Challenger Brand Leadership Series: Harmless Harvest

by Editor | Jun 25, 2019

Challenger Brand Leadership Series: Harmless Harvest

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Challenger Brand Leadership Series: Harmless Harvest

Ben Mand, CEO of Harmless Harvest, talks about the power of pink coconut water, constructive capitalism, and why he wants to fly his sales leaders to Thailand

This article is part of our Leadership Series.

The Seurat Group has well-documented the rise of the challenger brand within the CPG industry. We admire their ability to disrupt categories and create new segments by better meeting consumer needs. In this series, we have set out to profile successful challenger brand leaders and better understand how they challenge convention.

In each article, we focus on 3 questions:

What space, practice or convention are you challenging?
How are you challenging it?
What has challenged you along the way?

Introduction

Harmless Harvest unlocked a whole new tier of premium coconut water when it launched the first non-thermally pasteurized, perishable coconut water in the US. The brand stood out due to its elegant packaging and the distinct pink hue it takes on when antioxidants in the water interact with elements, such as light. In 2014, it became the first brand to achieve Fair for Life Certification. This designation means that Harmless Harvest is committed to paying fair prices for goods like their coconut water and supporting the wellbeing of local communities in Thailand, where they source and manufacture products. Not only is Harmless Harvest organic but they also help farmers convert to organic methods.

In 2018, the company needed to transition to a new phase of growth strategy without losing its challenger identity and mission orientation.

For Ben Mand, the decision to join the Harmless Harvest team came down to three questions:

(1) Did he believe in the brand?
He did: he felt the mission was one he could truly put his heart and soul into.

(2) Did he believe in the product?
He did: after conducting taste tests, chatting with store employees, and scouring online reviews, Mand felt that Harmless’ product was truly unparalleled.

3) Did he have the skill set to help the brand harness its full potential?
He did: Mand had built a career in the consumer goods industry, making a name for himself as a tackler of thorny problems at General Mills, and playing an instrumental role in the meteoric rise of Plum Organics (where he held many roles, including SVP of brand marketing and innovation). He believed his expertise in revenue generation, culture development and supply chain/logistics management would help take Harmless Harvest to the next level.

We were excited to talk to Mand about Harmless Harvest’s ambitious mission to challenge the very fundamentals of capitalism.

What space, practice or convention are you challenging?

Mand: This company was founded first and foremost on the principle of constructive capitalism. In traditional capitalism, the founders or investors might benefit from a company’s growth. In a constructive model, everybody along the value chain should benefit – farmers, harvesters, employees, consumers, investors – everyone.

Our founders (Justin Guilbert and Douglas Riboud) started the company with this business model in mind, but no idea what they were actually going to make. Justin and Douglas found themselves in South America, sampling different types of fruits they could commercialize as juice and bring to market. To help balance the taste, they tried blending them with coconut water, but they found all the coconut waters were nasty! They realized that despite coconut water becoming increasingly popular, no one was doing it right. The other manufacturers were all using the same factories and the same sub-optimal processes that included concentrating or thermally processing the water. This resulted in a product that was so far from what coconut water should be. Justin and Douglas knew they could do it better.

Today, we are challenging the way that business should be done and the way that consumers think about paying for products. Consumers in the US spend a smaller share of their income on food compared to any other country in the world (note: American consumers spend 6.2% of their household income on food).¹ However, what we eat is so foundational to long term personal, environmental and societal health.

I believe it’s my job to help more people understand that it’s worth it to spend a little more on what they eat and drink in order to better support product quality and responsible business.

Harmless Harvest coconut water is quite a bit more expensive than shelf stable, but we are more than worth it in terms of taste, purity, and impact.

How are you challenging that convention?

For consumers, we have to prove to them that the high price is worth it. Our credentials (like Organic and Fair for Life) get us in the door – they show we are “one of the good guys”. But, it’s really about the quality of our products. When consumers try our coconut water, they immediately get that it’s dramatically different. To get people to try it, it’s not about mission-driven, it’s about celebrating taste. After they experience our product, we can share more about our story. You have to earn the chance to educate them by first providing a demonstrably better taste experience. For retailers, we need them to understand that this is a different type of business. I took a number of my leadership team members, including my head of sales, to Thailand to observe our supply chain and factories. You could argue that a head of sales doesn’t need to know how we pick our coconuts. But I felt it was important that he know how to translate what we do for our customers.

Academically, anyone can talk about responsible business, but when you go there and experience it, it becomes personal and visceral. He can use that experience in conversations with customers to help them understand how our products are different and more aligned with the needs of the new millennial consumer.

What has challenged you along the way?

One of the key challenges is to really focus not only on getting your leadership team right, but also setting your entire organization up for success. You have to understand the organization, assess the current capabilities and make sure you have the right plan in place. If not, you’re hampered in your ability to build and deliver against a bold plan. Do you have the right people, capabilities and metrics in place to support your priorities? I joined the company in July, and we delivered our strategic plan to the board in November. This gave us essentially 5 months to re-work the leadership team, assess the business and organization, determine the organizational priorities, and write the plan – all while building out the teams across the organization. It was a sprint, but it let us hit the ground running on our biggest priorities.

As we look ahead, I am most excited for this team to tackle our biggest supply chain priorities and launch our new phase of innovation. Those two areas are true unlocks from a topline and profitability standpoint.

The Seurat Group is an insights-driven consumer packaged goods consulting and private equity firm whose mission is to create the clarity to act and invest in the future. We help our clients and portfolio companies sell more, more profitably, in more places, to more people by challenging convention.

1 https://www.weforum.org/agenda/2016/12/this-map-shows-how-much-each-country-spends-on-food/.

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2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

by Editor | Apr 3, 2019

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

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2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

Introduction

As has become tradition, we are sharing our annual top 10 revenue growth ideas with our network. This year we are using our platform to focus specifically on the role that Insights can play in unlocking growth.

We believe that the Insights function has the mandate to play a more transformative role in a company’s growth strategy. Insights should be a growth function, acting as an inspiration generator and conviction creator that empowers teams to make bold decisions.

With that in mind, we are highlighting the top 10 ways to leverage Insights for revenue growth. These concepts span all levels of the growth strategy framework, further reinforcing how Insights should be involved in every step of creating and updating a firm’s demand-generation strategy.

Top 10 Ideas: Growth Strategy Framework

Where to Play

Map for tomorrow
Develop a proprietary, predictive view of where to play that defines the consumer frame of reference, addressable market, and best opportunities to commercialize strategic choices.

Why it Matters:
A common insights foundation guides innovation and brand strategy, allowing brands to stay ahead of tomorrow’s opportunities and anticipate where to play in the future.

Role of Insights:

Develop a proprietary consumer definition of the category that combines learnings from leading-edge consumers, emerging trends, and other industries
Update and evaluate annually as a key input into annual business/strategic planning

Result:
This forward-looking market map empowers the team to plan ahead and creates the right to win.

Assess your job prospects
Expand thoughtfully by regularly assessing and re-assessing which jobs your brand can win.

Why it Matters:
Breakthrough revenue growth comes when brands successfully expand their reach into new spaces.

Role of Insights:

Build a deep understanding of brand resonance and consumer benefits to identify which jobs your brand will be “hired” for
Reconcile these potential jobs with the firm’s capacity to support expansion based on category and company dynamics

Result:
An effective insights foundation identifies the brand’s repeatable growth model and enables smart and sustainable expansion.

Create conviction
Know where to play – and just as importantly, where not to play.

Why it Matters:
As organizations grapple with big choices on how to prioritize multiple opportunities, they need the clarity to make difficult decisions, especially when that means challenging convention.

Role of Insights:

Actively seek new lenses of insight to inspire different outcomes
Arm the organization with these insights to enable teams to make, communicate, and defend difficult decisions
Use insight to create the case for change and future-proofing

Result:
Insights-driven decisions that build widespread support for broader organizational direction.

How to Win

Champion your leading edge
Inspire disruptive innovation by learning from the leading-edge consumer—that is, consumers other than your category’s mainstream core consumer.

Why it Matters:
Research based on today’s core results in close-in line extensions and product modifications, not forward-looking innovation that creates the right to win.

Role of Insights:

Identify what “leading-edge” means for your business. It may be lapsed users, ultra-heavy shoppers, younger shoppers, or the most informed shoppers
Understand how these shoppers use, avoid, or “hack” your focus categories
Connect these leading-edge behaviors to unlock growth from mainstream shoppers

Result:
Understanding the leading edge allows the team to disrupt by better meeting unmet or emerging needs.

Embrace omnichannel
Think outside the traditional channel structure when researching or planning go-to-market efforts.

Why it Matters:
The siloed “channel-first” approach fails to account for the increasingly cross-channel nature of shopper journeys. As methods to engage consumers and shoppers become more fragmented, it is critical to understand shopper journeys and key trigger points from an omnichannel perspective.

Role of Insights:

Reinforce a “consumer first” mindset, instead of a “channel first” approach
Map the end-to-end consumer journey to understand where consumers want to discover, learn and buy
Assess the most critical inflection points for reaching your target shopper

Result:
Insights functions can enable organizations to make go-to-market decisions and integrated demand plans through the lens of the consumer.

Spark digital transformation
Reimagine your organization’s approach to digital by placing the consumer and shopper at the center of your strategy.

Why it Matters:
Your shopper’s path to purchase increasingly involves fragmented digital touchpoints, and she expects a seamless brand experience across these points – on her terms.

Role of Insights:

Build the fact base and vision required to orient strategy and justify investment in digital transformation
Infuse digital and ecommerce perspectives into all research initiatives

Result:
Organizations can transform to align with this new consumer reality, justifying their investment with a solid fact base.

Activate the 4Es
Elevate the value equation from the traditional 4Ps to the new 4Es: Experience, Exchange, Evangelism, and Everywhere.*

Why it Matters:
Today’s consumer has more choices than ever, requiring brands to work harder to win trial and build loyalty. Consumers want to engage with brands on their own terms before “rewarding” them with a purchase.

Role of Insights:

Understand the consumer and shopper beyond their interactions with your product.
Elevate your brands’ value proposition with broader cultural and lifestyle contexts
Spark a mindset shift from “marketing against the 4Ps” to “providing consumer experiences”

*In the digital age, a successful brand must engage consumers through the 4Es. The Product becomes an Experience that delivers memorable moments. Price evolves to an Exchange that goes deeper than a transactional relationship with the consumer, offering value beyond price. Promotion turns into authentic, consumer-led Evangelism. And Placement becomes Everywhere: a consistent product and brand story available everywhere your consumer expects to see it.¹

Result:
Mindset shift equips brands to authentically deliver against new growth levers and strengthen consumer loyalty.

How to Action

Prioritize packaging
Reimagine packaging to enable the 4Es and elevate the brand value equation.

Why it Matters:
Packaging is often under-utilized for growth but plays a vital role in unlocking new consumer engagement and distribution opportunities.

Role of Insights:

Consider the role of packaging in research initiatives such as leading-edge consumer research and price-pack architecture
Understand packaging’s ability to deliver multiple benefits, such as ecological credibility, functional benefits, new need states, superior storage, seamless fulfilment, and badge value

Result:
Full leverage of a critical growth lever.

Leverage e-commerce learning for rapid iteration
Use digital as a learning channel in addition to a sales and marketing channel.

Why it Matters:
The rapid acceleration and “failing fast” needed to win in eCommerce can fuel success in other channels, too; this is a critical part of the challenger brand playbook.

Role of Insights:

Use digital learnings to optimize product mix, refine messaging, and more deeply understand the consumer
Own coordination of insights and application across the demand landscape

Result:
Better-informed omnichannel planning and successful retail launches.

Unlock the value equation
Drive revenue growth by better elevating the consumer value equation and proactively addressing ecommerce-driven pricing challenges. If not already existent, establish a Strategic Revenue Management leadership function to guide decision-making.

Why it Matters:
Among global top-50 CPGs, two-thirds of revenue growth is driven by pricing and mix, not by volume gains. ecommerce-driven price transparency makes revenue and profit growth even more challenging.²

Role of Insights:

Understand consumer jobs, shopper missions, and customer needs to identify incremental opportunities
Pair these insights with knowledge of current price-pack architecture to build consumer-driven architecture
Offer unique, customer-specific architecture that delivers and captures more value

Result:
Brands can thrive across retail environments even as price transparency issues increase.

We’d love to hear from you! To discuss any of these ideas further, please contact us at info@seuratgroup.com

1 Brian Fetherstonhaugh, Ogilvy & Mather.

2 BCG: How Net Revenue Management Boosts the Top and Bottom Line.

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Challenger Brand Leadership Series: The Honest Company

by Editor | Feb 11, 2019

Challenger Brand Leadership Series: The Honest Company

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Challenger Brand Leadership Series: The Honest Company

Nick Vlahos, CEO of The Honest Company, explains how the company maintains its challenger mindset as it scales

At Seurat, we have well-documented the rise of the challenger brand within the CPG industry.

We believe that a “challenger mindset” is not defined by a specific company size or maturity; rather, it is a willingness to challenge convention. We can all learn from this ethos. To that end, we are profiling successful challenger brand leaders to better understand how they cultivate and maintain their position as challengers.

We focus on 3 main questions:

What space, practice or convention are you challenging?
How are you challenging it?
What has challenged you along the way?

Introduction

When Jessica Alba founded The Honest Company in 2012, she set out to challenge the idea that new parents had to choose between safety and efficacy in their household essentials. In doing so, she and her team built an explosive-growth household products business using a direct to consumer model to delight new parents and disrupt established categories. The result was a company that was reported to be valued at over $1B in 2015, just 3 years after its launch. In the years since, the organization has experienced its share of growing pains: item proliferation and a handful of product issues threatened its position in the market, leading to leadership changes at the company and the need for a next generation growth plan.

Nick Vlahos, formerly COO of The Clorox Company, joined The Honest Company as CEO in 2017 and was responsible for many of the shifts in strategy that are driving The Honest Company’s resurgence, including a focus on core product categories and improved R&D practices. After spending time at other values-based organizations (including building the Burt’s Bees brand at Clorox), Vlahos was personally intrigued by The Honest Company’s mission to empower people to live happy, healthy lives. We sat down with him to learn about how he has helped the brand further its purpose while evolving its Challenger mindset over the last 18 months at its helm.

What space, practice or convention are you challenging? How are you challenging it?

Vlahos: From the beginning, it was all about empowering people to live happy, healthy lives. And that mission resonates in an even bigger way today. The beauty of this mission is that it isn’t in a specific category, rather, it’s bringing the idea of “wellness” to life in the things that go on you, in you and around you. With my experience building brands domestically and internationally, I play a crucial role in helping to further our brand mission. We are fortunate to have so much room for growth given that the company is only 7 years old.

A fundamental way that we challenged the industry is around accessibility – we want
to provide products for consumers in exactly the places where they want to find them.

At its inception, the company was disruptive in that it was e-commerce first, thanks to our direct to consumer model. Traditional companies had built supply chains and retail distribution with brick and mortar retailers that were dependent on shoppers taking a car ride or a walk and navigating the store to access their products. Jessica’s vision around empowerment was not only around transparency and wellness, but also ease. How do we do things better to really help you live a happy, healthy life? Maybe you are happier without having to take a trip to the store to get the solutions you need. We disrupted an industry that was built around retail distribution and made it easier for consumers to get products delivered to their homes.

At that time, we were challenging the convention that you have to go to the store to buy household essentials. We took this convention and said no, not necessarily. We will provide those items directly to you and create a subscription model where you don’t have to think about it anymore. That model seriously disrupted traditional go-to-market norms.

Today we are challenging the conventional wisdom that is “you can be good in DTC, but can you actually be good at omnichannel presence?”.

Can anyone execute with excellence in DTC, dot coms, and brick and mortar? And do that in a way that remains authentic to the company’s mission? And can you do that consistently? And can you do that in international markets?

We believe we can. Today, we provide products wherever people want to procure them. If you’re interested in online, we are there. If you are interested in going to a store and walking, you can find us at major retailers. That’s how people want to shop today, so we need to be in a position to really disrupt there. The big players are of course trying to do this too, but we believe we can do it better by offering the right value proposition at each access point. Many of the big players started as retail businesses and now are becoming DTC. We started as DTC – with that comes the best data and authentic consumer connection. We are using these assets to our advantage as we expand into brick and mortar.

Our direct to consumer DNA gives us an edge with innovation. For example, we did a Major League Baseball diaper collection. We created unique diapers for 8 teams/cities. We introduced it through our DTC platform, and in just 60 days were able to learn which products sold, and which didn’t, and why. In 2 cities, the product just didn’t sell as fast. That enabled us to better manage our own supply chain. It also helped us with our retail partners by not putting those cities’ product on the shelf because the turns weren’t there.

By being digital first and consumer first, we can access and use consumer insights better than larger companies that were built off of a traditional model.

What has challenged you along the way?

As we continue to grow, our competition takes notice and looks to us for inspiration. There are more competitors trying to get into the natural, better for you space, so our categories get more crowded. The positive is that they raise consumer awareness – and we want people to know about better products and ingredients so that we can change the CPG industry together for the better.

As we scale, we need to maintain the performance, quality and efficacy of our products. We wanted to raise the bar in order to compete with the larger players that have robust capabilities around formulation and development. We needed to rise to meet those standards by providing products with really strong designs and by maintaining the highest levels of safety and efficacy. Finally, we needed to bring our products to market faster. To do so, we built product labs for both our beauty and personal care businesses. Now, we do product development in-house, then work with the right partners when it comes to manufacturing the product. This sets us apart and allows us to stay nimble.

There’s always been a belief that as you scale a business, quality is negatively impacted. We say “no”.

As we scale, we are looking to improve the quality of our products. At the end of the day, our customers’ health, safety and satisfaction is our highest priority, so we need to continue to provide the highest quality products on the market. Every day we are continuing to work on earning our consumer’s trust. It’s hard to gain and easy to lose. Our mission is more resonant than ever when it comes to transparency and raising the bar on safety. We want to scale our business and maintain trust by ensuring that there is never a trade-off when it comes to the efficacy, quality, safety and goodness of our products.

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Future of Omni-Channel Planning

by Editor | Jan 2, 2019

Future of Omni-Channel Planning

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Future of Omni-Channel Planning

The End of Channel Management

Grouping similar retail customers into “channels” to organize go-to market efforts has been a hallmark of the CPG industry. This organizing construct exists because it has enabled more scalable, efficient and effective routes to reach consumer markets. The channel model was built on the premise that shoppers exhibited similar trip behavior within a retail format, thereby enabling manufacturers to use that medium to capture shopper value. This gave rise to organizations with teams and planning cycles structured around Grocery, Mass, Club, Drug, Dollar and more recently, Ecommerce.

While shoppers still think about outlets to fulfill trips, the availability of offers has blurred and people are shopping across more outlets than ever. Evidence that shoppers think less in terms of outlet is present everywhere you turn. Take, for example, Google Express, an online

platform that aggregates products available to be delivered based on your location. A search for “pea crisps” in our neighborhood returned above-the-fold results from Target, Walmart, Costco, Boxed.com, Fairway and Whole Foods Market – each featuring a product image, price, rating and convenient “Add to Cart” button. With 98% of US adults with internet access going online at least daily, and three-quarters using a smartphone, opportunities abound for shoppers to pick up their device the instant a need arises and receive instant gratification, whether through a nearby store, an online merchant or a third-party delivery service. With the rise of voice-activated search, social shopping solutions and text shopping enablement, this trend will only accelerate. The channel construct no longer reflects how shoppers fulfill CPG needs, creating an unsustainable tension between how shoppers behave and how companies go to market.

Traditional CPG go-to market model

Traditional CPG go-to market model elevates channel as an organizing construct

Media Transformation Highlights the Path Forward

Consider the transformation the media industry has seen in the last half century. Long gone are the days when brand managers could build a media plan by placing percentages of their budget across TV, print and radio mediums. Today, the integrated communications planning process (ICP) starts with a robust understanding and targeting of the end user, telescopes out to map the total consumer journey, and finally identifies where in the fragmented media landscape to invest to reach those end users.

In line with the media transformation, customer channel as an organizing construct must also transform for manufacturers to win with consumers in today’s environment. Rather than start the go-to market

process through established channel management and customer segmentation schemes, manufacturers must reorient their total demand planning to build relationships directly with shoppers who shop anywhere and anytime on their own terms.

Consider this in light of how most manufacturers go to market today. Despite their best efforts to implement omni-channel planning, most organizations are still woefully siloed, filtering staffing, budgeting, planning and marketing activation decisions through the lens of customer segmentation models that are misaligned with where consumers are fulfilling their CPG needs.

Being Consumer-First

What’s a company to do? In short, follow the consumer through the full consumer-shopper journey. This is not to say the future is all about direct to consumer. Rather, the imperative is be consumer first – then determine how to build and segment capabilities to reach target consumers, working effectively with customer partners (or DTC) across the demand landscape. Through our research and experience, we’ve identified three distinct behaviors to help organizations transform.

Map insights across the consumer journey.

The best products today are doomed to fail without a strong understanding of the end-to-end consumer journey and ability to insert the right messages at the ideal touchpoints. Consider a successful challenger brand that in addition to identifying a white space in a category, is able to use it’s understanding of the consumer’s journey and the “job to be done” at each inflection point (e.g., finding recipe inspiration, planning a social gathering, stocking the pantry) to build go-to market plans without struggling to force fit its planning into a legacy customer session. The most successful brands are ones that not only uncover powerful consumer insights but also map the end-to-end journey and invest at the right inflection points. This enables go-to-market decisions to be made through the lens of the consumer, rather than a default channel structure.

Omnichannel Consumer Journey: Illuminates triggers & barriers across the shopper journey, which is no longer linear

Integrate total demand planning.

Integrated Communications Planning and traditional “customer planning” must evolve from being compartmentalized and department-driven to a cohesive, coordinated, cross-functional capability. The goal is to apply a common view of the consumer journey that connects all relevant mediums and packages decisions about how to reach, educate and influence purchase into a truly integrated demand plan.

By being hyper-focused on demand moments and mediums in concert, manufacturers can develop more effective tactics. Proctor & Gamble recently launched a highly compact, concentrated Tide liquid detergent to meet the underserved needs of urban shoppers living in tight spaces. Priced the same as its ubiquitous 96-load jug, the so-called “Eco-Box” is about the size of a shoebox and weighs less than eight pounds. Most notably, the product is sold exclusively through online retailers like Amazon, Walmart.com and Target.com , where its carless city-dwelling shoppers are already turning to stock up on groceries and household goods. This type of innovation is more easily facilitated when go-to-market strategy is dictated not by an antiquated customer segmentation but by a rich understanding of the consumer and her journey.

Rethink your customer segmentation.

A large manufacturer recently conducted a study on where, how and why shoppers fulfill CPG needs online. What’s striking about the research is not what it uncovered about barriers to buying perishable items or openness to impulse purchases – valuable content in its own right – but rather the implications for the company’s customer segmentation.

As part of the study, the team looked at how shoppers engage with various fulfillment models (e.g., 2-day shipping, same-day delivery, buy online and pick up in-store). At first the team found a messy and fragmented landscape, with different groups of shoppers making different types of trips across a broad set of online and offline retailers. However, looking at shoppers based on how they fulfill unlocked a whole new way to think about customer as an organizing construct. Through the lens of fulfillment, the team conceived a new shopper segmentation that could be overlaid with customer segmentation. For example, the study found that high-value shoppers frequently used “click & collect” to bridge online and offline behavior. With that insight, the company could prioritize customers offering an omni-channel experience and rethink how it organized resources to service those customers.

The pathway to rethinking customer segmentation can lead to being able to prioritize differently. An example is RXBAR’s first sales call wasn’t to Whole Foods or the nearest health store but rather to the founder’s own CrossFit community – which became the company’s exclusive channel. Only after four years did they open the doors to mainstream channels, starting with Trader Joe’s, based on their understanding of the target consumer’s journey.

New go-to market model starts with the consumer journey for integrated demand planning with customers

Conclusion: Future of Omni-channel Planning

While upending the way companies have organized and created go-to-market strategies for decades can feel like a daunting task, fortune favors the bold. Tomorrow’s successful CPG firms will be those that are truly consumer first. As a starting point, here is what we recommend:

Map a strong insight foundation across your consumer shopper journey
Build an integrated approach to total demand planning that integrates consumer touchpoints with customer needs, strengths, and strategies
Adapt customer segmentation to facilitate integrated communication planning and ultimately yield stronger, more cohesive business plans

To discuss how we can help you rethink your consumer journey, demand planning or customer segmentation, contact us at info@seuratgroup.com.

1 “The Rise of the Empowered Customer.” Forrester, 2017

2 “P&G introduces new concentrated Tide box for e-commerce only.” Cincinnati Enquirer. Nov 2018

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Future of Packaging: Re-thinking Plastic Solutions

by admin | Nov 17, 2018

Future of Packaging: Re-thinking Plastic Solutions

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Future of Packaging: Re-thinking Plastic Solutions

Overview

Core to unlocking disruptive growth for manufacturers is identifying new consumer trends and quickly moving to innovate against them. Identifying these trends is often grounded in understanding your leading-edge consumers. For example, Blue Buffalo built a dog food brand that tapped into burgeoning needs of pet parents underserved by established brands. The idea: meat should be the first

ingredient in the ingredient panel. By curating the brand in channels where pet parents relied on store associates for nutritional advice and fueling social media mavens, they were able to accelerate the meat-first trend and disrupt the dog food space – leading to General Mills’ acquisition of the brand last year for $8 billion.

The Next Leading-Edge Trend & Why Now?

Listening to leading edge consumers and social media conversations, it is clear to us that the volume around the environmental impact of plastic packaging has turned up a few notches. We believe one of the next leading-edge trends primed to transition into the mainstream is alternative packaging solutions.

Manufacturers tapping into the alternative packaging trend is not a new concept. Water filtration systems (Brita, Pur, etc.) have grown over the last 20 years and were predicted to make bottled water obsolete. Yet, today bottled water remains the fastest growing beverage category in the US at 9%.

We believe this time is different.

The negative impact of plastic among leading-edge consumers is at a tipping point. Consumers are more invested than ever in brands that demonstrate a conscious effort to support sustainability. Social media disseminates this message and connects consumers that share this sentiment like wildfire.

At the same time, Big CPG’s efforts to connect with these consumers – and social pressure accelerating around reducing plastic waste entering the oceans – is ushering this concern into the mainstream.

Eliminating plastic is quickly becoming a standard, with company after company coming out with their own sustainability pledge.

Plastic Disruption is Already Occurring

Big CPG can only go so fast. Supply chain complexities and profitability concerns require them to pick their spots and manage against longer time horizons. This opens the door for Challenger brands to strike quickly, putting the consumer first. We’re already seeing brands succeed in positioning alternative packaging solutions as a core piece of their consumer value equation:

Lush Cosmetics

Boasts minimal, 100% recyclable packaging on all its products; it is one of the fastest-growing beauty retailers in the U.S., with North American sales increasing 25% in 2017 and reaching $550 Mil.

LOLI

Educating consumers that most beauty products are >95% water and use more plastic than necessary is a core focus. The brand minimizes its packaging footprint by removing water from beauty products, using glass and offering consumers a unique “blend it yourself” experience.

Carlsberg

Danish brewing company introduced new pilsner six-packs held together with adhesive rather than plastic rings in a bet that the eco-friendly packaging will attract younger consumers.

We believe the manufacturers that can act quickly and short-circuit the time horizons of big CPG will create advantage by appealing to consumers and customers that desire plastic alternatives.

What to Do

Be truly consumer-first
Core to the DNA of Challenger brands is an understanding of your leading-edge consumers’ values and a commitment to use packaging to better meet their needs. Manufacturers must identify the role packaging plays in consumption occasions and shopping trips and bring to market a solution that makes sense. Lush & Carlsberg represent examples of this in action. Lush defined minimal packaging as a core principle of its brand to connect to its millennial consumer base, while Carlsberg’s desire to attract these same consumers led to a solution to reduce plastic rings as a key component of their packaging.

Get to know your leading edge
Define the key consumer segment that will lead change within the category and identify the triggers to mainstream the experience. Banza commercialized leading edge food value insight in dry pasta to disrupt traditional boxed pasta – millennial moms rely on pasta as a dinner staple for their families, but value the carrier aspect of the meal (fresh vegetables mixed in with tomatoes) and want to replace the starchy carbs. Brands should speak to and learn from their leading-edge consumers, use these insights to fuel their solutions to reduce packaging within their categories and most importantly message how they are participating in this shift.

Map demand occasions more broadly
While the core of your business may be grounded in traditional brick & mortar occasions, there is an opportunity to re-think how demand occasions are mapped for your business. Channels such as foodservice and on-premise offer opportunities to reduce your packaging footprint while still accessing your core consumers. For instance, growth of WeWork locations have increased awareness and consumption in the absence of packaging for Kombucha, while Pepsi’s purchase of SodaStream highlights how brands think about accessing new consumption occasions outside their core plastic package.

Lead the way with eCommerce
Estimates show that roughly 165 billion packages are shipped in the US annually, using cardboard equal to more than 1 billion trees. The tremendous growth of eCommerce will only increase CPG’s contribution to this number. Move beyond transactional goals for ecommerce and use the platform as an insight tool for rapid testing and learning, to refine innovation and the value equation before launching across B&M channels. While packaging changes may require a price increase, test consumer demand online to determine what drives the most value for your consumers while positively impacting the issue of packaging waste online.

Price Pack Architecture:
Given today’s omni-channel environment and the realities of radical price transparency (see growth paper), companies are in constant struggle with customer partners to manage their price pack architecture. Leading companies have used reduced packaging solutions and smaller sizes to access unique consumer needs, such as Coke’s introduction of 7.5-ounce mini cans. Not only do these products meet new needs, they also offer manufacturers the opportunity to reduce overall packaging – and margin up – through smaller, opening-price-point items. Consider offering reduced sizes to both participate in this trend and meet consumer needs that may exist for your product portfolio.

Conclusion

We are at a tipping point for alternative packaging solutions. This trend should be an opportunity to reimagine packaging as both an outsized influencer for core consumers and a positive difference-maker on the sustainability front. Manufacturers must evaluate their own brand priorities and consumer set to find areas in which they can participate and lean in to be at the forefront of this change.

As always, we want to hear from you! If you’d like more information on how to re-think packaging, or want to share how your company is addressing this issue, please reach out at info@seuratgroup.com.

Sources:

https://www.beveragedaily.com/Article/2018/06/01/Bottled-water-takes-top-spot-in-US-in-2017

http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html

https://www.fastcompany.com/40560641/can-online-retail-solve-its-packaging-problem

https://www.forbes.com/sites/walterloeb/2017/04/07/lush-beauty-taking-the-industry-by-storm-thanks-to-young-love/#3fcba1a411c5

https://www.npr.org/2018/08/23/641215873/attention-shoppers-kroger-says-it-is-phasing-out-plastic-bags

https://www.npr.org/2018/07/09/627220348/starbucks-goodbye-plastic-straws

https://www.bloomberg.com/news/articles/2018-09-06/britons-among-first-to-try-out-carlsberg-with-much-less-plastic

https://www.unilever.com/news/press-releases/2017/Unilever-commits-to-100-percent-recyclable-plastic.html

http://mypbrand.com/2016/11/06/walmart-commits-to-100-recyclable-private-brand-packaging-by-2025/

https://ir.mondelezinternational.com/news-releases/news-release-details/mondelez-international-commits-making-all-packaging-recyclable

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