2020 Challenger Brand Study: Challenging in an Omni-World

2020 Challenger Brand Study: Challenging in an Omni-World

2020 Challenger Brand Study: Challenging in an Omni-World

Challenging in an Omni-World

As digital lexicon now dominates brand and business planning, our purpose with this year’s Study is to remind our community why it is more vital than ever to start with the consumer and use channels as consumer touchpoints to forge deeper loyalty to your brand’s experience.

While Direct to Consumer provides an advantageous incubation opportunity for brands to build consumer intimacy and garner a loyal base with lower upfront investment, today’s reality is that there are a multitude of consumer touchpoints available and these channels alone may not provide the reach to delight your consumers where they prefer to discover, learn, shop and buy. Embracing an omnichannel orientation is more important than ever to build durable brands this decade.

COVID-19 has taken an already-discerning consumer marketplace and amplified the challenge of capturing consumer spend. Brands constantly need to interrupt, remind, suggest, and prove why they should be picked up, put in baskets (virtual and IRL), and invested in by shoppers wherever they are. This requires successful challenger brands to be even more poignant, connective, and shrewd to win shoppers’ dollars and command both share of mind and share of physical space at shelf. It also calls for more widespread distribution across the omnichannel landscape. Diversified channel strategies not only fortify consumer relationships, but they allow brands to endure the unpredictable ebbs and flows of societal and market changes. Successful challengers use these various channels and subsequently tailored offers to remain competitive for shoppers’ minds and wallets.

For this year’s Challenger Brand study, we have selected ten brands that transcended their incubator origins and designed unique omni-channel touchpoints to accelerate consumer acquisition and loyalty, and disrupt established categories.

Top 10 Challenger Brands

OLIPOP

A healthy alternative to soda, OLIPOP calls itself a ‘delicious fizzy tonic.’ Its products consist of soda-like flavors packed with digestive health benefits – prebiotics, plant fiber, botanicals and more. OLIPOP’s online DTC business features a discounted subscription and facilitates fast transactions with easy cancellation and texting features. Consumers can find OLIPOP in curation outlets like Erewhon (where nearly 5K cans were sold in one month alone) and independent coffee shops. This year, OLIPOP has aggressively expanded at retail, with retail sales spiking 400% since mid-March, driven by distribution in Sprouts, Kroger, Whole Foods, Safeway, and Wegmans.

HU Kitchen

HU Kitchen’s journey to disruption in premium chocolate began in 2011 as a paleo/primal restaurant concept. When the founders struggled to find a delicious chocolate that met their restaurant’s strict health criteria, they decided to launch their own line of chocolate. By 2013, HU chocolate launched into Whole Foods, coinciding with their Union Square (NYC) restaurant launch. From 2016 to 2018, their retail penetration grew from 400 to 3,000 stores. Today, the brand applies a unique test-and-learn model with its in-house test kitchen and insights lab to cultivate a loyal following through both retail and DTC.

Hint

To combat her diet soda addiction, Kara Goldin habitually put fresh fruit into pitchers of water for herself and her family. This led to the birth of Hint in 2005. Fast forward to 2019, and Hint is the number one independently owned non-alcoholic beverage company in the U.S with $140 million in annual revenue. Goldin has prioritized an omnichannel approach to cultivate Hint’s rise to the top. While 60% of Hint’s sales comes from retailers like Whole Foods, Target, and Costco as well as Silicon Valley cafeterias, 40% still stems from the DTC arm of the business that makes it easy to customize soda packs with a 20% subscriber discount.

JustFoodForDogs

As a dog parent himself, Shawn Buckley felt compelled to disrupt the $30 billion pet food market by offering human-grade dog food beyond a can or bag. He went to market with a bang as the first-ever public kitchen for dogs! The kitchen was not only an efficient production facility, but also a unique marketing tool that attracted a loyal pet owner following. After its success in the DTC landscape, JustFoodForDogs partnered with Petco in 2019 to open a 1,350-square-foot retail activation kitchen in Petco’s Union Square (NYC) store. By expanding to over 1,000 Petco stores and embracing DTC and Amazon, JustFoodForDogs has reached $80 million in revenue.

Mush

Debuting on Shark Tank in 2017, Mush is an all-natural ready-to-eat overnight oatmeal founded by San Diego natives Ashley Thompson and Kat Thomas. Thompson and Thomas created Mush out of frustration with the lack of healthy, easy to prepare breakfasts and snacks available in the marketplace. Prior to its appearance on Shark Tank, Mush sold through farmer’s markets. Since partnering with Mark Cuban, Mush has rapidly grown its retail penetration, expanding into over 3,500 stores, including Wegmans, Whole Foods, and Publix. In addition, Mush has bolstered its DTC arm by offering subscription discounts for its customizable “Everyday,” “Weekday,” and “Snacking” packs.

Public Goods

Public Goods, a membership-based online home goods store, was founded in 2016 to combat the paralysis of choice faced by consumers at retail today. Offering just one type of product per need, the site touts minimalism and pleasing aesthetics across its portfolio. In 2020, Public Goods announced a CVS retail partnership where consumers can forego the annual membership to access the brand’s products, albeit at higher prices. CEO Morgan Hirsh views this as a strategic move to expand reach among new consumers who primarily shop B&M, with the aim of introducing them to the brand, building their loyalty, and increasing Public Goods’ membership numbers.

BirchBox

Founded in 2010, Birchbox has pioneered subscription commerce, helping consumers conveniently tailor beauty products to their lifestyles. The service provides each consumer a personalized box of products featuring both prestige and niche brands to fit his or her beauty routines. Beyond its established DTC offering, Birchbox has invested heavily in its retail arm to secure selective partnerships. Birchbox placed beauty consultants in 3,000 Walgreens nationwide to educate beauty shoppers on the brand and fuel an increase in monthly subscribers from Walgreens. Birchbox also introduced its products at select Gap locations. Between these partnerships and its DTC stronghold, Birchbox amassed over 1 million subscribers.

Sumo Citrus

Available for just 4 months a year, the “dekopon” varietal of mandarins known as Sumo Citrus are a highly coveted seasonal fruit. Celebrated for its sweetness, distinctive top knot, and ease of peeling, the Sumo Citrus brand benefits from its digital presence and sense of exclusivity. Eager consumers can sign up to receive a notification when the varietal becomes available, and in season, consumers can purchase gift boxes of the fruit to be shipped nationwide. Sumo’s real brand value creation comes from its in-store staging. Leaders like Whole Foods, Wegmans, Target and Publix allocate large displays and signage to capitalize on the fruit’s seasonal excitement, demand, and premium ring.

Rothy’s

Rothy’s took the professional women’s apparel landscape by storm beginning in 2015, providing women with trendy flats that are washable, handmade, and made from recycled plastic bottles. Online drives the lion’s share of brand sales, but the brand has recently expanded with in-store locations in New York City, Los Angeles, Boston, San Francisco, and Washington, D.C. In 2018, Rothy’s debuted in the retail landscape by dropping an exclusive collection at Nordstrom. That same year, Rothy’s sold over one million pairs of shoes, contributing to a valuation of over $700 million and driving genuine sustainability impact that helps Rothy’s inspire continued shopper engagement both online and in-store.

Cocokind

Cult-favorite skincare brand Cocokind launched in 2014 with a mission: to make clean, efficacious skincare more accessible. The brand became an early hit with influencers and bloggers, with their hero Collective Sticks (like MYMatcha) being shared frequently on Instagram personal pages and routine videos. CEO Priscilla Tsai has personally taken charge of Cocokind’s social media, creating posts that relate to the skincare challenges of Cocokind customers. What started primarily online quickly expanded with retailers like Whole Foods, Bed Bath & Beyond, and Target.

Revenue Growth through Relevancy

Revenue Growth through Relevancy

Revenue Growth through Relevancy

Introduction

With overabundant options and shifting consumer preferences, achieving revenue growth—especially profitably—is the core challenge that companies will face in the new year and decade. A brand’s ability to grow remains rooted in the indelible principles of winning consumer jobs, carving out distinctive spaces, and engaging with consumers in highly relevant, authentic ways.

We believe that building relevance is an under-leveraged pathway to accelerate growth. As Millennials and Gen Z account for the greatest transfer of wealth and consumer spending power on record, brands must use a forward-looking approach to identify what is most relevant for this next generation.

We’ve distilled a forward-looking view on what next generation relevance means into five pillars: relevance to my values, culture, lifestyle, budget, and places I purchase. This paper explores each relevance pillar and offers ideas for how to unlock revenue growth through each by highlighting brands that are doing it well.

5 Pillars of Relevance

Pillar #1: Relevance to my values

Next generation consumers want to spend their money on more than a product; they use their beliefs to direct purchasing. Winning brands position themselves as relevant to contemporary values and empower consumers to use their purchasing power to support a greater purpose.

Brands aligned to consumer values (e.g., ways of eating, environmental stewardship, donation of proceeds to various causes) also command a price premium as consumers are willing to pay more for the enhanced benefits delivered by a values-based brand. We see this justified premium as a growth unlock across categories.

Unlock: Use forward-looking insights to identify emerging values that drive purchase decisions

Prioritize leading-edge consumers (those creating change in the market) and identify what they value most when selecting products. These consumers portend where purchase decisions are trending, and brands that deeply understand these values-based decisions can better delight this group and remain ahead of broader market trends.

A few examples include:

Love the Wild, a frozen seafood entrées kit, with sustainable aquaculture benefits for consumers and the environment.

 
 
 

Credo Mobile, a virtual network operator, can charge similar rates to Verizon because it invites its members to designate a charity each month to receive a portion of Credo’s profits.

Pillar #2: Cultural relevance

Brands often struggle to appeal to next generation consumers in today’s ultra-competitive landscape. Successfully creating stickiness in consumers’ minds requires talking to consumers through mediums and situations that are relevant to their culture. Connecting to the next generation’s culture in an authentic way while remaining true to the brand’s heritage will allow the brand to build relevance with a spectrum of consumers.

Unlock: Link your brand to contemporary culture As consumers see advertising everywhere, from subway ads to Snapchat stories, it has become more difficult for brands to capture mindshare. One way to stand out authentically is to leverage borrowed interest from pop culture, making smart, relevant connections to your brand and what it stands for.

A few examples include:

Bud Light’s Game of Thrones campaign targeted Millennials with its creative focus on high-quality ingredients and fostered cultural appeal through its humor and homage to the widely popular show.

 

Sir Kensington’s co-branded food trucks borrowed badge value from beloved TV show Bob’s Burgers and appealed to foodie culture.

Pillar #3: Lifestyle relevance

As the next generation builds careers, families, and homes, they seek solutions that fit meals, snacks, and personal care and household occasions into busy schedules, spurring a resurgence across categories from home cleaning to frozen meals to dairy and pasta. Brands can win by updating old standbys for evolving needs as consumers seek better ‘job’ solutions.

Unlock: Connect with trending values as a ‘way in’ to today’s lifestyle

For the next generation, food values are about more than just nourishment; they are integrated into consumers’ sense of self and wellbeing. Brands whose products better fulfill evolving consumer ‘jobs’ associated with changing lifestyles will earn greater market share.

A few examples include:

Califia identified plant-based eating as an emerging food value and innovated within this platform to fulfill a myriad of consumer “jobs”, such as energy, digestive health, and satiety.

 
 
 

Banza’s chickpea pastas were inspired by the idea that consumers buying better-for-you products want the best of both worlds: delicious meals for the whole family to gather around, while overdelivering on nutrition density.

Pillar #4: Budget relevance

With college tuition increasing 500% since the 1980s and cost of living more than tripling, the next generation of consumers is accustomed to living on a budget. In the consumer goods space, they are seeking an even greater value equation. Low prices alone are not the answer. It is more important than ever to identify and deliver on the aspects of the value equation that matter most to them.

Unlock: Over-deliver on the value equation

Offering exceptional value through the right benefits at the right price requires a deep understanding of where value lies for your consumer. By offering exactly what consumers value most and not investing in what they don’t, brands can be highly relevant while saving on areas that expand profit margin.

A few examples include:

This is L became a high-growth feminine care brand through a highly relevant value equation for modern women, including organic ingredients, stand-out packaging and competitive pricing vs. conventional leaders.

 

One Bar focuses its packaging on communicating its nutritional point of difference—20g of protein, just 1g sugar—and delicious exploratory flavors.

Pillar #5: Relevant availability

Today’s consumers expect brands to be seamlessly available for purchase in their flow of life outside traditional retail channels, whether offline or online. However, brands must still stand out in the traditional brick and mortar retail environment while expanding omnichannel through availability online, in foodservice, and/or in unexpected UDS (up-and-down-the-street) channels such as apartment buildings, workplaces, and gyms.

Unlock: Develop breakthrough availability

As social networks expand in-app purchasing capabilities, brands can capitalize, reaching younger consumers where they already browse and removing the friction to purchase online. In real life, brands can break through by ensuring their in-store presence is unforgettable (or better yet, Instagrammable) and by increasing distribution in grab-and-go locations that accommodate the next generation’s on-the-go lifestyle expectations.

A few examples include:

Sumo Citrus’ seasonal in-store execution aligns with retailers’ desire – and emerging KPI – of creating Instagrammable displays. Shoppers associate these oranges with an eye-catching showstopper on the store perimeter, leading to higher likelihood to purchase.

 

 
 

Smalls cat food sidestepped category incumbents by expanding point of sale to Instagram, where browsers receive a discount to encourage trial and can shop directly from the link.

 
 
 

 
 
 

Q Mixers is sold at retail, but next-generation consumers might also spot their “Spectacular Serve” bottles when ordering drinks at leading restaurants and bars around the country.

 

Summary

To unlock growth this decade, commit to a forward-looking insight approach to build relevance with the next generation of consumers. Include the 5 Pillars of Relevance framework within your annual planning and ensure new growth ideas integrate into your marketing plans. We wish you success in the new year and hope these revenue growth ideas provide inspiration on new ways to engage consumers.

As always, we welcome your thoughts and feedback. Please reach out to info@seuratgroup.com.

Unlocking Growth Through Health and Wellness

Unlocking Growth Through Health and Wellness

Unlocking Growth Through Health and Wellness

Unlocking Growth Through Health and Wellness

Introduction

Food & Beverage are the primary tools for the majority of Americans to manage their overall Health and Wellness (‘H&W’). 1 in 4 Americans report using exercise to primarily manage their health and wellness, while 3 in 4 Americans do so through food.1

Unfortunately, US consumers are becoming less healthy overall. For example, 9.4% of the US population is diabetic, and another 25% is prediabetic; obesity levels continue to rise.2 Healthier eating and nutrition are widely discussed in culture, yet 2 in 3 consumers are confused about which products to choose as healthy.1

Helping consumers make better nutrition choices is clearly better for public health. It is also a critical growth strategy for brands and retailers as 2 in 3 shoppers are willing to pay a premium for healthier products.3

State of Health & Wellness1

Harnessing Health & Wellness

We believe every manufacturer can unlock growth through H&W, but it requires greater focus on truly understanding consumer H&W triggers, identifying the consumer role of H&W at retail, and engaging consumers along the purchase journey.

In this growth paper, we highlight how manufacturers can simplify H&W choices, engage shoppers along the purchase journey, and partner with retailers to grow category and brand sales.

H&W Playbook

Identify Consumer H&W Triggers

A one-size-fits-all approach won’t work as consumers have unique needs when it comes to H&W. Two segments of H&W consumers, Limiters and Seekers, are examples of how this is uniquely brought to life:

1) Limiters restrict how much unhealthy food they eat and seek physical benefits from their diet. They look for specific macronutrients and take a measured approach to support managing their body.

2) Seekers are eating natural and unprocessed foods regularly and are searching for help with holistic health and functional performance. They actively use food and beverages to enhance their physical and mental wellbeing.

Manufacturers and retailers need to understand consumer H&W motivations by segmenting and targeting consumers based on attributes and benefits they prioritize, as well as motivations and triggers that drive changes in behavior. Providing products and communication that resonates with the unique priorities of each specific segment is the foundation for growth.

Consumer Triggers

Segment H&W Customers

Manufacturers must understand the H&W development of their customer set to inform how they engage with retailers. Many retailers are looking to connect to growing H&W trends, but need help to do so in a way that is right for their shoppers.

Manufacturers should build a H&W retailer segmentation to inform how to position their portfolios and advise retail partners on how to grow through H&W. This starts with both

1) Identifying how important each H&W offer is for a retailer’s shoppers

2) Identifying how shoppers rate retailer performance on this offer

Understanding the intersection of importance vs. performance helps manufacturers prioritize investment and customize recommendations for retailers based on a shopper-first perspective.

We need MFGs to tell us what is right way for me to be a H&W leader for our shoppers.”–Leading US Retailer

Inform and Inspire H&W Shoppers

To truly unlock growth, manufacturers need a deep understanding of the role H&W plays in driving behavior along the shopper journey. Given the high degree of confusion among shoppers around which H&W products are best, brands have the opportunity to educate consumers and influence their choices.

Manufacturers also need to work with retailers to support shopper activations and evolve in-store conditions in a way that provides much needed H&W information for shoppers and drives category growth.

Through this process, manufacturers can better leverage H&W insights to inform the right distribution of items, optimize the shelf set, determine which benefits & attributes to communicate through merchandising and optimize pricing opportunities.

Shoppers are overwhelmed by the choices in the grocery store and the lack of transparency on what is actually healthy. It’s hard to know what’s good for you these days as diet trends keep changing and the ‘healthy’ options in the stores keep expanding.”4

It’s just product overload. There are tons of stuff in every single category. Everything is organic or inorganic or said to be ‘healthy.’ It’s hard to weed out what you should and shouldn’t buy.”4

Conclusion

To drive growth through health and wellness, manufacturers and retailers need to start with the consumer, identify their H&W needs, understand what they aren’t getting today, and let this drive decisions along the shopper journey. Those with deep H&W insight will better delight consumers, shoppers and retailers, and unlock a significant new source of growth.

The Seurat Group is an insights-driven consumer packaged goods consulting and private equity firm whose mission is to delight consumers. We help our clients and portfolio companies by artfully integrating multiple lenses of insight to unlock new perspectives & uncover new growth opportunities.

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

 

 

2 CDC.gov
3 Seurat Benchmarking 2018
4 Food Navigator and Bernstein

Challenger Brand Leadership Series: Harmless Harvest

Challenger Brand Leadership Series: Harmless Harvest

Challenger Brand Leadership Series: Harmless Harvest

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:

  1. What space, practice or convention are you challenging?
  2. How are you challenging it?
  3. 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/.

Challenger Brand Leadership Series: The Honest Company

Challenger Brand Leadership Series: The Honest Company

Challenger Brand Leadership Series: The Honest Company

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:

  1. What space, practice or convention are you challenging?
  2. How are you challenging it?
  3. 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.

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.