By Dan Ginsberg, Maveron Sector Advisor, former CEO Red Bull
The seismic shift that has occurred throughout the business world has been felt as strongly in the leading edge of the fast moving consumer product categories as anywhere else – maybe stronger. After all, it is not difficult to understand that, when put under buying pressure, the consumer will stay as closely attached to their tried and true brands, those that they know deliver what they want, rather than taking a “risk” on a new product, even if the price point is “only” $2-4. This has presented problems for innovative brands right on through the value chain from creation through funding, distribution, retail merchandising and, ultimately, the consumer.
What is an Entrepreneur to Do? While there is no doubt that price plays an integral role at a time like this, it seems that price, like a better, greener package, is the ante alone, and not enough right now to move the consumer to a, so-called, riskier purchase. So, as happens in any cycle, we are now seeing brand after brand finding a new path and, in food and beverage, it is definitely functionality. Innovative entrepreneurs are adding a distinct health advantage to naturally nutritious products by supplementing with ingredients that add value in a therapeutic manner, and/or for consumer convenience.
Some beverages, for example, are providing the calcium and Vitamin D that women are being told they need as supplements in their diet. Because of this efficacious movement, the consumer can refresh themselves and satisfy this pharma-type need all in one purchase. Meal Replacement beverages, as well, are seeing good growth, even in these tough times. Those would be the belly-filling, nutritious, great tasting products that also feature the simple, but all important, mouth appeal of a classic beverage. They deliver the protein, or the multi-vitamin, or the carbs that consumers are looking for in an incredibly convenient package that doesn’t require a fork and a knife, or even a hard stop in a time-starved day. It’s so portable; they can even drink their meal while driving.
This healthy-on-the-go movement sees no end right now and so, as I speak with the entrepreneurs who are looking for their next round, or even first round, of financing, I am careful not to discourage them about their own better mousetrap idea, while making certain that I firmly cement in their minds the growing opportunity to move beyond refreshment, alone, and articulate the power of this movement toward functionality. Certainly this is not the only way to success, but look around at all the new products and the numbers speak for themselves. Those emerging brands that feature functionality far outstrip those that don’t. In the case of those that don’t, they had better be healthier, reduced calorie or greener choices.
Just so that we are clear on this not being a beverage-only conversation, the same applies to snack foods. While it is a tough road to hoe for traditional empty-calorie snacks, the nutraceutical approach to snack foods that promise the same healthy value-add as their beverage brethren is working. What began as health bars has leaped into chips, sticks, dips etc. etc. Why not get my daily dose of X while still getting the satisfying crunch I’ve always gotten from my previously-favorite bag of chips. But for a few pennies more out-of-pocket, it’s a no-brainer for many consumers and, especially, for the Mom gatekeeper, who is more studiously than ever, moving quickly down the aisle looking for better alternatives for her family, and herself.
