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Kevin Ryan's: Culture Matters

Resetting Expectations
The Slutty Vegan, an Atlanta, GA food truck and restaurant, has announced the launch of their bacon-alternative product Slutty Strips. The restaurant, a celebrity favorite and so popular that people regularly wait in line for up to 5 hours to eat their Impossible and Beyond Meat creations, said that this new product will top their in-store burgers and will be available at supermarkets within the year.
Two advertising creatives in the UK are Kickstarting Vegan Pig, a non-meat version of pork scratchings (similar to US pork rinds). Created in partnership with food innovation company TasteHead, the soy-based crunchy snacks have nearly reached their Kickstarter goal. Their ultimate goal: to get Vegan Pig into every pub in the UK.

So What? Sometimes you have to break expectations before you can make expectations. That’s the story of Tesla (they overcame the idea that electric cars were weak, ineffective golf carts by building a muscle car) and that’s what’s happening with plant-based meat. The biggest names (Impossible and Beyond) aren’t aiming for the niche vegetarian market but for mainstream flexitarians (data proves it).  Even the words ‘plant-based’ are an attempt to move away from the name and stereotypes typically associated with ‘vegetarian’ or ‘vegan.’ Why did Impossible join forces with Burger King or Little Caesars? Beyond just getting their name out their using an established network, I believe it was to purposefully move their brand into areas that vegetarian brands traditionally would never dare venture. They are effectively breaking the stereotype that plant-based food is fussy, stuffy or for a certain class of people (which is why I think Beyond’s recent partnership with Blue Apron is not a good move).
Right or wrong, the terms ‘vegan’ and ‘vegetarian’ have baggage, often associated with a particular political ideology, moral beliefs and even style of dress. In order to gain scale, in order to win in Everytown USA, these ‘plant-based’ companies have to distance themselves from the old-school stereotypes. And that’s what the Slutty Vegan and the Vegan Pig are trying to do, using extremes to let you know they are not your hippie grandmother’s kind of vegan. As Slutty Vegan says on their website:
“A Slutty Vegan is someone who takes time away from their busy lives to indulge in the pleasures that life brings. And there is no better pleasure than eating good food with good people! So take a break from your brussel sprouts and quinoa salads and enjoy the best burger in town!”
As I look around at many emerging lifestyle brands and products, I’m realizing that they need a similar expectation reframe. Too many concepts won’t get traction unless they break free of old-fashioned beliefs and stereotypes: weight management, cannabis, or just cooking a weeknight dinner. The successful companies in these spaces will be those that distance themselves from what’s gone before and start again.
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Prime Day = CPG Black Friday?

TRUWOMEN, a “plant fueled™ nutrition company that's devoted to creating plant-based snacks”, launched two new protein bar flavors exclusively for Amazon Prime Day. One of the new flavors, Whole Lotta Macchiato, has added caffeine (80 mg, as much as cup of coffee) based on feedback from consumers. Together with Whipped for Key Lime Pie, the “Indulgent Nutrition™” bars each contain 12g of protein and are 200 calories.

So What? A few years ago, I remember sitting in a consumer’s apartment in Shanghai, gathered round their smartphone. It was November 9th and they were very excited to show me what was in their Alibaba and JD.com queues in preparation for Singles Day. At the time, I had never experienced this e-commerce ‘holiday’ in person, and only knew that it was a much more lucrative predecessor (reported Singles Day sales for Alibaba were $30.1 billion in 2018) to Amazon’s Prime Day (reported $4 billion in sales in 2018).  What I saw surprised me. While this consumer had a few small electronic items on their ‘wish list,’ most of their queue was filled with mundane products like laundry detergent, boxed milk and cosmetics; and they weren’t an anomaly.
Since Singles Day started, in 2009, it has progressively morphed from a cost-cutting electronics and big ticket sales day to a ‘stock up on FMCG day.’ Whereas in 2018, Amazon’s biggest selling items were Fire Sticks and Echos, Alibaba’s were health supplements, milk powder, facial masks and hairy crabs (1.1 million sold in the first hour!).  However, while Amazon is nowhere near as transparent about sales as Alibaba, based on third-party reports, I’m starting to think that Prime Day is becoming increasingly CPG-focused. Nielsen, citing Rakuten Intelligence data, said Amazon doubled its U.S. consumer packaged goods sales for Prime Day last year compared with an average two-day span. Grocery last year was the second-highest selling CPG category on Prime Day, behind health and beauty products.  Forbes reported that in United Arab Emirates, Procter & Gamble’s Ariel laundry detergent was a top seller. In Singapore, it was Coca-Cola Zero Sugar soda. Amazon’s own Mama Bear diapers were a winner in the Netherlands while its Happy Belly water was a bestseller in Japan.   
Of course, it all makes sense. Amazon needs to win at grocery to hold off Walmart, and using Prime Day deals to increase consumers’ comfort with the transaction is a smart move. However, I think we’ve only seen the beginning. As we gear up for Prime Day 2020 (and this year’s Black Friday and Cyber Monday) I think we’ll see grocery take more centerstage, and I think we can learn something from how Singles Day CPG has evolved:
  1. New Retail Push: Alibaba uses their brick and mortar stores (such as their grocery arm Freshippo, formerly Hema) as omnichannel touchpoints to lead up to Singles Day. While we definitely saw aspects of this in Prime Day 2019, it was mostly a few deals and discounts in storeAlibaba’s approach is much more sophisticated, allowing for in-store QR code scanning of merchandise to add to Single’s Day queues, comprehensive in-store events and cross-channel promotions. I can envision Amazon using Whole Foods (and the upcoming grocery stores?) in a New Retail-way to push grocery over the line for the company.    
  2. Cheap QuantityàExclusive Quality: JD.com CMO Lei Zu has gone on record indicating that Chinese consumers have gone from seeking deals on cheap merchandise to a more value-driven mindset , saying that for Singles Day “There is a noticeable shift in China toward quality over price.” This is what drives sales on hairy crab and New Zealand powdered milk. For US consumers, there may be some initial interest in saving $3 off a box of Lower Sugar Quaker Oatmeal, but I’m not sure that’s going to cut it for long. I predict we’ll be seeing more Amazon exclusive (either 3rd party or Amazon branded) grocery items to drive interest. Although it goes against past behavior, exclusive launches like TRUWOMEN will likely become more common as Amazon looks for more buzz to get consumers into grocery.  
  3. Competitor Push: In the end, Amazon will be forced to make grocery their lead because competitors are using it as a blunt instrument to rally consumers away from Prime Day. Bulk ecommerce company Boxed (coming off their announcement that they were partnering with grocery chain Lidl) ran a Prime Day promotion offering ‘doorbuster deals’ off of grocery items (e.g. soft drinks, snacks, wine and condiments). Likewise, Target ran ‘Deal Days’, Walmart had a special event and more than 250 other retailers (according to Nielsen’s Commerce IQ) had competing specials—many on CPG.
Net-net: Future Prime Day’s could very well be retitled CPG Black Friday.
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                                                Nutritional FOMO
The founder of the popular chickpea snack Hippeas, Livio Bisterzo, and Dan Obegi, former chief digital officer of GNC and CEO of Dermstore, have joined forces to launch the personalized nutrition company Buddy Nutrition. Last week, the company announced their first product: a 1.8oz smoothie shot. Through an online questionnaire and sophisticated co-packing, the company claims they can replace all of a consumer’s unique mix of vitamins, minerals and supplements in one pouched smoothie shot. The company told NOSH that they’ll soon be launching protein powder as well as vitamin enriched bars and snacks. 
Macro Snacks, a startup out of North Carolina, has launched a new range of flavors of crispy snacks. The products use the USDA guidelines intake recommendations (i.e. the currently uber-trendy ‘macros’) to create a “macronutrient balanced crisp.” Each crisp has 11g of pea protein isolate, 16g of complex carbohydrates and 3.5g of fat. Flavors include Cheddar Cheese, BBQ Sauce, and Sour Cream and Onion.
Huel, the British meal replacement beverage company, is expanding its efforts in the US. Founded in 2015, the brand claims it has seen 150% year over year growth and is set to be valued at $1.25 billion by 2022. Similar to other meal replacement products, like Soylent and OWYN, Huel’s UK product line-up consists of beverages, powders, bars and snacks. However, in the US, the company has only been selling a limited number of beverages, only recently adding chocolate to its line-up.

So What? There was a time when we trusted doctors to take care of our health. They were the experts, and whatever they said we did. I remember a time when even getting a ‘second opinion’ was a radical thought. Today, as the opioid crisis has eroded ‘the last straw’ of our trust in the motivations of Big Health, and WebMD and personal nutrition apps proliferate, our health has become our problem. So much so, that big pharma companies are now advertising their drugs to us, not doctors.
We are our own physicians, and we use whatever we can to help guide us. Lacking a medical or nutrition degree, pressed for time and juggling other responsibilities, we look for easy to follow systems (e.g. paleo), intuitive aphorisms (e.g. Eat food. Not too much. Mostly plants), and simplistic labeling (e.g. RX bars) to make decisions. However, without functional diagnostics or concrete metrics, all consumers have to fall back on is how they ‘feel.’ Which leaves us all with, what I call, Nutritional FOMO.
The body is complex, and one deficiency or abnormality can lead to another. Every day we hear that missing our daily values of one vitamin or another can lead to depression or other issues. All of which makes us worry that we are missing out on key nutrients. Add on top of that the fact that everyone feels their body is different than everyone elses, and we arrive at products such as Buddy, Macro Snacks and Huel; different ways-in to treat Nutritional FOMO.  ‘Complete’ and ‘balanced’ are key words on these products, the ultimate salve to stop our anxious brains from worrying that we are starving ourselves of some allusive combination of our micros and our macros.  
Nutritional FOMO is not going to end, in fact, with each news cycle it will get worse. Personally, I’m bullish on Buddy Nutrition’s personalized approach. If, as they claim, they can use their state-of-the-art manufacturing systems to profitably (that’s the big if) create a suite of customized snacks, shots, and beverages they’ll have a true first mover advantage. Why? Because you won’t be able to mix and match across competing systems. I can’t take a Buddy Shot in the morning and have a competitive product for lunch. What if I get too much of one nutrient? Or what if I need a particular vitamin parsed out throughout the day? A nutrient delivery system hooked to actual food would lock the user into an nutritional ecosystem.  
Interesting days ahead for the personalized vitamin and nutrition space.
 
 
Brands I'm Watching
Somersaults Snack Co, a privately held company out of Sausalito, CA, has launched a new line of snacks called Crunchews. Combining the company’s signature sunflower seeds with dried fruits. Each serving has 5g of protein. Flavors include: Apricot & Ginger, Blueberry, Cranberry and Mango. Hormel has added globally-inspired flavors to their line of Natural Choice snacks. The new products include a Mediterranean-style chicken paired with bruschetta jack cheese alongside garlic and herb pita chips and chipotle chicken paired with queso quesadilla cheese and flax seed corn chips. So What? It was ok for snacks to be one-dimensional when they were just snacks. Eating a quick bag of chips or an apple was fine because it was never meant to be the meal, it was the intermission between. However, meals are going away. When was the last time (during the week) that you actually sat down for breakfast? What about lunch? Instead, I’m seeing more and more consumers eating 2-3 bars a day or slurping down yogurt. The monotony of such omni-textured food is grating on people’s taste buds. What they’re looking for (to paraphrase an old Campbell’s soup line) is a snack that eats like a meal. Somersaults and Hormel’s new lines are just early examples of what a lot of snacking will look like in the future—multi-textured and multi-sensorial. If your snack brand can be described in one word (e.g. crunchy), you might want to start thinking about phase 2!
Harvard professor and serial inventor David Edwards has finally announced a full-scale launch from the company he started a few years ago, Sensory Cloud. Called Nimbus, it is a device that is capable of creating ‘scent clouds’ reminiscent of the aroma of any food or drink. Because much of what we think of as ‘taste’ is actually ‘aroma,’ Nimbus can be used to turn water into wine by breathing in the Nimbus-created scent while sipping some H2O. So What? Several entrepreneurs are now trying to disrupt toilet paper (see Who Gives a Crap? No.2, and Cheeky Monkey) but for some reason, no one is trying to push salt and pepper to the side. That’s why, even though Nimbus is a strange idea (with a name that will likely remind more Millennials of Harry Potter than meteorology), I think there is something intriguing here. The concept of creating personalized seasoning via olfaction has possibilities, for creative reasons or weight loss. I doubt if Nimbus will be the ‘winning horse’ here, but making low rent or boring beverages and foods taste different, fun or unique is an idea with potential.
Solar Foods, a Finnish company, has recently announced Solein, their brand name for “protein created out of thin air.” While that’s a bit of hyperbole, its not far from the truth. Solar Foods uses solar power (electricity), CO2 and water to heat and incubate bacteria to ferment and produce protein powder. No need to grow any agricultural crops. So What? I just wrote last week about milk and cheese proteins being produced via bacterial fermentation by two new startups, and now this. So many people have ‘drank the Kool Aid’ in regards to growing grasshoppers and crickets for protein (FYI-never going to work), but in a way they were right. ‘Bugs’ are going to be the future; the problem is that the 'bugs' people have been betting on are too big! The real ‘bugs’ to beat are those responsible for microbial fermentation (and algal fermentation). These will be the sustainable protein sources of the future.
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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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