10 May Marketing Lessons from the Grocery Aisle
I was having lunch the other day with a Food & Beverage PR client when the subject of leadership came up. Not the ordinary, everyday leadership, but the leader-of-the-free-world kind of headship. Now, I’m not the type to talk politics in mixed company, and I’m certainly not the kind to risk opposing views with someone paying me for counsel, but I’m particularly close with this client so I let it play out a bit. I’m glad I did.
My client’s point was this – if the desire is to hire a smart, successful, shrewd business leader to the highest office, we should be looking no further than the grocery store aisle. He argued that as everyday consumers, we don’t put enough consideration into the magic act that is modern-day grocery convenience. We don’t often ponder how that ice cream carton we just put in our cart came to be, or how that perfectly ripened peach is possible in November. He’s right; outside of the growing farm-to-fork consumer, the everyday grocery-getter doesn’t think about the food in the pantry other than its taste, function, caloric/fat content and/or expiration date. The reality is, the grocery store is an amazing study of logistics, ingredient sourcing, market analysis, pricing strategy, materials procurement, lean manufacturing, behavior study, futures trading, marcomm practice, customer service and a plethora of other practices that must come together perfectly to succeed in this highly competitive space.
Consider this: our friends at Food Business News tell us 10,000 new grocery products hit retail shelves every year, yet fewer than 10 of those launches capture more than $100 million in that first year of sales. Now, that’s not to say a $25 million year-one isn’t a success. We often work with challenger food brands that would jump with glee over that kind of year-one success (and many have hit that mark and then some). It does, however, shed light on what it takes to be successful in this space. And, I must concur, many of the business leaders we’ve had the opportunity to work with as a top-25 Food and Beverage PR firm are some of the very smartest business men and women I’ve ever met.
So, what else can we learn from food manufactures? Unlike durable goods, consumer packaged goods (CPG) are used up and replaced on a frequent basis. Thus, successful food manufactures place incredibly high value on first impressions, particularly that initial product trial as a path to future trial. Consider the fact that margins on a single sale in the grocery store is measured in pennies, and you begin to understand the importance of the long-term relationship and repeat trial as the key to business viability. Additionally, food manufacturers must be experts in communication – those that are successful are masters of converged media (shameless plug: look for our upcoming blog on converged media!) to make optimum use of earned, owned and paid media spaces to build a deeper relationship with existing customers and to intersect with new consumers where they reside (hint: phone browser, in-app, influencer post, in-feed media coverage, native ad, etc.). In times of trouble, such as a food recall, smart food manufacturers are quick with answers, transparent in their findings and above all else, tell the truth. The alternative is company suicide in grocery, club and mass merch. food PR.
I can think of several upstart food brands that have come from nowhere to disrupt an entire category overnight. Who had heard of Greek yogurt before Chobani came along? Actually, a company called Fage did. They were first-movers but failed to reach the success of the former. Who saw the reemergence of ready-to-eat popcorn before Skinny Pop went from zero to $1.5 billion in sales over the course of five years? SmartPop did, but their signature black bags failed to make the same impact Skinny had with Non-GMO, natural, low-impact, minimally-processed messaging that met today’s younger, label-conscious consumer smack where they were residing. Is some of it luck? Perhaps, but I’d argue these massively successful category-changers have shrewd founders who outsmarted their competition with smart, honest leadership and a unique understanding of today’s consumer and the media landscape they reside in.
Perhaps my client friend is on to something here. Should the moment of time ever arrive where we seem divided as a rudderless nation, we might want to look to the Food & Beverage category for our next great leader, whomever they might be.