Kevin Ryan's: Culture Matters
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Introducing Healthy Indulgent Premium
The Coconut Cult, the privately held vegan yogurt company out of California, has launched a line of probiotic frozen yogurt gelatos. The company, known for recently launching a $25/jar of probiotic yogurt, has partnered with Hu Chocolate ( minority backed by Mondelez) for this new line.
The Hershey Company, through its C7 Ventures group, has announced they are taking a minority stake in two companies: Fulfil Holdings Ltd and Blue Stripes, LLC. Based in Dublin, Ireland, Fulfil produces a line of vitamin and protein-fortified nutrition bars. The bars are distributed through retailers in Ireland and the UK and through Amazon in the US, in flavors such as chocolate orange, white chocolate, cookie dough, and chocolate hazelnut whip. Blue Stripes is the new upscale storefront for the famed Israeli chocolatier Oded Brenner, founder of the famed chocolate chain Max Brenner ( his first venture back into chocolate since his 5 year ‘ban’ was lifted).
Unreal, the Boston-based candy company, has launched their latest creation: Dark Chocolate Coconut Bars. The bars contain only 3 ingredients (dark chocolate, cassava syrup and coconut) and are meant to mimic a Mounds bar.
So What? If you go into homes with young kids, you’ll notice that there’s always a ‘family zone’ of foods (i.e. a pool that anyone can eat) and a parent’s zone (typically filled with more expensive treats). This isn’t a new phenomenon, but what fills these zones is changing. Whereas, in the past, mom or dad would have a secret stash of pricy candy or cookies (e.g. the Milano cookie bag on the top shelf, the pint of Haagen Dazs in the garage freezer), over the past several years, I’ve seen a new, surprising category being added to the hideaway: indulgent healthy foods.
It used to be that you needn’t hide healthy food from kids. What kid willingly ate a rice cake or a food containing vegetables? However, as health food has been made tastier and ‘junk food’ has been cleaned up (e.g. Unreal), we’ve seen the formation of a new food category that contains healthy and indulgent characteristics. Consumers can now get fiber bars that taste like Snickers and cookies with as much protein as a steak. It’s become harder to tell the difference between the nutrition aisle and the candy aisle. However, the problem as I see it is that healthy-indulgent analogs haven’t moved past ‘checkout lane’ confections. Their chocolate is poor, the marketing is all-family and the flavors aren’t exciting (oh look, another peanut butter chocolate bar). Time to differentiate!
Yogurt is one of the early breakouts. In fact, Innova Market Insights recently reported that while breakfast is still the primary usage occasion for yogurt, post-dinner consumption is a fast growing niche. You only have to look to ultra-rich and indulgent brands like Noosa (in the US) and The Collective (in the UK) to see how they’ve drawn a clear line between their kids yogurt line and their adult (‘gourmet’) yogurt lines (e.g. the Collective’s Espresso Martini or Rhubarb+ Vanilla). In this context, Coconut Cult’s move to yogurt gelato is a logical and smart move.
However, I believe there is a huge opportunity here that few are taking. Brands need to recognize the emergence of this new healthy-indulgent category but they also have to be brave enough to cleave it from kids’ indulgence, to charge the premium and skew toward more adult flavors. When I see Hershey taking a stake in Fulfil and Blue Stripes, I wonder if they are considering such a path. If so, it wouldn’t be the first time they’ve tried to ‘gourmet’ and adultify a category that had suddenly become healthy. Hershey’s purchase of Krave marked the beginning of a trend within the meat snack category that created an upper tier in a product set that had been previously relegated to gas stations and camping. My guess is that they are experimenting with doing something similar in nutrition snacks.
Right now, Fulfil is still more a run-of-the-mill candy bar with vitamins, but there is potential to pivot this brand considerably using Hershey’s marketing and technical know-how into a more sophisticated offering. Blue Stripes is even more interesting. Their current shop offers ‘Mental Brews’ that use raw cacao to supply ‘energy and focus,’ as well as cacao fruit teas and bowls. If Hershey can amplify this vibe, I believe they can crack open a new, lucrative category.
Brands need to start seeing the possibility that adults will pay $5-$6 for a one protein bar with single-source Guatemalan chocolate with Himalayan sea salt. Who is the future category captain in this space? The current candy companies ( Mars, Hershey) or wellness brands ( KIND, Clif, Nature Valley, Kellogg)? |
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Richard’s Rainwater, a Texas-based bottled water company, is expanding its line and its reach. The company, which captures rainwater ‘before it hits the ground,’ purifies it and bottles it, has recently added new size offerings to its still and carbonated lines. According to BevNet, the company will be in 1,000+ retail location by the end of the summer (including The Fresh Market and Whole Foods).
JUST, the San Francisco food-tech company, has struck a deal with Kroger for the retailer to carry its mung bean-based liquid egg substitute (JUST Egg) in 2,000 stores nationwide. This comes on top of JUST Eggs being put on shelves at Whole Foods, Sprouts and Costco as well as on menus at Tim Horton’s. The company has also made in-roads internationally, selling the product in Europe, Mainland China and Hong Kong.
Eco Convergence Group, a vertical farming company based in Florida, announced last week that they were rebranding themselves as Kalera. Additionally, the company announced that they had broken ground on what will be the largest vertical farming operation in the southeast United States, capable of growing 5 million heads of lettuce annually. The company uses IoT, data analytics, AI-powered process automation and cleanroom tech to create a fully automated system to plant, move and harvest crops.
So What? Let’s take stock of where we’ve been in the last two decades in terms of the ethical, environmental and wellness movements in CPG. Prior to the early 2000’s, quality and prestige (badge value) were the primary marketing message for many products (i.e. our product is better than yours or our product will make you look better to others). While in some categories, like meat and milk, the main strategy was running awareness campaigns (“Beef, its what’s for dinner” “Got Milk?”). However, in the early aughts, things changed. We started to see the rise of simpler, ‘chemical-free’, natural and organic products ( the National Organic Program and USDA Organic seal were codified in 2000). In other words, the rise of food marketed to do less harm to you, or as I call it in retrospect, Benevolence Stage 1.
When that line of messaging showed results, food marketing expanded to not only discuss the welfare of the consumer but also the producer (e.g. Fair Trade) and the animal (“Great Cheese Comes from Happy Cows. Happy Cows Come from California,” free-range chickens and grass-fed beef). This was Benevolence Stage 2. All of which was followed by the mainstreaming of environmental welfare as it pertained to packaged food and bev (e.g. recyclable packaging, solar energy, upcycling, etc.)—Benevolence Stage 3.
We are just now reaching Benevolence Stage 4 in the making and marketing of CPG, and it’s an important and unique milestone. Stage 4 differs from previous stages in that it doesn’t bother itself with trying to correct the flaws of the food system to meet or exceed the everchanging ethical standards of consumers. Instead, it rolls back food production to First Principles and makes positions food in a pure state before it was tarnished by doubt or risk.
Richard’s Rainwater is a great example of Stage 4. While other water brands are pushing their purity standards (‘pristine mountain spring water’) or more environmentally-responsible bottling plants, the industry can’t outrun rumors of Nestle (and other companies) ‘stealing’ clean water for ‘next to nothing’ from parched countries and cities. Richard’s sidesteps the whole issue by pulling water out of thin air (or as the company says ‘before it even hits the ground’). No water rights contend with, just water in its uncontestably purest form: rainwater.
The alt-protein movement is also Stage 4. While meat and dairy companies will continue to deal with the Stage 1-3 issues of animal welfare, antibiotics and the environmental impact of their products, Impossible, JUST, Atomo Coffee and Perfect Day have removed these barriers by eliminating the source of the original problem: animals. Just as Richard’s Rainwater rolled back the problem to the point it ceased to be a problem, these companies have preempted meat by starting with vegetables (or as oat milk maker Oatly says about cows “We get rid of the middleman”).
The question becomes: how long before Stage 4 comes for vegetables and grains? It’s hard to image dialing these products back any further, erasing anymore fear of ‘harm’ that their production or processing inflicts. Perhaps driving everything back to base macronutrients produced through fermentation? Maybe, but its likely not profitable to ‘print’ tomatoes and broccoli anytime soon. Instead, I believe the Stage 4 future for produce will be vertical farming. By removing the people, the pesticides and the transportation, you jump ahead of the current concerns of vegetable production and produce untainted, untouched vegetables.
Stage 5? Impossible and JUST are seen as ‘clean’ now, but consumers will quickly see flaws in the soybeans and mung beans that comprise them. Autonomous, ‘clean’ farming of these veggie ingredients will likely be the next step in the ongoing Benevolence Battle.
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Accepting Feedback
London-based Earlybirds has launched a line of vegan breakfast-on-the go ‘drinking snacks.’ The products, available at Sainbury’s, are a mix of coconut milk, fruit juice (including banana puree), oat bran and faba bean. Flavors include Berry Bircher and Mango & Oats.
VapShot, an Austin, TX based business, is ramping up their marketing of alcohol vaporizing systems for bars and other venues. The company sells machines that transform any alcohol into a vapor (aka Alcohol Mist) that can be suspended in a balloon, allowing consumers to ‘take a shot’ directly into their bloodstream via their lungs. Tagged as “Instant buzz, 1/60 th the calories, and taste great,” the company also sells Green Mist, an atomized CBD and alcohol vapor system.
So What? Have been introduced to Lymphatic Drainage Massage, yet? If you haven’t, you soon will be. LDM is a technique originally invented for post-op patients recovering from invasive procedures (e.g. liposuction) to rid them of unwanted swelling. The massage, which helps the body purge itself of excess water in soft tissues, can cause you to lose 5-6 pounds overnight! As you would guess, these results have not been lost on the rich and famous. Name a celebrity and they’ve likely had the procedure done, and studios are opening up in NY and California just for LDM (with many current spas adopting the practice).
Consumers want immediate feedback, immediate results. Yes, there is a place for the hopes, wishes and the placebo potential of vitamins and extracts, but if you can make a person physically feel something right after consumption ( operant conditioning), you have a winner. While a traditional Swedish massage is great for the ambiguous state of ‘overall wellness,’ it can’t complete with your scale registering a 6 pound loss in 24 hours.
Earlybirds gets this. They could have spent precious front-of-pack real estate talking about their purity, non-GMO content or their vegan-status, but instead they downgraded all of that info into mouse-print. Instead they shout: “This is a snack.” Perfect. They understand the order of importance of their benefits, with the primary one being the immediate feedback of satiety (something you equate with a snack, not a beverage, and a critical job of breakfast). Similarly, VapShot starts the conversation with the most salient point: Instant Buzz.
My point being: if you are ever struggling on the correct benefits to prioritize in your advertising or messaging, go with the ones that consumers can viscerally feel.
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Hershey has expanded the usefulness of their Hershey’s Solution online portal by allowing c-store owners to increase the speed in which they receive new Hershey launches through direct ordering. The site, which launched in 2018, also offers retailers insight-bolstered planograms, in-store merchandising ideas and promotional suggestions. Also last week, Kroger announced that they were expanding their partnership with Walgreen’s with the addition of 35 more Express ‘store within a store’ concepts. These Walgreen’s-Kroger hybrid stores feature Kroger private label foods and serve as pick-up locations for Kroger’s online grocery ordering. So What? The future is small footprint retailers and everyone sees that now. CPG and traditional grocery are all realizing that in the battle against frictionless ecommerce, they need to pour their resources and their attention into the brick-and-mortars with the least friction of their own. C-stores, drug stores and $tores offer the easiest ingress/egress, more convenient locations and a ‘feel’ of local (versus corporate) management. Expect to see more CPG’s forming new, more expansive relationships with these retailers as their importance grows.
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Totino’s, a General Mills brand, is introducing two versions of Mini Snack Mixes, Original and America’s Favorites. The hot snacks come in stand-up bags (90 pieces per bag) and contain mini-versions of pizza rolls, cheddar bites, potato bites, and mozzarella sticks, just to name a few. So What? Hot Chex Mix, as I’m thinking of this product, is a great idea and a long time in coming. What I like about it is it begins to explore new temperate boundaries in snacking (something I’ve talked about before with the rise of frozen popcorn and frozen KIND bars). While the shelf stable savory snack aisle is ferociously guarded, there is room to grow in frozen. One thing I’d like to see in this product is a smaller count bag. With 90 pieces, Totino’s is still thinking about this in the old school ‘pour out and heat in the oven/microwave’ mode. The bigger opportunity, in my mind, is to sell a box of individual bags that the consumer throws in the microwave and eats. This 90-count variety offering may be slightly incremental, but potentially cannibalistic. However, an individual bag-in-hand offering would have Totino’s go head-to-head with Frito’s ambient line-up, all while maintaining a safe distance in the freezer case.
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Culture Matters is on break next week. Just a notice everyone that Culture Matters is taking a break next week to enjoy one last barbeque for the summer. I’ll be back on Sept 9. Until then, I’d suggest scanning the Culture Matter archives if want some early week inspiration.
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Innovation Doesn't Need to Be Difficult
Malachite can serve as guide, coach and inspiration in your company's journey toward a profitable pipeline. From consumer interaction, to whitepapers, ideations and prototyping, Malachite can help. Visit malachite-strategy.com for more info or email kevin@malachite-strategy.com. |
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