We have Eric Pierce, Director of Business Insights for New Hope Network.  If you’ve been following the podcast, we hfood industry trends 1ad Eric on the show back at episode 19.

It’s been one of our most popular episodes, so we asked Eric to come back on the show to share some more insights on trends, and he graciously obliged.

Eric is incredibly talented in helping entrepreneurs and companies uncover opportunities in the market, and I always walk away from our conversations feeling more in tune with what’s happening emerging in the industry.

In this episode, Eric answers the following questions:

  • What trends are providing big growth potential in food and beverage?
  • How can you test new product concepts without breaking the bank?
  • Could retailers benefit from thinking more like Zara or H&M?

And plenty more…

LISTEN TO THE INTERVIEW ON ITUNES >>>

Show Notes:

Alex: Eric, welcome back to the show.

Eric: Yeah. Thanks, Alex. I really enjoyed our last conversation. I’m honored and delighted to be back and looking forward to talking some more.

Alex: Can you tell our listeners just a little more about yourself?

Eric: Yeah. Yes. So my name is Eric Pierce. I’m Director of Business Insights at the New Hope Network. For those who aren’t familiar with New Hope Network, we focus on the natural products industry. We run the Natural Products Expos East and West every year.

We’re also publishers of trade journals within the natural products industry. And I work sort of as a director of insights for our Next Data and Insights Team.

The Next Data and Insights Team is a team that is designed to help use the unique knowledge and insight both from a data as well as from a qualitative sort of industry understanding perspective to tap into all the insights that exist through the business that we run here at New Hope to help entrepreneurs and retailers, providers within the natural products industry improve their chances of success by tapping into knowledge about the marketplace trends and to possibly engage us in doing consumer research and consulting work.

Alex: And that’s such a crucial service that you guys can offer, especially for the newer types of companies that are exhibiting it as Expo West, which I know seems like ages ago this point.

It was only back in March but was there anything in particular that you came across that you found interesting as far as new companies or trends that were emerging?

Eric: Yeah. This industry is absolutely flooded with cool new ideas and interesting things. And there were some really interesting things that came out of the show this year, both at the product and brand level but also sort of at the trend level.

One brand that I’d love to call out is a brand called Wize Monkey that I believe launched effectively at least at Expo.

I mean, they’ve been out in the market for a little while. Their Expo launch was this year at Expo West, an interesting product. Have you ever heard of Coffee Leaf Tea?

Alex: No, I haven’t.

Eric: Yeah. Wize Monkey is bringing the idea of coffee leaf tea to the market. They’re probably not the first to experiment with the idea of using coffee leaves as a tea product. But they’re one of the ones that I think is probably doing the best job of building a brand around this idea of coffee leaf tea.

They won our NEXTY award this year for best new mission based product because what they’re trying to do is they’re trying to build a marketplace for coffee growers. It would extend the harvest from what is typically a three-month coffee bean harvesting to being able to generate incomes for coffee farmers year-round by building a market for coffee leaf tea.

And the idea of coffee leaf tea here is similar to tea itself in the sense that we would derive caffeine and a warm, you know, pleasurable beverage out of drinking sort of an aged coffee leaf as opposed to tea leaf tea product.

And their marketing is really, really smart. They’re doing an incredible job of telling their mission-based story, the social mission of the brand and also creating a market for this.

So, great branding, real standout in in that regard in my opinion from Expo West this year. But there were also lots of interesting trends sort of that we’re beginning to pop up and materialize and kind of show themselves maybe for the first time at the show.

Alex:  That’s funny. I found an article on The Next Step, just catalog about all the great resources that you guys offer.

And one of them was on the growth trajectory of turmeric. And I was like, “Oh, I knew it. I spotted that one.” And that is the articles from 2014. It was like, oh that.

Eric: Yeah. I struggle with that all the time because there are some of these trends that really begin to emerge very early on, right? And turmeric, just as you pointed out, is not a new story, right?

So if the way in which you were thinking was, “Oh my gosh, turmeric is emerging for the very first time. It’s this big thing,” then in some ways we’re a little bit off because, yeah, we have been talking about turmeric and curcumin in the supplement space for many, many years now.

But what’s really interesting is your observation is spot on that there was sort of something substantially different at the show this year when it came to turmeric.

And the real difference, I think, was actually a trend that we saw with a lot of different or several different types of ingredients and product types this year.

What we are seeing in the market is the transition of what was traditionally maybe back in 2014 a product that was showing a block in the supplement space beginning to transition into a huge amount of food products and not just general food products but ready to consume products.

So what you probably were seeing is turmeric showing up in snacks, chocolates, and desserts as well as a huge number of sort of functional shots and ready to drink beverages. And that really was distinctly new this year.

We’ve seen those kinds of things for years. But there was a kind of a mini explosion, if you will, of brands that were really all together sort of this year somehow coming behind this idea of formulating turmeric into ready-to-drink beverages and on the go snacks and whatnot.

Alex: Kind of along those lines, another thing that I personally noticed. I don’t know if it’s actually a legitimate trend. But have you seen the demand for alternate protein sources?

I know plant-based options you’ve got beyond meat, cricket protein. I don’t if you’ve heard of Lithic protein bars. I met those guys at Expo West. But have you looked at what the increase in these companies in that specific category looks like compared to the competition?

Eric: Yeah. So what I don’t have right now, I’m waiting. I’m probably about three weeks out from having all of our data from Expo West tabulated and sort of accessible.

So, every year at the show, one of the things that the next team does is we catalog. We do a census of every single product that showed up at the show. So we’ve got over 3,100 exhibitors at the show every year and almost 18 to 20,000 products that are on the show floor.

We actually have a small army of trend spotters out on the show floor taking photographs of every single product on the show. And then we go through the process of converting the images from all of those products into a database that tells us, all the claims, all of the marketing materials.

We’re capturing all of the ingredients, all the nutritional information for every single product on the show floor.

And I’m looking forward to digging into and showing, being able to talk about the exact growth of turmeric that we saw in different categories and also being able to look at, you know, things like this growth in the plant-based space. So I don’t have that data just yet. But observationally, I think you’re right to be spotting that.

One of the things that I thought was really interesting is more in the plant-based space.

Yes, we’re seeing alternative proteins. I think we continue to see growth in the insect space. That’s gonna be a long slow growth process, but we continue to see momentum there.

The place where I think there’s a lot of action going on right now is plant-based dairy alternatives and plant-based meat alternatives. Two observations in that space.

One, the plant-based dairy alternatives, man, that marketplace is so hot, right? There are so many people who are continuing to look for the new way of innovating in that space.

We’re seeing growth in the cultured nut milk space, which in my opinion are some of the best dairy cheese alternatives on the market.

About two years ago, we started talking about the brands that were experimenting with the idea of culturing nut milks to create cheese products that are nothing like the traditional sort of cheese replacement products from the vegan days of old which were a lot of emulsifier oils and different products.

These have a flavor and a tang from their fermentation process that are really quite incredible.

In the beverage space, oh my gosh, we’re seeing pistachio milks, macadamia milks, banana milks. It’s almost gone too far in some ways as people are seeking out sort of the next new innovation and opportunity within this huge category of dairy alternatives.

The thing that I was most excited about is what I think of as a kind of a scaling trend. So sometimes when I talk about trends, I talk about emerging trends versus growing trends or ones that are simply continuing, maybe some that are evolving and those that are scaling.

And when I talk about a scaling trend, I’m kind of talking about a trend that is growing in size and across categories sort of in a unique way.

And what I thought was really interesting in the meat replacement space for plant proteins at this show was, you know, historically, we’ve had a handful of fairly established meat alternative vegan oriented brands, think Daiya, you know, with their dairy and cheese products, think Gardein and Follow Your Heart.

These are all kind of multi-line businesses that have had, you know, for the past decade or so they’ve had a wide variety of different vegan and vegetarian sort of, you know, food options in the marketplace.

But we’ve had a growth of newer, smaller brands, think brands like Sweeter Foods and Field Roast and Upton’s Naturals that have come into the marketplace in the last five or so years that somehow at this Expo West all seem to be taking advantage of and showing real growth opportunity in the marketplace.

Each one of them seems to have launched three or four lines that enter into the meals place or step slightly outside of the single meat replacement sort of option into offering something like, you know, corn dogs or Massaman curry options or full meal options. And so I think that there’s something happening here.

We’ve been talking about traction around plant-based foods for some time and we’ve been following the growth of some of these businesses.

But I think there’s sort of this inflection point right now where we’re seeing these brands that are newer in the space all realize that there’s a bigger opportunity than they had been pursuing.

And they’re all kind of expanding their lines and getting bigger at the same time, which I think is really interesting.

Food Industry Trends

Alex: So I was doing some research on the next website. And one of my questions that I wanted to ask was which products or categories seem to have a positive growth trajectory?

I noticed that you guys have a concept test or tool that I think is really interesting. Can you just explain what that is?

Eric: Yeah, yeah, absolutely. So I actually gave a presentation at Expo West this year that presented the results of an analysis from that tool.

But I guess first just a little bit about the tool. So we launched the NEXT Concept Lab Tool about three years ago. When we were starting our consulting business, there were a couple things we wanted to do.

One, you know, we wanted to fuel the growth of this industry by helping companies use marketplace intelligence and insights to make better smarter decisions and grow faster and more successfully.

We realized at the time that obviously sort of as a consultancy and a data insights department that many of the companies we would end up working for would be the larger companies that tend to have budgets for this sort of thing, right? Small entrepreneurs don’t often have budgets for market research as a basis for decision-making, right, in their businesses.

And many of them don’t need it. They’re small, they’re close to their customer. They understand exactly who they’re designing for and what the consumer need set is.

And so when we were building out this business, we realized that what we needed to do is support the growth of the industry by supporting larger businesses.

But also, that we needed to help fuel the engine that has always been the driving force of this industry which is the entrepreneur. And so we designed concept lab as an efficient way of supporting smaller businesses and being able to get insights to help grow their businesses.

So what we created was an omnibus concept testing study. When I say “omnibus” that basically means it’s a standardized tool that we run once a month.

By standardizing it, what we can do is we can distribute the cost across a lot of companies who participate in the process and we can keep the cost down real low as opposed to doing custom research.

So every month, we put into testing 40 concepts that are inspired by products in the natural products industry. You know, many of those concepts are paid client positions.

But a lot of them are ones that we’re just testing for the sake of building up a database for analysis, and we get a couple of basic metrics.

We use a wisdom of the crowd’s prediction market methodology to assess the probability of success, the concept in the marketplace by asking consumers effectively, “Regardless of whether you like this product, do you think others would buy it in the marketplace?”

And we contrast that with sort of a personal relevance assessment which is purchase intent.

So we get a cultural relevance and a personal relevance score for every one of these concepts that helps us understand the overall potential for a new idea or for a new product concept that somebody might be thinking about bringing to market.

And what we find is our entrepreneurs use this a lot to help build out a sales story to tell to investors or to demonstrate the potential for their product to retailers

Or for some of the more evolved companies who are thinking about launching new products in the marketplace, they might test one or two ideas to say, you know, “Oh gosh, I’m only going to be able to bring one new product to market next year, which of my two ideas is the one with the greatest potential?”

So anyways, we analyze this data, and we use it as a basis for supporting smaller entrepreneurs in the market. Of course, you know, companies of all sizes end up using it. But it was designed so that small companies for $2,500 can get efficient and valuable marketplace data and insight on their concepts.

And then at Expo sort of what we did, so getting to your question of categories where we’re seeing real growth, for Expo what we did is we took this database of 1,000 concepts that we have now, most of them proprietary ones that we’ve tested ourselves based on products we see at Expo, based on NEXTY winners and other things that we see in the industry, many of them obviously based on clients concepts as well.

What we did is we took this 1,000 plus concepts, this database of concepts, and we coded all of the trends that we have in our next forecast that we talked about during our last conversation, Alex.

We coded all of the concepts into these 50 or so trends that are covered within the next forecast, ran the data on market prediction and purchase intent, and effectively were able to identify the trends in the marketplace that had the greatest potential for continued growth based on the, you know, particular subgroup of analysis.

This particular time what we did is we wanted to look at those consumer segments from our customer segmentation that are most focused on the natural products industry, right, so those who are currently engaged in the natural products industry.

What we’re able to do is say which of these trends within the natural products industry have the greatest potential for growth sort of within this core consumer base.

And the cool thing was we identified some really, really interesting patterns that suggest the core of the industry despite the fact that it’s growing so rapidly and expanding in so many ways, that the core values of environment, social purpose, transparency, and convenient nutrition kind of were the themes that described these top trends that rose to the top.

And those trends, just as a quick summary, you know, involve things like food waste, concepts, and innovations in the marketplace that are associated with businesses that are trying to solve problems about feeding a growing population despite the fact that we’re, you know, we’re facing challenges to agriculture caused by climate change.

Concepts that are associated with speed scratch, the idea of cooking more at home but doing it in more convenient way. Environmental issues like regeneration, purposeful brands, and mission based brands, brands that were helping to connect consumers to where their food is coming from.

Trends like that sort of were emerging as the most compelling and most powerful trends in our analysis.

Alex: That’s interesting. I definitely agree with you. The trends that I would say anecdotally could say are influencing the way that I shop as consumer.

When it comes to consumer segmentation, I’m curious now, is this is a survey data that you guys are collecting?

Eric: The segmentation or the concept testing?

Alex: The analysis. I guess purchase intent.

Eric:  Yeah, yeah. So that’s survey data. The process, again as I mentioned, 40 concepts. Everyone looks at 40.

There’s a unique methodology that we use, but it is survey based.

So people come in and they enter into this survey. We’ve got a random sample of U.S. consumers, you know, strict quotas to make sure they’re representative of the broad U.S. population, but then, yes, they go through a traditional survey exercise where they tell us how likely they would be to buy these particular products.

But then they also go through this sort of gamified survey process where they have a limited number of points they can use to bet on the concepts that they think other consumers will buy more of in the next 12 months. And that’s where we get to our market prediction score.

Alex: That’s interesting. That is fun. So as far as the consumer segmentation goes, is this the five different category breakdowns you guys have?

Eric:  Yeah. So the #Young4Evers, the Chief Health Officers, the 4 Out of 5 Doctors, Guilty and Defeated and the Life Tastes Goods are our segments. So this was a segmentation that, again, was created of the broad U.S. population.

We created this just a couple years back.

The idea was we recognized at the time that the growth for this natural products industry was in the mainstreaming of these values and the increasingly growing relevance of the products and the brands, you know, born out of this industry becoming more mainstream relevant.

So what we wanted to do at the time was take this broad U.S. population and understand based on attitudes and behaviors with regards to health and wellness and a proactive engagement in health and wellness sort of how the U.S. population segments out.

And two of our five segments that represent almost 40-some percent of the population are these consumers who already have attitudes and beliefs that are oriented towards the natural products industry.

Alex: Which are those two?

Eric: Those are the #Young#Evers and the Chief Health Officers. So the Chief Health Officers are kind of who you might think of as the classic natural and organic consumer.

This is the one. I love segmentation. I hate segmentation, right?

I hate creating stereotypes that are overly general because they do damage. At the same time, being able to simplify a complex world into easy-to-understand buckets is helpful.

So we’ll walk that fine line of creating a stereotype without believing it too strongly. Okay?

The Chief Health Officers are that classic, you know, mother who was shopping for her family, who’s concerned about the health of their kids and their family and concerned about, you know, healthfulness of what they’re feeding their family.

That over generalizes who the Chief Health Officer is because the skew is just barely female and all of that.

But this is an engaged, proactive shopper who’s concerned about health and wellness, you know, who does, you know, think about family and the health of others in their purchase decisions and is an influencer in the market and one who really wants to study and understand sort of the claims behind particular products.

Our #Young4Ever is kind of the untraditional. You know, the big insight when we ran the segmentation was that there is this #Young4Ever segment. We stereotyped them as slightly younger, slightly more likely to be male.

Alex, you might be the great sort of the poster for, you know, for this particular consumer who you wouldn’t necessarily automatically think of as the natural and organic consumer.

But they’re engaged in the space. Maybe slightly more so because, and here I’m not making a judgment about you now, Alex, I’m sorry, but maybe more engaged in this space because they’re thinking about, you know, energy and wanting to feel good or remain youthful.

You know, they are slightly more engaged in following sort of what others are doing in the marketplace. So maybe in comparison to the Chief Health Officer, they’re less worried about the science behind the claims or the validity of the claims and they’re more interested in experimenting and trying new products.

And they are engaged in the social and the environmental aspects of some of the natural organic space.

But they may be somewhat less committed at the core to some of the reasons why they engage, but they definitely skew that direction. And again, a little younger, a little bit more likely to be male then how we can to think of, you know, the Whole Foods shopper, right?

If we were to take a broad stereotype about the Whole Foods shopper or the independent natural channel shopper, this would be the consumer you’d be less likely to expect.

Alex: That’s interesting. When I read those and I read the #Young4Life or #Young4Ever, that could not have described me more to a T, like that is incredibly accurate.

Eric: Well, I’m glad I haven’t over generalized them.

Alex: No, I wouldn’t say that at all. As far as the analysis that you guys had presented at Expo West, one of the prevalent emerging trends that you mentioned was the companies that are focusing and marketing their sustainability and minimizing food waste.

And I know that you presented a complete separate topic around climate change and what the food industry can do to actually influence that for the better.

In your opinion, what companies are making the biggest effort towards sustainability in the industry and how are they doing that?

Eric: Yeah, you know, that’s a really good question and such an important one right now. Last time when we talked, we talked about what an incredible opportunity we have right now to connect the power of consumerism to food for the sake of creating positive climate action, right?

We talked about, you know, the sheer power of the U.S. consumer purchasing power, right, trillions of dollars spent every year on consumer packaged goods.

I think it’s something like the entire retail value chain for the food retail value chain is something like $9 trillion. I can’t remember the exact estimate, I have to dig it up someplace, but a huge amount of money, right?

And we have this opportunity right now as we talked before about growing consumer interest and concern about climate change as well as this this food movement which is causing consumers to reevaluate and reconsider some of their purchasing habits.

I’m not saying everyone’s changing their minds and they’re doing it all at once in a wholesale sort of re-evaluation, but we have this general pattern of consumers sort of stumbling across and reconsidering some of their purchases and moving away from the heritage brands to smaller more innovative more purpose driven brands.

And in that process, when these two things come together, we have the opportunity to translate small everyday purchases at a grocery store into climate positive action, right?

And so we had this great track at Expo this year. It was the first time we’ve ever done it, it was Climate Day. We spent an entire day before, you know, on Wednesday, two days before the main show floor opened talking about climate.

I presented some research during that day.

But also we worked very closely with an organization called the Climate Collaborative that is trying to inspire and lead brands within the natural product space to make climate commitments and then to begin to use that as a way of demonstrating leadership in the marketplace and helping to create pull in the market, right?

So, for so long we’ve talked to consumers about, “This is what you need to do, and you need to go out and do this.” We’ve kind of put the onus on consumers.

And what we’re trying to do right now with the Climate Collaborative is to demonstrate to brands that there’s an opportunity now in the marketplace to lead and that there’s enough demand in the marketplace that if we make commitments as our brands to lead on climate and to demonstrate and to make that part of our marketing, that we can help pull consumers along in this direction in the process.

And so I would call out the Climate Collaborative and the parent organization, which is called OSC Squared, as a great leader in this space.

But we’ve also got a lot of really incredible small brands that have made big commitments in this space: Ultra Eco, Annie’s, which is part of General Mills, 18 Rabbits, Califia Farms, Clif Bar major contributor in that space.

Dr. Bronner’s is doing great things. There’s a packaging company called L. Packaging which is doing a lot in the packaging space. There’s a whole list of great companies that are really, you know, standing behind this commitment to lead in the marketplace on climate.

So, I’d love to read them all but there’s about 20 or more of them, almost 30 of them. But I’ve encouraged people to take a look at the Climate Collaborative and, to the extent that you can, you know, support these brands that are taking a risk and getting out there and trying to lead on climate and to demonstrate what can be done.

At the same time, I’d also contrast that and say there are some major organizations out there in the world that I think are beginning to make meaningful change in climate as well. So Unilever has made it a pretty big part of their company to make serious commitments to running a more responsible business and making climate commitments.

General Mills is, you know, not as consistent in my opinion in its demonstration of these sorts of commitments.

At the same time, they’re doing some really interesting things. If you do a Google search for press releases from the sustainability team at General Mills, you’ll see that they’ve made some really substantial commitments to growing organic acreage.

They’ve made some commitments to doing some really interesting thing with this regenerative crop called Kernza, which is a perennial grain. And so there are big companies making some really powerful commitments.

And I think together, small brands sort of leading the way, big brands making commitments that are gonna help translate and change supply chains in a larger scale sort of way, together hopefully we can we could really begin to make some impact in the market.

Alex: And the cynic in me says, “I wonder how much these large conglomerates are actually changing and how much is attributed to a big PR budget.” I’d love to believe that they are actually making a big difference.

Eric: You’re right to be a little cynical, right? I think that today’s consumer so…I mean, you’re more than just consumer, Alex. You’re a very smart marketer as well.

But the thing that I would point to is, you know, how much of this is a corporate responsibility sort of requirement, right? “Oh, I think this is just something we’re supposed to be doing and so we’re making these commitments,” versus how much of this is, you know, a brand really taking a stance and standing for something.

So to me, the really big difference in the marketplace right now between these smaller brands and the larger ones, large ones can make major impacts with small decisions.

Even if we sense or fear that they might be shallow in their intention, right, they can still have a big impact. So I still want us to support and acknowledge the impact that these large organizations can have.

Maybe if we give them the benefit of the doubt that there is…and I actually know this firsthand that there are people within those organizations that care deeply about doing these things, maybe not all the way up to senior leadership. Maybe it’s, you know, it is sort of in the middle management where the passion really lies.

But they do exist and they are doing these things for the right reasons.

But from an authenticity standpoint, from a building a brand, from a connecting with consumers and making it meaningful perspective, I think your intuition is right that it’s these smaller organizations where you can sense the humaneness, you can sense the passion. You can sense the authenticity in the kinds of commitments that they’re making that really does come across as the more genuine of the actions in the marketplace.

So I wanna us to recognize and support both of them.

But also I think as a marketer, you know, the really important thing right now is thinking about what are gonna be the brand leaders of tomorrow, you know, and what is the difference between an action that some of these larger organizations might make versus the actions and the brand building that’s going on for some of these smaller organizations?

And what’s the difference there and, you know, who do we wanna emulate as marketers and as brand builders in the marketplace and which model is the one that’s gonna take us to the future and create tomorrow’s big brands?

Alex: And out of curiosity, the brands that you mentioned, I’m sure it differs across the board. But what exactly are they doing to push that sustainability and minimize food waste? Is it in the packaging, in the supply chain, all the above?

Eric: Yeah. Yes, all leverage the Climate Collaborative sort of structure here. What they have done is they’ve outlined nine key areas that they are encouraging brands to make commitments because they’re the ones that they think have the biggest potential impact.

And so just reading off the list they include, agriculture, energy efficiency, food waste, forestry, packaging, policy, renewable energy, short-lived climate pollutants and transportation as the areas that they believe brands can and should evaluate and think about making commitments.

And obviously there’s layers of different ways in which one can make commitments within those. But those are kind of the big areas where the Climate Collaborative’s research and intelligence in this space suggest where real traction can be can be made.

Alex:  Not to completely veer off from that the topic that we’re on right now, but I was doing some research and came across a really interesting article that you wrote recently or co-authored.

And one of the main points as far as, I guess, the argument of thinking in terms of we need to be ready to scale or create products for scale. It was actually hurting the industry in general.

And one of the interesting points that was brought up was that CPG brands should really start thinking more like winning fashion brands like Zara and H&M. So can you speak to that point at all?

Eric: Yeah. That was a fun article to write. So I wrote that with Maggie Garner and Katie Waterson from Garner and Waterson. They’re a qualitative research company that I’ve partnered with.

What we were trying to do was, yeah, really challenge organizations to think about the future of food.

You know, really powerful insight from WatersonGarner was the idea that in so many ways consumer culture and consumer orientation to novelty, uniqueness, to experimentation, to exploration in the marketplace is driving a lot of industry towards this idea of, you know, rapid prototyping and flexible business models where, you know, new products are launched and evolved and sort of changed out on a fairly frequent basis.

And the really great example of that changing business model is the fashion industry, right, where we see traditional brands like Gap and Banana Republic sort of struggling.

And, again the brands like Zara and H&M sort of doing really incredible things with managing these really flexible portfolios of products that are, you know, changing out inventory almost every couple of weeks to the point where they are really engaging this consumer desire for novelty and experimentation and exploration, right?

And I think we see something like that similar driving some of the change in the food industry, right?

Maybe one of the reasons why so many small brands are being successful in the marketplace is because together collectively they’re allowing consumers to engage in this experimentation and this seeking of sort of novel new experiences and different products and giving consumers the opportunity to share in social media and engage in food in a new and in a different way that satisfies this desire for novelty and experience and exploration.

And so the challenge we were kind of putting out to businesses is to say, you know, food business is driven so much since the industrialization of our food industry has been driven so much by reducing costs and creating things on mass scales.

And that the idea of scale is what makes adapting to consumer demands, you know, makes predicting which trends what not to build products around and, etc., are really, really risky. But it is that in some ways, that expectation of scale, that I think holds us back.

So the challenge that we really put out to businesses was not necessarily to suggest that there should be a retailer that matches the Zara or the manufacturer that matches exactly sort of what Zara’s doing in the marketplace, you know, sort of in the food industry.

But instead to say, you know, what would it look like if retailers had a little bit more flexibility in their shelf sets so they could offer up new products and bring new things in.

And in many ways, retailers shelf sets are these things that we do once a year and only with a huge amount of analysis and sort of evaluation that goes into it.

What if we had flexibility built into our shelves sets? What if rather than building every product line for a food business, you know, based on the idea of needing to get to a certain level of mass and scale, what if we allowed for a little bit of flexibility within our manufacturing process?

Yeah, you know, we have to pump out a huge volume of one product on one line.

But what if we built facilities that allowed us to do more experimentation and run small batches and create a regional variation of a particular product or, you know, launch something every three months rather than every two years, right?

And what if we built that flexibility in such that we could begin to respond to and engage differently to this consumer demand?

Then maybe we could build brands that sort of adapted and followed consumer demand in such a way where it wasn’t so risky and actually could build a different type of food brand in the marketplace that engages consumers’ novelty that taps into social media, the idea of you sort of influence and sharing and all of these kinds of things that if we look at the fashion industry we can find interesting and exciting parallels for food.

Alex: Is there anybody that is somewhat resembling or is there anybody who is closer to resembling a fashion brand the way that they’re set up within the natural products industry or retailers that are somewhat going to this direction or kind of resemble this?

Eric: Yeah, gosh, you know, I didn’t come across any examples that I wanted to share that said that. You know, I think, generally speaking, the independent retailer within the natural channel is it’s probably the closest to that in the sense that they aren’t as structured and firm.

They are the place where a lot of people go to find those interesting and novel brands and new products, you know.

In some ways Whole Foods has played that role for a long time.

I’m not suggesting that they necessarily have these super flexible shelf sets all the time. But you could go into one Whole Foods in one region of the country and experience a very different sort of product assortment than someplace else because they gave so much flexibility to their local buyers.

There’s some threat of some of that changing as they change their business model. They’re doing more central buying. But they are still trying to allow their local foragers to bring local products in.

So I think the natural retailer and the Whole Foods models have done that in the past and done that reasonably well, but not necessarily from a brand perspective. I mean, I think the smaller brands collectively represent that. But it’s hard for small brands to launch lots of new and innovative products.

But I think collectively, you know, when you look at the innovation within the industry, they fill that need for consumers even though it isn’t necessarily one brand that’s doing it on its own.

Alex: Another really interesting point that you guys brought up in that article is that the power is really shifting from the retailer and the brands to these Facebook or Instagram or Twitter influencers and bloggers. Can you speak to that a little bit more?

Eric: Yeah. The influencer is changing social media. You know, we talked last time a little bit about the power of technology and the influence. Within our next forecast we talked about technology as one of the three major cultural forces that are driving change and innovation within the broader CPG marketplace and especially within food and beverage.

And social media is playing obviously a really big role in that. The influencers in the marketplace have changed. How consumers gain information about brands has changed. The process of brand building has changed, but also how we’re selling to consumers.

So I think broadly if we think about social media and the influence it’s having, one of the things that I’m most excited about for small brands is the degree to which social media and direct to consumer selling, but also direct to consumer relationship and brand building is enabling opportunities for small brands that wouldn’t have existed, you know, seven years ago, right, before the mainstreaming of social media in some ways.

Brands today have the ability directly and through the power of influencers to engage consumers in a way that is allowing for what I think is the evolution of the brand playbook, right?

You know, in the past what we’ve found was brands that could communicate a broad message with a mix of emotion and rationale sort of, you know, communication but ultimately were building fairly shallow brands were the ones that succeeded, right?

They offered a good price and they communicated broadly to a large group of consumers and they built brand around, you know, emotional or rational pleas.

Today, I think brands are built…They’re successful. The powerful brands that we’re seeing being built today are those that are connecting on almost a human level, right, where the brands that we’re engaging most with and demonstrating the most loyalty to and willing to pay the most premium for are those that are almost human-like in nature.

We know what values they stand for. We know what’s important to them. We know them through social media, through engaging with them because they’re talking to us as if they were a human, right?

They’re coming across in a way where I can get to know them and again, understand what’s important. I get that sense of trust that I hadn’t really been able to build with a brand of yesterday.

And so social media is allowing companies to build these new unique powerful brands to connect with and to engage consumers on a more authentic and human level. And then it’s allowing and creating opportunities to sell directly to them to help build a basis of proof of concept for their brand, sometimes before they’ve even really gotten any meaningful distribution in traditional retail.

Alex: So one of the…I think a really interesting or revolutionary brand that you mentioned from Expo West’s when we last spoke was Spindrift, who is doing some really progressive things in the beverage industry. Can you speak to that and why what they’re doing is so revolutionary and maybe how it ties in to other relevant trends that are emerging?

Eric: Yeah, yeah, absolutely. So a lot of different emerging trends in my recent analysis of Expo West sort of observations. You know, one of the things I did put together was a kind of an early claim of trends.

Sometimes when I call something an emerging trend, you know, it may not be fully formed just yet or something that I would legitimately call a trend, but it’s starting to take shape in such a way that we wanna call it and sort of begin calling people’s attention to it. And one of them is in this area of Spindrift.

So it was about a year and a half ago that I wrote an article that put out a challenge to food manufacturers that says, “Basically, what would happen if we stopped making foods that needed to be faked,” right?

That was kind of an in-your-face sort of claim because I think that’s a little bit dramatic obviously. There’s a lot of great things that have been done with flavorings and colorings to improve our foods and to, you know, compensate for shelf life issues.

But what I was noticing at the time and Spindrift is capitalizing on right now was the fact that so many major food companies were working to remove artificial flavors or artificial colors from their products that what we were beginning to expect to happen was the more and more, right?

So historically, it was really easy. We had a good guy and a bad guy.

You look at a back of a label and it says “artificial flavors,” you kind of assume that’s the bad guy. You look at it and you see something says “natural flavors” and say, “Well, that’s better than artificial, so this is the good guy.”

As we’ve seen more and more companies commit to removing artificial flavors and artificial colors from their foods, the natural place to go is to say, “Well, wait a second.

Now, if all we have is this fairly opaque term, ‘natural flavor,’ I think consumers are gonna start asking questions about that,” right?

And unfortunately, natural flavors and natural colors in some ways are the industry’s worst kept secret or best kept secret, maybe most dangerous secret.

Natural flavors when you start looking closely at it, I’m not necessarily saying they’re bad. I’m just saying that when consumers begin to look closely at natural flavors, what they’re gonna find is not necessarily going to engender trust, right?

They’re gonna realize that the strawberry flavored beverage they’re drinking has nothing strawberry in it at all whatsoever. They’re gonna realize that it’s not so different what they thought was artificial flavor.

It’s a chemical compound that just happens to been derived from a natural source as opposed to a strictly chemical source. But again, strawberry that isn’t strawberry, right?

And so Spindrift is the first major, you know, business that I really see sort of committing to and recognizing this, what is going to be I believe this transition in the marketplace to consumers saying, “Well, wait a second now.

Now that all I have to look at is natural flavors or natural colors, what’s in that and are there better versions?”

So what I’m expecting is the same thing that sort of Spindrift is betting on is this idea that we’re going to see further bifurcation of the natural flavors into the ones that are better and consumers are more comfortable with—strawberry that actually came from a strawberry—versus those that maybe we feel a little bit less comfortable with, a flavor that was derived from the bark of some tree that is now just a highly processed chemical that’s creating a flavor within my product.

And Spindrift, what they’ve done, is just before Expo West, they committed to removing…It’s gonna take a little bit of time, but they’ve committed to removing all flavor extracts and natural flavors from their carbonated beverages and their soda products.

I think they’re gonna focus more heavily on their carbonated beverage products going forward, their unsweetened ones or sorry, maybe not soda based versions.

And what they’re gonna do is they’re going to sweeten and flavor all of their carbonated waters with squeezed juice, right? Something that feels really natural, really clean, really authentic to consumers. And that’s their point of difference going forward is that they are going to be sweetened with real juice, you know, no extracts, no flavors other than juice itself.

And I think this is just the beginning of this path that we’re gonna see where we’re gonna see more differentiation between types of flavors added.

And right back to my challenge, what if we made food that didn’t need to be faked, right? When I say “faked” I mean what if we didn’t have to add flavors and colors to something to get it to taste the way it ought to taste if we made it ourselves, right?

So I think that’s the challenge in the market. And I’m excited to see Spindrift making that commitment and kind of taking a bold leadership stance in that space.

Alex: And this might be a naive question as the marketer instead of an operator of a food brand. But what’s started the rise of these natural flavors derived from, well, natural but then synthesized and processed chemicals?

Eric: Yeah. You know, the real… It isis a legitimate challenge. That’s why as well I was probably being a little bit bold and saying, you know, let’s make food that doesn’t need to be faked.

The real challenge when you use, you know, whole food flavors, if you will, right, that when you put a strawberry…Let’s say you blend up a strawberry and you put it in a can of water or carbonated water as a drink. The challenge is a couple of things.

One, that strawberry, that actual strawberry tastes very different in the winter than it does in the summer. It tastes very different depending on where you’ve sourced it. So you have a natural variety in the flavor that’s going to happen, right?

When we industrialize our food system, we set consumers’ expectations that one bottle of ketchup should taste the same as the next. If I’m buying Heinz ketchup, every bottle of Heinz ketchups should taste the same, right? Every McDonald’s hamburger…That was the revolution that made McDonald’s so incredible is every burger tasted the same, right?

You knew what to expect, and it was consistent. And consumers liked that. And we built our food system around delivering consistency to consumers.

We engineered out the natural variation of flavors from a strawberry grown in California versus one grown in New Jersey, right? And one that would have to be shipped in the winter time versus one that was local.

The other thing is the enzymes, right? So just from a production methodology, natural flavors break down over time because when you grind up a strawberry, the strawberry itself has naturally-occurring enzymes in it which helps us digest it, but it also breaks down and changes the flavor and the color over time.

So desires for good shelf-life and consistent flavor over time also drove us to using these either synthesized or very refined flavor compounds and colors to ensure that we had consistency in flavor and good shelf-life.

So those are things that are valuable and admirable and we do wanna have in our food system. We don’t want more food waste because we have, you know, things going bad on the shelf.

You know, we don’t want the risk of food being contaminated or going bad over time. So there is benefit to using these.

At the same time, I believe that our science can figure out how to overcome some of this or at least to favor the closer to natural versions of things that consumers will feel more comfortable about.

So there are real challenges that these things help us overcome and is not going to be easy to execute or to reset consumers’ expectations that maybe a really good bottle of ketchup doesn’t always taste exactly the same because what we value now is local and seasonal and all of these other things and we’re willing to trade off the consistency. I’m not sure consumers are willing to do that. It would be interesting to see if they are.

Alex: Yeah. It will be well. I hope Spindrift blows it up and succeeds because I think that’s a really worthwhile move within the industry.

Eric: It’s a great way to build a brand right now. I remain absolutely confident that it’s gonna help them carve out a space in the market. But yeah, there will be challenges to overcome.

Alex: Yeah. I’m kind of wrapping up here. I’m wanna be respectful of your time and our listeners time. Based on your previous work or a recent research, is there any or a couple pieces of advice that you could offer food startups or somebody looking to launch a new product right now?

Eric: Gosh, yeah.

Alex: Broad question.

Eric: It is really broad. Where do I go? You know, be bold, be vulnerable, have fun.

So be bold in my opinion is, you know, there’s a huge amount of opportunity out there in the marketplace and I think those that are willing to innovate and get out front…You know, we’re in this point in the industry where success can be had with some of these bold risks and adventures.

Have fun, right? I think building these brands really has to be sort of an all-in sort of thing, right? It’s so difficult and so time-consuming and so much effort that I would say, you know, find something that you can really enjoy doing and have fun doing it.

And be vulnerable, right? So to me, yes, there’s competitive secrets to be hidden and guarded as you launch a new brand and bring a new brand into the marketplace.

Yet at the same time putting yourself out there and asking for help and engaging the natural products community can be one of the most invigorating experiences out there, right?

So many people within this natural products industry are interested in the same sorts of things, improving our food system, improving the health of consumers or society and the environment. And by putting your idea out there and being vulnerable in a way where you’re asking for help and engaging the community, I think you improve your chances of success.

So bold and vulnerable and fun and connected to purpose and passion, I think, are really great building blocks. Obviously there’s a lot more to be done. But find those things at very least.

Alex: Well, Eric, thank you so much for coming back onto the show. It’s always a pleasure getting to catch up with you and hear all the great things that you’re working on and never ceases to amaze me, your insights into the industry.

Eric: Thanks, Alex. Thanks for continuing to do this podcast. I continue to enjoy listening to the conversations that you lead and appreciate what you guys are doing in the market and thanks for having me.

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