think mood enhancing nootropics or energy).
TIDBITS
Americans Have Lost the Plot on Cooking Oil
Target taps Shopify to add sellers to its third-party marketplace
Denmark becomes from first country to tax farmers for cow’s flatulence
Ozempic maker Novo Nordisk is racing to build a factory in North Carolina to create additional product
Daily multivitamin use shows limited value in huge study (20 years/400K people)
Cyborg Centaurs and Meat Puppets: What AI is doing to us in the workplace
Amazon is launching a direct-from-China storefront to compete with Shein and Temu
The definitive guide to all the Chicago restaurants featured in The Bear
Is Chipotle getting skimpy with their bowls? Wells Fargo analysts did the math
New Japanese soda turns into jelly in your stomach
Why plastic milk jugs have dimples in their side
7-Eleven is reinventing itself to be more Japanese
Oat-zempic is here
Texans are using Whataburger to track power outages
McDonald's rebrands Happy Meal as just 'The Meal' for Mental Health Awareness Week
Sober young adults boost Athletic Brewing to $800 million valuation
Latest TikTok trend: grocery store tourism
McDonald’s discontinues all salads due to lack of demand
Sam’s Club seeing growth with Gen Z and Millennials (technology)
What’s in our grocery cart tells a story
Outrage in China as some cooking oil found to be carried in fuel tanks
Berries in the US never tasted so good
Walmart is opening five automated distribution centers for fresh food
Tyra Banks opens her first Smize Cream scoop shop with a Cap’N Crunch infused ice cream
Costco hiking membership fees for the first time since 2017
MOD Pizza announces new owner as bankruptcy threat looms
PepsiCo looks to cost-cutting and promotions to win over consumers as revenue dips
General Mills says they are seeing savings of $20M+ with AI tools
Singapore approves 16 insects for human consumption