Legacy CPG Brand Involvement in the Specialized World

Millennials are notorious for “crushing the middle” of just about every area of life…

Department Stores…Gone!

Legacy Big Food and Beverage…Struggle Bus!

Chain Restaurants…Don’t Let the Door Hit You on the Way Out!

The largest living generation with now the largest buying power has made the “establishment” stand for something or risk losing everything. If these legacy brands aren’t willing to change, they are left for dead in the wake of constantly evolving consumer tastes. So, why would the diet and nutrition world be any different? The “tried and true” ways to get in shape are now thought of as boring. Today, diets like…

• Ketogenic
• Vegan (or plant-based)
• Carnivore

…are gaining followers at a fast rate. As consumer behaviors shift with diets, what happens to the legacy nutritional supplement and sports nutrition brands that provide products for these consumers?

What Should Legacy Brands Consider First

The first question all Big CPG brands should ask is “are we dealing with a fad or a trend?” A fad is not worth planning strategy and executing on in a meaningful way. A fad will be short lived, and most customers will return to you after they realize that fad isn’t effective or cool anymore. On the other hand, a trend is something that should be taken seriously. This is something that has proven to have some staying power because of effectiveness or it has momentum in social and popular media. This is where an additional decision needs to be made in the strategic map.

Attack a Trend or Not?

The problem in this question is universal because in today’s fast-paced go-to market world, there will be digitally-native brands that are getting in and out of trends (and fads) with less risk layers. These digitally-native start-ups will either eat big pieces of market share if they are successful or will be so numerous that market share will be lost by a “thousand small stabbings.” The answer to this question is not universal to legacy brands. I would likely advise Glanbia differently than Post or Kellogg’s and those would be completely different than Premier Nutrition or Universal Nutrition.

Regardless, can one of these legacy brands go all-in on Vegan, Keto, or any other emerging trend or do they have to create separate brands?

This is a generalization, but I would suggest it if these line extensions still align with brand’s values and messaging and won’t dilute the core products and alienate the base customers. If not, I would advise the legacy brand portfolio to start separate brands and start with testing online first until you move them successful tests into more mature FDMC channels.

The Catch-22 for Legacy Brands

If legacy brands decide to attack trends, they will now have product offerings to compete to earn new customers or keep existing ones that are leaving the brand for more specialized products. The Catch-22 of this strategic move is that the complexity of the business will undoubtedly get worse. It is also a bit counter-intuitive to the culture of legacy brands and portfolios because its risky to follow trends and try to innovate without knowing if you will get the market returns needed for your investors (either public or private equity).

The Catch-22 for Consumers

On the positive side, more specialized product offerings from legacy brands give trusted choices. On the other hand, this makes for more noise in the market because even more digitally-native brands will jump into the trends when they see validation from larger companies. This is a perpetual cycle that has created a proliferation of new CPG brands and products in just about every category.

Why Do I Believe This is Happening?

Here is the scariest thing to consider, the world will continue to get faster, competition will be even more astute, and differentiation of life will get more diverse from all the great technology that we all love.

Low Barriers of Entry to Distribute (Amazon and D2C) — this is obvious and can’t be understated today. With a few clicks of a mouse, you can create e-commerce websites, Amazon listings, and get your products up for sale nationwide. It will only be faster and easier to sell things in the future with messaging apps.

Low Barriers of Entry to market nationwide (social media) — another love/hate with business professionals is social media. With a few clicks of a mouse, marketers can target the smallest areas of human personalities to achieve a selling intent. This is a massive difference from the mainstream media buys that yielded large impressions but never yielded the detail to provide specialized products at scale.

Thought leadership causing fractures in market — people like me (OK, not me specifically) are looking to get attention. Because of that, they need to create NEWER, BIGGER, CRAZIER content to get you to pay attention! This is and will continue to cause more specialized everything as social influence gets bigger and more powerful in the economy.

My Advice to Legacy Brands Today

Re-frame your expectations. Operationally, ensure your company is set up for speed and risk and manage those decision areas like an incubator and not in the normal decision tree of the portfolio. You will want to do that because you need different win/lose or risk metrics that shouldn’t be the same as your core. Financially, assume margins will shrink for your core with increased competition but keeping nimble in your specialized innovation will keep you relevant. Communication wise, assume more is more and don’t get romantic on super curated creatives because mind-share is very important, and consumers won’t remember small details over time. Finally, things like extended product and brand life cycles will become less and less and that’s OK, embrace death and creation with your ideas.

I also did a partner YouTube video on this subject with PricePlow that you can watch here — https://www.youtube.com/watch?v=iwTUifnvaoI&t=17s

If you guys enjoyed this article, let me know in the comments. If you want to connect, feel free to reach out on LinkedIn or email me (address is in my profile). Thank you for taking time out of your day to read this article.