Keys to retail media success, and advice regarding targeting plant-based users.
Marketing spending by CPG companies is projected to exceed $200 billion in 2023 after multiple years of decline driven by COVID and supply chain constraints. Major components of marketing spending include: trade promotion, digital, traditional advertising, consumer promotion and shopper marketing. The overall budget is split approximately 60% through retailer customers and 40% directly to consumers. Add to this the rise of retail media networks, and you have a complex mix with a proliferation of options, confusion, and measurement challenges.
There needs to be true retailer/manufacturer collaboration without conflicts of interest between selling products and selling media.
RETAIL MEDIA
Retail media networks are bright, shiny, new objects, but they are not a panacea. They are essentially advertising platforms run by retailers which allow brands to market through retail customers to consumers. Amazon is the grandaddy of retail media and has an immense database that allowed it to pioneer this field. Add in major retailers, including Walmart, Target and Kroger, and you have a real game changer. Success for retail media networks, however, is contingent upon the following:
Data: Retailer first-party data is now worth much more due to constraints on Facebook, Google, and other intermediaries.
Advertising networks: These need to allow for customization without complexity. There are more than 50 advertising networks, each with its own standards and requirements, which creates tremendous confusion for marketers.
Collaboration: There needs to be true retailer/manufacturer collaboration without conflicts of interest between selling products and selling media.
Measurement: We can’t understand true performance unless we can measure changes in shopper behavior. Retailers that capture longitudinal shopper card loyalty data by household, can provide a clear read on trial, repeat, loyalty and other shopper performance metrics. This is a “results orientation” rather than a media consumption or attribution model orientation. Manufacturers must have a clear read on actual purchase behavior, both online and offline, to justify their investments.
MANUFACTURER INNOVATION
Plant-based products have been over-hyped and suffered from significant declines in the past year. Seemingly, no manufacturers are immune from this. However, our research identified some brands with true promise that offer great taste, with competitive prices, while delivering on the promise of plant-based: healthier, environmentally friendly, and humane treatment of animals.
• Meati: While not strictly a plant-based product, Meati employs a proprietary process that uses mycelium, the root structure of mushrooms, to create a meat-like texture and flavor. These products offer great taste, a clean ingredient deck, and a delicious eating experience at a fairly affordable price. This four-year-old company may be on the forefront of alternative meat 2.0.
• Daring Foods: The challenge for chicken has been to get outside the batter and breading. Who knows what the chicken tastes like when it’s covered with seasoning and crunch? Daring has directly targeted muscle meat. Daring Foods’ products are made from a blend of soy protein, wheat protein, and other natural ingredients, and really do replicate the taste and texture of chicken.
• NotCo: This is a plant-based food technology company. Their leading product in the United States is NotMilk. It’s made from a combination of pea protein, chicory root, and other plant-based ingredients. They utilize artificial intelligence to identify plant-based ingredients that can be combined to replicate the flavor and texture of dairy or other products. NotCo’s recent partnership with KraftHeinz indicates there is real interest in both their development processes and products. NotMilk is smooth, tasty, and has a real creamy, dairy-like mouthfeel. The KraftHeinz partnership should also yield significant distribution opportunities and food manufacturing expertise for NotCo.
THE OPPORTUNITY
At the intersection of retailer media and plant-based products lies optimization. Reviewing Cadent’s 2023 survey data, we find that of plant-based buyers: 19% are exclusive to plant-based, 37% are primarily plant-based, and 44% are occasionally plant-based.
In our last article we assessed lapsed vs. core plant-based buyers. Lapsed buyers didn’t really buy into the fundamental promise of plant-based: healthy, environmentally friendly, and humane treatment of animals. They tried plant-based because it was something new or recommended to them. They were casual buyers without a real commitment to the proposition. These shoppers, however, left not just because they didn’t believe in the proposition, but they also didn’t like the taste or the price premium.
Enter retail media networks. Retail Media offers the opportunity to better target key buyers who are more likely to buy, try, and commit to plant-based products. These buyers have a distinct profile. They are more likely to be employed and have an advanced education and higher incomes. They are less likely to be rural and very much committed to healthy, environmentally friendly and more humane treatment of animals.
An assessment of what matters to consumers and how products deliver on these factors is important. The top importance factors for buyers of plant-based and the gaps vs. product performance are indicated below:
Retailer first-party data is now worth much more due to constraints on Facebook, Google and other intermediaries.
MIND THE GAPS!
But let’s dig a little deeper, and see what percentage of respondents rated product performance as “extremely important and very important” for each of these same five factors: taste, 75%; flavor profile, 75%; healthy, 73%; texture/mouth feel, 72%; and satisfies, 71%.
There are two key takeaways here. First, the gaps between “importance” and “performance” are greatest when it comes to “taste” and “flavor profile.” Second, price is not mentioned in the top five. If manufacturers and retailers can bring innovation in products and marketing together, they can target shoppers who are most likely to be committed to plant-based foods over the long term. These products must deliver on taste and price, but also need the fundamental underpinnings of healthy, environmentally friendly and the humane treatment of animals.
Don Stuart is a managing partner at Cadent Consulting Group, with offices in Wilton, Conn., and Evanston, Ill. He can be reached at don.stuart@cadentcg.com.
