According to a joint study by the Boston Consulting Group and IRI, America’s largest consumer brands lost nearly three percentage points of market share from 2011 to 2015*. Three percent may not feel like a lot, but when you consider that the US food economy is nearly a trillion dollars in size,
We’re talking about billions of dollars shifting away from the big brands many of us grew up with toward new brands and even new types of food.
In the case of our food system, the entrance of new players and new directions is a good thing because while there are numerous factors that impact life expectancy, it’s probably safe to say that many people’s diets and lifestyles have been moving in the wrong direction. In the 1950’s the United States ranked 13th in average life expectancy. And yet despite all the educational and technological advancements we’ve made in health and science over the past 60 years, when the United Nations released their 2015 life expectancy rankings, the US ranked 38th. We were tied with Lebanon, a country with one seventh our per capita income.
The nation’s largest food companies now face competitive pressure from two different directions.
From one side, there is a movement toward simplicity — simpler recipes, fewer ingredients, less processing. Included in this wave is the shift toward what consumers perceive to be less complicated, transparent agricultural systems — ones that rely less on synthetic inputs, such as artificial ingredients, pesticides, hormones, antibiotics or genetically modified organisms. Within this shift, there is also a group of consumers seeking out local, smaller, craft, or artisanal producers.
A nice way to label this shift toward simpler foods is “the undoing of food,” a term I first heard from the founders of Back to the Roots (who trademarked it). Back to the Roots offers a line of ready to grow products allowing consumers to grow their own mushrooms, herbs, or tomatoes at home, and also a new line of organic breakfast cereals that are made with only three or four ingredients.
Of course, other companies playing in this space include Honest Tea, the company I co-founded, with its emphasis on simple ingredients, and a transparent (USDA Organic and Fair Trade certified) supply chain. The recipes for Honest Tea continue to be simple enough that I can still brew most of them in my kitchen, as I did with the first samples we sold into Whole Foods back in 1998.
At the same time, and from the opposite direction, there is the “re-doing of food” — a process whereby entrepreneurs take on existing categories and seek to reinvent them in a way that improves on the incumbent. Fairlife Milk is one example, creating a value-added milk by concentrating the best components and removing the less desirable ones, resulting in more protein and calcium, with half the sugar and no lactose.
Food can also be redone to address a diet, taste, health or environmental shortcoming. Soy milk was the first popular attempt to improve on some limitations of dairy milk. Almond milk sought to improve on the taste of soy, though it lacks the protein content of dairy or soy. And in the latest re-doing, there is Ripple Foods(on whose board I sit). Ripple is a plant-based dairy substitute that uses pea protein to deliver the same protein of dairy milk, along with a smooth creamy taste.
And of course in the protein category, there has been a proliferation of plant-based protein substitutes. Beyond Meat (whose board I chair) has just launched the Beyond Burger in dozens of Whole Foods stores around the country. It is the first plant-based burger to be carried in the meat section of a grocery store, and one of the reasons that Tyson Foods recently invested in the enterprise.
Companies like Ripple and Beyond Meat have numerous PhD scientists on staff who are analyzing the physical and chemical properties of plants, seeking to utilize them in new, novel, and patentable ways.
Now it’s fair to ask, how can both of these food categories, which seem to be contradicting each other, be growing in the natural food channel? Why would consumers seek out simpler food options at the same time they are purchasing science-driven solutions?
First, it’s important to recognize these trends aren’t mutually exclusive. Consumers’ willingness to try new foods is often driven by health or environmental concerns.
But whether it’s undoing or the redoing of food, the biggest determinant for repeat purchase is taste. Protecting your health, or that of the planet, goes down much easier when the food tastes delicious.
It’s also worth noting that both of these approaches are not typically in the repertoire of most big food companies. In an effort to catch up, many have created their own venture and incubation funds, which allow them to participate in this growth, either by investing in the un-doers and re-doers, or acquiring them altogether. Some of the more well-known examples include General Mills’ 301 Inc., Campbell’s Acre Venture Partners and Coca-Cola’s Venturing & Emerging Brands Unit.
These investment vehicles often bring together unlikely bedfellows, pairing organic food entrepreneurs with a multinational. But the results can be powerful. As we approach the tenth anniversary since Coca-Cola’s first investment in Honest Tea, it’s worth noting that our organic, Fair Trade certified brand is now almost ten times larger in sales than we were when Coke first invested. We are also proud of the role we have played in democratizing organics. Back in 2007 our drinks were sold in about 15,000 stores, predominantly natural food stores on the coasts. Today our drinks are available in more than 125,000 accounts, including Wendy’s, Subway, and Chik-fil-A. And our purchasing of organic ingredients has grown commensurately: we bought 700,000 pounds of organic ingredients in 2007, having grown to more than 15 million pounds in 2015.
While I can’t predict exactly where we’ll be in another 50 years, here are a few safe bets. Transparency and authenticity will not go out of fashion. How we define them may change — vague marketing claims such as “natural” and “healthy” will lose value. The environmental footprint our food produces will become more relevant, as consumers seek to understand how much water and energy are required to bring it to our shelves.
Even though election season has passed, consumers still have the chance to vote with their dollars three times a day. Whether consciously or not, every meal we choose for ourselves and our families has a direct impact on farms and farm workers in our country as well as tea gardens in India and sugar cane co-ops in Paraguay. Unless we’re on a hunger strike, this is one election we can’t sit out.