At CBX, we create brand experiences designed for cultural and commercial impact. What does this mean in our ever-changing landscape of evolving business, technologies and consumer interests? On a daily basis, we’ll continue to investigate and explore this notion through the brands and leaders we both work with and are inspired by. In a more straightforward and IRL experience, we decided to dig further into this via our first event series, #StraightTalk.
Plain and simple, we see #StraightTalk as an opportunity to connect with disruptors and provocateurs in their industries to converse on all topics relating to business, culture and commerce. #StraightTalk is our way of facilitating an exchange of ideas from people spanning the spectrum of industry. We will be experimenting with different formats, video content and unexpected guests along the way. We don’t necessarily know where the road is headed but we promise, we’ll keep the talk straight and everything else crooked as hell.
# 1: The Catch 22 of Big
In a recent study from CB Insights, global food and beverage funding since 2012 has added up to $5.9 billion across 1300 deals. Take a look around your grocery store and you’ll see hundreds of new brands with about $2 billion in fresh funding that didn’t exist 5-10 years ago. Unicorns like Sabra are on their way to $1 billion dollars in revenue while Chobani, heading towards a cooler $2 billion, is barely a decade old and currently sitting as the top yogurt company in the US. Retail channels like Trader Joe’s, Lidl and Aldi continue to disrupt the traditional supermarket and grocer category while eye-raising mergers and acquisitions such as the recent Amazon and Whole Foods deal promise to profoundly impact brand and consumer behavior and expectations.
As an agency that has worked with brands, big and small, up and down the shelf and aisle, we couldn’t help but wonder how these radical changes are affecting them. Whether you’re a legacy brand looking to evolve or a start-up looking to scale, the new landscape of seemingly limitless choices, new shopping platforms, and endless competitors encroaching your product and category territory, the old ways of maintaining and growing your companies are being challenged at every turn.
In our first #StraightTalk, we invited one of leading purveyors of the healthy snacking movement, Noha Waibsnaider, founder of Peeled Snacks for a conversation with her old friends, CBX’s CMO Dustin Longstreth to discuss their perspectives from opposite vantage points and answer: In the world of food, how do you think small when you’re big…and how do you go big when you’re small?
Dustin: “There is a paradox happening, big brands having to act small because small competitors are fiercely coming after them. It’s death by a thousand cuts.”
The conversation kicked off with Noha addressing her pre-Peeled days. Prior to starting her company, she worked at a conglomerate that made products across categories. Interestingly, she mentioned interacting with food scientists in a lab that stated, in reference to the “foods” they were creating, that they “wouldn’t eat this stuff.” While at its inception, these “foods” might have been quality products, as each year progressed, engineering them to be more cost-effective was the recurring pattern with increasingly less consideration towards quality. Her experiences led to her lightbulb of an idea to create healthy, natural and importantly, real snacks.
Noha: “When I started Peeled Snacks, people didn’t understand what I was saying. For instance, they didn’t know there was a difference between added sugar versus real sugar from fruit.”
When she introduced Peeled Snacks back in 2005, it was just the beginning of more health-conscious eating attitudes. We forget that not long ago, items like Cheez Whiz where routinely featured at the forefront of the supermarket. While we believe this might have to do with a certain generation (and their mindset when it comes to brand values and money spent towards experiences,), both Dustin and Noha agreed the uptick in higher quality products was clearly reflective of the shift in consumers desiring more socially-conscious and purpose-driven brands. And bigger food conglomerates acted, and are continuing to act accordingly.
Beloved “small” brands we’ve come to know and love such as Kind Snacks and Annie’s are no longer independently owned. The rise of these acquisitions are due to these companies understanding the shift and realizing their abilities to leverage their infrastructure to support these growing companies. Noha stated for a company like Peeled, which is still independently owned, that this is exciting for her as bigger budgets, operational capabilities and people are dedicating themselves to scoping out companies like hers. She maintains that savvier consumers nowadays demand trust from brands they consume which may be harder to cultivate from the ground up with bigger brands. The key with seeking out a smaller brand to align with is commonly shared roots and values that the consumer will then feel comes from a more authentic place.
However, when a small company goes “big,” what happens to the culture? Dustin raised this issue as this is often a challenge CBX tackles for many of the brands we work with- how to maintain a bespoke culture while scaling. From the perspective of a smaller company, Noha was adamant that a successful company needed a mission aligned and driven purpose her employees understood and got behind. She brought up Peeled’s unique offer of additionally compensating her employees with stock options, as she truly wanted people to literally, feel part of the company.
The pattern of conversation seemed to follow that as companies grew, their behavior needed to harken that of much smaller, agile and employee-conscious brands, leading Dustin to ask, “Is the era of mega brands over?’ Our observation on the numerous grocer brands we work with, is that we’ve noticed the growing power of those brands at the perimeter of the stores, less so the center. The prevailing mentality of the consumer is the desire to discover within the store, or as Dustin put it, “Help me find you.” Because of this new mindset, the competition amongst both big and small brands to stand out on shelf and connect with the consumer is much more fierce. For a brand like Peeled, Noha stated that maintaining differentiation through a consistent stream of conversation with their consumers, specifically through digital channels like social media allows them to remain competitive.
The conversation wrapped with a Q&A session with audience members for Noha:
Q: As a smaller brand without a lot of capital, what drives your decision-making?
Noha: It has to be more qualitative than quantitative. As a smaller company, we don’t have the time to do long drawn out studies, layers of committee or board members to go through or as much money for R&D. We behave more agile for instance, innovating around what we discover at trade shows or teaming up with an array of partners.
Q: Trends such as kale and charcoal have usurped the market lately. Do you believe consumers or brands are dictating this?
Noha: Brands have some of the power but not all of it. I learned early that that brands alone can’t change the conversation, it requires many and much bigger parties. Peeled was one of the first brands to put “No added sugar” as a call out on our labels but everything didn’t change because of us. That involved government intervention about educating consumers on what this meant; additionally, doctors, nutritionists, retailers also had to get on board. Power comes in numbers and when many brands get together to try to make a change, grocers listen. Its less about a sole product but more “portfolio” based thinking. We’ve come to understand the importance of having really strong competitors because strong players make a strong impression and you can make a bigger impact when you’re not just a product, but also a category.
The importance of product differentiation, brand equity, and a strong business culture were the key takeaways of the night. A steadfast conviction in your unique product offer, and maintaining its integrity and quality as your company grows is a non-negotiatible –especially at a time when competition is so fierce. Ensuring your brand value is clear, both internally and externally, is integral; a company needs to focus on being purpose-driven so its activities aren’t dictated by fleeting trends or shaky markets but instead continually contribute towards what the company wants to stand for. To do this, it must create an infrastructure where a strong culture is cultivated with its talent truly understanding and feeling part of the company’s growth and well-being. Whether it be offering stock options like Peeled or creating other ways for employees to feel invested in the company, the old ways of employee engagement and interaction are no longer relevant especially as younger generations increasingly crave values from their employers similar to their own.