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Kevin Ryan's: Culture Matters

To Tell the Truth
 
Country Crock, owned by the margarine company Upfield, has released a line of Plant Butters that contain almond, olive or avocado oils. The spreads are available in both sticks and tubs.
Kraft has launched a national TV ad that states that, for Mother’s Day, the company will pay for what mothers really want: a day away from their kids. So, moms can hire a babysitter and send the bill to Kraft.
So What? First of all, for those of you needing a sign that plant-based products were mainstreaming, you can look no further than this launch from Country Crock. If there was a bellwether brand to indicate full trend adoption, old-school Country Crock is it. However, if you sense something amiss here, you must be a food scientist. Country Crock is a brand of margarine and margarine (by its very definition) is made from vegetable oil (aka plants).  So, either Country Crock assumes that their consumer doesn’t know this fact or they are just pointing out that now, instead of being made from unknown plants, it is made from specific plants (and even then, just in tiny amounts—its still a vegetable oil margarine).
Is it ok to tell a ‘mis-truth’ to your consumer? In the case of Country Crock’s labeling, its less of a mis-truth and more of a mis-direction. Would it have been better labeled as Country Crock, now with avocado oil? Maybe.  However, a lot of Country Crock consumers likely picked up this product thinking they were trying something new and being trendy. The biggest test is: would Country Crock consumers be upset if the truth were explained to them? Potentially, but most would rightfully say that the company delivered what they said they would.
However, the same can’t be said for Kraft. The commercial claims it’s as easy as three steps: 1. Hire a sitter; 2. Submit your receipt; 3. Kraft covers it.  Again, like Country Crock, its technically true, but the difference is that its doubtful the company is going to be covering your Saturday night freedom. Go on the website and you quickly find out that the company has capped the payout to $100 per person for a max of $50,000 for the total campaign. Plus, the whole campaign is only good until the 19thof May!
Did Kraft understand the motherhood angst of 24/7 parenting and communicate that effectively? Absolutely. Did they cover themselves legally? Looks like it (but I’m not a lawyer). Did they anticipate the negative consumer reaction that would come from people finding out that the chances that they’d ever see any compensation are probably near zero? I don’t think so. Yes, it’s all there in the fine print, but that doesn’t matter. Consumers take you at face value and you have to deliver on that.
This marks the second time that Kraft has played fast and loose with consumer trust. The first being in 2016, when they told consumers that they had already pulled artificial colors and dyes from their products and ‘look, you didn’t notice.’ While some advertising friends of mine thought that was a brilliantly clever campaign, I saw it from a consumer’s POV. A POV that basically saw, ‘we as the powerful corporation just manipulated you, aren’t we cheeky.’ And I think, they’ve just done it again.
Net-net: your consumer empathy doesn’t just need to be around the emotional and functional brand insight, it needs to extend to the reception and aftermath of the campaign. Just because your lawyers and fine print cover you doesn’t mean that consumers will.
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Open Pivot

Danone announced this week that it would “open its collection of 1,800 strains for research purposes. This includes granting access to its current collection of 193 lactic and bifidobacteria ferment strains deposited at the National Collection of Cultures of Microorganisms, held in the Biological Resource Center of Institut Pasteur (CRBIP). Danone will also open its collection of over 1,600 strains at its Research & Innovation center in Paris Saclay to researchers around the world, with the aim of sharing Danone’s legacy for the benefit of all.”

So What? At this point, the details of all of this are all very sketchy. However, a liberal reading of this press release could indicate that Danone plans on allowing ‘researchers’ (however that is defined) to make use of their IP (bacterial strains) for whatever purpose they want.  Wow!
Let me unpack why this is a big deal. This is not open innovation, at least not the Chesbrough-type in the way CPG companies have been experimenting with for over a decade. In that form of innovation, companies partner with external individuals and groups to help with the innovation ‘heavy lifting,’ but the corporation typically maintains control of the process and the IP. What Danone is doing sounds like open source innovation, a very different beast. In open source innovation, a form popularized in the computer software world, the community (not the corporation) controls the process and the IP.  If it’s the latter, a BIG if, it could mean radical changes coming for Danone.
While open innovation and open source innovation sound similar (and to be fair they do exist on a continuum so-to-speak) the ramifications of the extremes of these types of innovation for a corporation are very different. Both forms harness the philosophy that smart people exist outside the walls of the company and could accelerate the corporation’s innovation. However, while open innovation is based on the goal of profiting from the sale of innovation with corporate control of the innovation process, open-sourced innovation sees profit from the use of innovation with distributed control of its development.  
OK, that’s a lot of innovation-speak for one paragraph. What’s the advantage of Danone giving away their IP? If Danone embraces open source innovation, they might be considering the possibility of developing a new business model (see von Hippel for extreme details).  Instead of continuing to create innovation internally, they may be considering becoming a production area of the innovation community their IP creates. In a way, they are using the bacterial strains that a century of internal research has created as a ‘life raft’ out of the yogurt category and into the new divergent world of fermented and cultured foodstuffs. This would then make money NOT by internalizing the (hypothetical) gut-friendly and shelf-stable properties of one of their strains in a line of pickles, but providing production capabilities for such a product and getting a cut of the profit.  
Of course, all of this is a big IF. Danone may put so many restraints on the use of their strains that they end up swing this completely away from open-source. However, if they take the intriguing idea of using the DNA strands in their possession as a version of ‘code,’ and releasing it for very smart people to tinker with unencumbered, it could catapult them into a totally different playing field.
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Brands I'm Watching
In a recent interview, Boxed’s head of private labels revealed that the company is in talks with traditional brick and mortar supermarkets to stock their label on shelves (like the Prince & Spring label pictured above). For those of you not familiar with Boxed, it is an ecommerce bulk buy site (sometimes called the Costco for Millennials”) that has seen impressive growth in the last few years, especially in their private label sales. So What? Despite all of the bluster, ecommerce is still not a popular means for people to get groceries. Unlike electronics or books, groceries are fragile, spoiling mid-transit and cutting into already tight margins. However, people need to eat much more frequently than they need to read or listen to music, so whomever dominates in grocery is guaranteed a high frequency of visits. This explains why the current grocery war is so vicious, with Amazon and Walmart fighting for dominance. Yes, they both want the revenue from selling you apples and cereal, but what they really want is the total wallet that comes from dominating your path to purchase. Walmart’s willing to pour countless millions into ‘click and collect’ initiatives and Amazon buys Whole Foods and builds grocery stores to recruit consumers into their ecosystems. Interestingly, Boxed has chosen a different path—don’t build new, use existing. Their likely strategy is to use the quality of their private label, embedded in existing retail, to pull people over onto their site. It says a lot about Boxed, but even more for the retailers that collaborate. Unlike a normal brand that a retailer would stock, this is the brand of a competitor that could potentially steal your consumer. This shows you the panic some retailers are in right now about the developing dominance of Walmart and Amazon, they are willing to do business with frenemies. All I can say is, Boxed must be developing some amazing private label products.
Mooala, the alternative milk company, has launched a line of vegan, plant-based creamers. The new products are available in three flavors (Vanilla Bean, Oats 'n' Crème, and Banana Nut), contain no added sugar and are only 10 calories per serving. So What? This is not a ‘new to the world’ product. Nut Pods has been making similar offerings for years now. However, what it does indicate is a change in strategy for the nascent alt milk company, and a lesson for a lot of the alt products currently out there. A carton of milk is a commitment for a consumer. Unless you are eating cereal everyday or downing multiple glasses, its likely to spoil before you drink it all. That’s the ‘fatal flaw’ of alt milk, it requires more than one drinker in the household to make the purchase economical. Yes, you could make smaller cartons but getting the margins to work are more difficult. That’s where creamer comes in. Its an individual serving (you don’t need family by-in) with daily consumption and you can charge a little more. More importantly, it familiarizes a consumer to your taste. In a sense, it serves as a gateway to full alt milk adoption. So, Mooala is going backwards to go forwards. Not ideal, but kudos to them for figuring that out. Its an adoption question that a lot of alt protein and alt anything products should figure out.
Kellogg’s is launching a new line of frozen waffles under a new brand called Off the Grid. The waffles contain 12-grams of ‘complete protein’ per serving. Flavors include vanilla buttermilk, cinnamon brown sugar and wild blueberry.
So What? Kodiak Cakes, you roused the real bear! The Shark Tank waffle/pancake company had a head start, but this entry by Kellogg’s speaks to the growth Kodiak must be seeing (and likely stealing away) in the frozen waffle category. Will Kellogg be successful? While they definitely have the distribution and development chops to squeeze out the competition, a few things give me pause here. One, why is Kellogg using a completely unknown brand for this launch? With a plethora of cereal brands to chose from (or what about RX?!) the use of Off the Grid makes me believe that they did the testing (of course they did) and none in their arsenal work for this consumer. That’s troublesome because they really could have used a known brand here. Second, the name Off the Grid doesn’t telegraph the benefit (protein-enhanced waffles) strongly enough in my opinion. Perhaps Kellogg is thinking of making this a new umbrella brand (that would be a good idea), so they are going for broad (although ‘grid’ seems a pun on waffles). The problem is, they have to go up against something called “Power Waffles.” Which one do you think communicates the benefit better through a frosted glass door? Lastly, the hook of ‘complete protein’ is interesting. I’m not saying it’s wrong, but I question if it’s a strong enough benefit to warrant the use of soy protein isolate in the ingredient deck. All that being said, this should be an interesting battle!
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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 building a rigorous and repeatable way to build and maintain 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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