CPG Trends 02 May 2023
Our April Roundup: PepsiCo’s new healthy diet, licensing deal between Coca-Cola and Frutura, and a True Pricing scheme from Albert Heijn
In CPG news from April, we explore PepsiCo’s new healthy diet strategy, an interesting licensing deal between Coca-Cola and Frutura, the impact of HFSS regulations on small brands in the UK and a new True Pricing scheme from Albert Heijn
4 minute read
From the Wall Street Journal
In this piece, the WSJ examines the strategy from PepsiCo which for a time focused on moving beyond its “junk-food roots” to shift towards healthier consumer choices. However, CEO Ramon Laguarta has taken the approach that people will “continue eating potato chips no matter what”, and therefore a better approach is to make the snacks and drinks less bad for the consumer. This has meant lowering sodium, saturated fat, and sugar content in products. All this while ensuring no sacrifices are made to taste.
This highlights the progressive moves that transform PepsiCo’s core product formulations, giving consumers what they want rather than changing the company’s portfolio to promote changes in consumption habits.
Coca-Cola’s Minute Maid and Simply brand names are set to appear on fresh fruit in the US and Japan as a result of a new licensing deal. This is the result of a deal between Coca-Cola and California-based fruit supplier Frutura. To quote the piece:
Under the licensing agreement, fresh citrus fruits will be marketed in the US branded as Simply Select. Minute Maid will appear on fresh grapes sold in the US and citrus fruits and grapes in Japan.
Associating these brands with fresh fruit appears as an interesting equity builder for consumers and institutional stakeholders alike. Additionally, there is a huge opportunity in fruit that remains unexplored, and a lack of branding is an obstacle here. Sevendots Partner Colin McAllister had this to say about this interesting development:
“Licensing agreements are growing in significance, but in this case, Coca-Cola is going one step further. Apart from the financial aspects of the deal it’s curious that Frutura believes that branding their fresh fruit will strengthen their distribution and/or brand equity. Meanwhile, for Coca-Cola, having their brand on fresh fruit may help strengthen their brand image in the minds of consumers.”Colin McAllister
From Sustainable Brands
In this announcement from the snack brand KIND Snacks (Mars), the brand has committed to sourcing 100% of its almonds from orchards practicing regenerative agriculture by 20230. This is the lead ingredient in over 45 of the brand’s products. Sevendots Partner Colin McAllister had this to say about the announcement:
“The initiative by KIND to raise the commitment to Regenerative Agriculture (RA) is an interesting move in the right direction. By selecting one ingredient – in this case almonds – and focusing on sourcing via RA, the brand seeks to strengthen its equity and build further differentiation in a crowded Better for You market. Furthermore, the attention to educating the consumer is a critical step in developing a common understanding of the benefits of RA.”Colin McAllister
The piece details all the specific practices of RA that are required, including the planting of cover crops to build soil and improve pollinator habitats, subsurface irrigation to reduce water use, whole orchard recycling, testing the addition of composting and biochar to soil to decrease fertilizer use and utilizing off-ground harvesting to reduce dust in the air during normal harvesting (improving air quality and carbon sequestration).
From The New York Times
In a unique insight into China’s younger generations, the NYT explores the increasing number of young people who are leaving prestigious white-collar jobs for manual labor. The piece describes the appeal: “Proponents describe the joy of predictable hours and a less competitive atmosphere.” Post-pandemic, the shift towards greater work-life balance has been pronounced, especially in younger workers.
China’s Gen Z are a unique generation, and a group our sister company The Red Flower Factory has spent time examining. You can read more insights into their work on their website.
A new report from the Food and Drink Federation (FDF) details how the UK’s small and medium-sized enterprises are struggling to reformulate HFSS (high in fats, sugars and salt) products. The report details how larger operations have been more effective at reducing HFSS, at an average of 11% across products, nearly four times the reduction achieved by the wider FDF membership.
It demonstrates an interesting challenge for smaller brands, who will face challenges in the face of new government restrictions:
Restrictions planned for October last year on buy-one-get-one-free deals and TV and online advertising for HFSS products have been delayed. A ban on multi-buy deals was pushed back until October 2023 while a ban on TV advertising of junk foods before the 9pm watershed was delayed to October 2025.
Despite delays, these restrictions are coming into play, and brands will be challenged to do more to meet targets reducing salt, sugar and calories in products.
Dutch retailer Albert Heijn trials ‘true price’ scheme to show consumers social and environmental cost of products
From Food Matters Live
Dutch retailer Albert Heijn (AH) has introduced a ‘true price’ initiative to make the social and environmental costs attached to its coffee products clearer for consumers. AH has partnered with organisation True Price to deliver this, and additional costs include CO2 emissions, raw material consumption, labour conditions or water usage. To quote from the TrendWatching piece linked below:
When customers buy a self-service cup of coffee in Groningen, Wageningen or Zaandam, they’ll see two prices: the standard retail price and the true price… For example, the regular price for a double espresso is EUR 2.25; when priced using the True Price methodology, that same jolt of caffeine comes to EUR 2.33.
Consumers have the choice to pay either price; this may be primarily educational for AH, determining whether consumers are really looking for sustainable choices. It is notable that the price of a coffee is most different where the consumer chooses oat or another alternative milk over cow milk, whereas the price differential of coffee alone is quite low. It remains to be seen whether this really provides the educational component for consumers that might be desired.Sevendots Partner Andrea Bielli comments:
“We can see an increasing number of retail-driven initiatives designed to reflect the sustainability cost in the consumer-facing price. These initiatives may have a more educational objective but are good ways to increase awareness among consumers. However, clearly the lack of an objective and shared metrics is somehow limiting their efficacy.”Andrea Bielli
Read more here (in Dutch!) from Albert Heijn itself: True Price at AH
And read more from TrendWatching: Innovation of the day, 20th April 2023
That’s it for another month. Let us know what stood out for you from this month’s news by chatting with us on LinkedIn.