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Recession Coming? Now’s the Time to Be Bold & Smart

It seems like every news outlet is full of doom and gloom: inflation, rising interest rates, a likely impending recession, global food scarcity, war. Media outlets are feeding our sense of despair — their business model is built on keeping us distressed so we tune in — and so society’s malaise is self-reinforcing.

Here’s the thing: We’ve lived through similarly tough times. Like, two years ago. Remember, in June of 2020, people were dying, businesses shut down, the whole world stayed home. But by 2021 the economy and the job market went into hyperdrive.

While corporate CEOs are bracing for recession, plenty of us in the food and beverage industry know, based on recent experience, that the next slowdown won’t last forever. We know that ultimately we will be OK. The normal ebbs and flows of our markets are just ebbing and flowing more abruptly and frequently these days.

Your leadership team may be tempted to lay low and wait this out — to “hunker down” (to borrow a phrase from 2020). But, as we recommended two years ago, now is not the time to sit idle. It’s the time to thrive.

Our advice to brands and businesses: Instead of panicing, use this time to discover, rekindle, or invent radical strategies that put daylight between you and your field of competitors. Get ready to capitalize on the opportunities that your insight and marketplace circumstances will create.

Fortune favors the bold (and well prepared). A solid brand foundation will serve you now more than ever.

This All Feels Really Familiar

The pandemic, you may recall, caused a brief recession in the first half of 2020. And, you may also recall, consumers exhibited confusing behaviors not unlike what they’re showing now. They didn’t stop spending, but shifted dollars. Experts are predicting a similarly short and shallow recession in the coming months; the key difference now is rising interest rates.

What did we learn from 2020’s mini recession? That the brands that won took their bravery pills and got to work.

Mega brands like Frito-Lay and PepsiCo exploded in every way, doubling down on product innovation and channel strategy. They got nimble in ways they hadn’t before and adopted entrepreneurial thinking — because they had to. Huge segments of their business, like restaurant and commissary sales, shut down literally overnight.

Mid-cap brands did the same. Some adjusted pack sizes, tweaked product formulations, or invested in online selling in response to shifting consumer buying habits and supply chain challenges. Massive disruption meant that anything was possible. It created the conditions for radical experimentation and breaking the old ways of doing things.

The brands that grew in sales and relevance over the last two years are the ones that took a long view of the game and started to ask, “What’s stopping us from doing X?” and “What would happen if we did Y?” They got serious about innovation and omnichannel sales, and then did the creative work to back that up. The winners had new plans, new products, and new outlets in just 3 or 4 months.

Remember? You and your team lived through this just two years ago.

So lean into the coming recession with the same mentality you adopted at the front end of the pandemic.

Take Advantage of the Uncertain Economic Picture

Whether you’re an early-career marketer or tenured enough to have led and survived at the helm of a brand in 2008 and 2020, you need to understand that this is the best time to be planning for competitive advantage (other than lower prices). It is the time to connect the dots, so your go-to-market strategy truly is omnichannel and oriented toward growth.

Brand relevancy is recession-proof.

So what are the four things food and beverage brand marketers must do now to ensure success as we move into 2023?

Understand current consumer behavior.

In our society, people want what they want when they want it — and they have enough self-confidence to figure out how to make it happen. If they want it they’ll buy it. Belt-tightening is hitting big-ticket items where rising interest rates are creating pain — major purchases like homes and cars and vacations — not so much what consumers put in their shopping carts once a week. In this time of uncertainty, consumers are using food, beverage, and wellness products to feel connected and relevant. And they’re sticking with their preferred brands. (Just look at Q3 2022 earnings in the category.)

Our recommendation is to lean into this consumer behavior. If you panic, you’ll lose the opportunity. Smart brands have learned that they can take advantage of the marketplace when it gets soft. When consumers are abstaining from larger purchases, leverage that.

Shift your messaging to meet consumers where they are today. Help them imagine how good they’ll feel when they spend time with your brand. Build a marketing plan that doesn’t go cheap or play on their pain, but that points to the hope and self-reliance and self-worth they’ll gain when they’re with you. And recognize that in this climate, shoppers are open to trial. Use packaging and point of sale to catch their attention.

Be proactive about innovation.

If the supply chain outages in 2020 prompted massive changes to your product lineup, borrow that same “what can we make now?” mindset and apply a proactive, not reactive, lens. Let your brand strategy guide your product innovation process. Look at 18-month, 36-month, and 5-year

horizons and use scenario planning to predict what your brand will be and who you’ll be for — and what you’ll need to be making for those people. Move fast and be brave.

Build a smart retail strategy.

Again, consumers are buying products that make them feel good and exploring new options. So we’re advising the brands we work with to invest strategically in placement in retailers where you know your current and prospective audiences shop. People are going back to brick-and-mortar stores and their impulse-buying habits; you have an opportunity to hold onto your current audience and gain new converts — or to lose them because you’re not paying attention and responding to their needs. Make good friends with your retail partners so you can work with them on placement and marketing; they can be your brand’s biggest advocates.

If fear and desperation drove brands to act nimbly and strategically in 2020, let bravery and intention guide you now. We tell clients all the time: When you’re making bold, visionary progress, that scale of change can feel scary to your team. So make sure your internal people fall in love with your plans — so in love that they’ll push through any obstacles they face in bringing them to fruition.

Our superpower is giving brand leaders the confidence they need to make seemingly risky moves because they’re deeply rooted in the brand’s mission and vision. If you’re looking for the right path during a time of uncertainty, we’re happy to be your team’s guide. Let’s talk about what this means for your brand.

David Lemley

David was two decades into a design career with a wall full of shiny awards and a portfolio of clients including Nordstrom, Starbucks, Nintendo, and REI. His rocket trajectory veered when his oldest child faced a health challenge of indeterminate origin. Hundreds of research hours later, David identified food allergy as the issue and convinced skeptical medical professionals caring for his child. Since that experience, David and Retail Voodoo have been on a mission to create a cleaner, healthier, more sustainable food system for all.

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The Formula for Taking DTC Brands to Brick-and-Mortar Retail

You’ve got a killer product, a packaging system that looks fantastic on social media, a cohort of fans who flock to your site and gobble up every new flavor you drop, and a pile of data on those customers. You’ve got a thriving direct-to-consumer (DTC) brand. Good on you!

DTC is a great proving ground for start-up brands. But the costs associated with delivering a top-shelf consumer experience are skyrocketing: shipping costs, marketing expenses (social media, influencers, retargeting), and raw materials. And while we don’t think the channel’s going away in the near term, we believe it’s time for brands to shift their focus from being a darling to a few (we call this Dominant by Default in the life cycle of a brand) and move to the bigger, real-er world of in-store retail where billion dollar brands are made, and the fakers die.

We are advising the DTC brands we work with, “Get thee to retail.”

How Does DTC Success Translate to IRL Retail?

The short answer is, what you think you know about your customers is not gonna get you there.

Not all DTC 1-to-1 marketing data translates into bankable audience insights. We have seen it lead smart teams into complicated channel transitions because they’ve been deceived by past success —

1) They thought they had a brand, when in reality they had a product lineup.

2) They thought they knew their audience, but really they projected their own wants and desires into an audience profile.

Products don’t matter as much as promises. And groupthink and cognitive bias are brand killers.

Reaching consumers is so much easier via DTC and ecommerce channels than through brick-and-mortar because you’re fully in control. You tell your story through artfully curated social media photos, you pay to attract visitors to your site, you entice them with long-form content about how great your products are. Then, when they buy, you overspend on a sexy unboxing experience and free shipping, hoping that the lifetime value of this handful of die-hard fans will become your ticket to the promised land of preference.

But (or and) even though this channel has boasted 10 years of strong growth, at the peak of the pandemic DTC was still 84% below total retail sales. And it’s been steadily declining since we have been allowed to go out again.

If you want to go big, it’ll take more than your customer data to get you there. Every leader and marketer working on DTC brands has access to their own loyal fan base’s input, preferences, and shopping behavior. But just like all syndicated and primary research, this data can only look backward.

Plus, your current fan base is too insular. Consumers think they have an outsize influence on other people’s buying habits because they’re living in an echo chamber – and the brands that listen to them are living in the same echo chamber. You’re missing millions of people who could love you in the future because you’re focused on the thousands of people who love you now.

So how do you translate this tiny little star into a galaxy of customers?

The Formula for Taking a DTC Brand to Retail

There’s a formula for turning DTC traction and insights into a strategy to reach velocity on shelf:

Audience + channel strategy + positioning, with packaging as the icing on the cake.

(How do we know this works? We guided HighKey from a DTC startup with tons of potential to explosive retail sales in just 6 months.)

So let’s break this formula down.

Audience

When you start in the DTC channel, you’ll know deeply who your audience is. In fact, it’s a valid reason to launch a brand this way: not to make money, but to gather consumer intel.

But — and this is a big but — online consumer data gives brand leaders false confidence. Why? Because you’re paying money to get people to your site, narrowing your audience by persona, and communicating highly specifically to them. Many leadership teams and marketers think that the online buying audience will scale. Just because a hard-core workout type buys protein powder on Amazon, that business isn’t scalable beyond that microgroup.

Three things will help you get beyond your current fan base:

1) additional data (SPINS, IRI, Numerator) that will help you understand who to target in the retail environment

2) an experienced navigator who can interpret that data to help you find net new consumers (that’d be us)

3) a solid brand strategy that will align your mission, audience, and product lineup.

Channel Strategy

It’s not just a matter of where you sell; it’s about the order in which you proceed into different outlets. Ultimately, universal acceptance requires that your brand be available in all kinds of channels, but the order in which you move is important. Success in DTC will have left clues about which sequence of retailer growth makes the most sense for your brand.

Audiences expect certain types of brands in certain stores. If you start out in dollar stores, you can’t then go sell at boutique or specialty retail. Your reputation as a low-cost offering will precede you, and you can’t then up your price and target audience. If you get discovered at Costco, it’s hard to swim the other way.

You may not be a mass-market brand, and that’s OK. An essential part of brand strategy is defining who you are not for. But if you aim to reach a bigger and bigger audience, best to start at the small end of the funnel. When we built a channel strategy for our client Essentia, we led them carefully from specialty food retail into big-box chains. Consumers are delighted to find Essentia at Walmart because they’ve already bought it at Whole Foods.

Positioning

Positioning is an extension of your strategic foundation. It’s the act of saying, “Here’s our value proposition, our reason for being, and what we make.” Let’s agree that your success in DTC means that you have considered and are using brand positioning.

Once you define and deeply understand your audience, you build different personas. For Essentia, we broadly defined the brand’s audience as “Overachievers” and then created personas around different types of overachievers: athletes, people who do physical work, musicians, etc.

Positioning involves making tough decisions that go beyond conventional messaging. Who do you want to reach, and how do you want to reach them? The transition from DTC to retail is an ideal time to re-energize brand positioning as part of a deeper strategy to reach a wider audience in pursuit of growth.

Packaging

How you look on shelf is the icing on the cake, the inevitable visual outcome of the world you’ve built around the brand. If there’s any hesitation or conflict about the package design, you’ve missed something.

What Do Retailers Need from You?

No doubt, success in DTC will open some doors for your brand. Retail category managers probably know who you are. But they need more than a few months of Amazon or proprietary sales data.

They want to know that you have real audience insight — not just for your own products, but for how their shoppers will adopt your brand. And not just for your niche online buyers but for a larger universe of brick-and-mortar shoppers.

They’re also looking to see that you have a long term game. And you’ll need to convince them that you know the category well and that you’ll invest in their channel – their job is at stake here, too.

Taking an online darling into retail stores requires a hell of a lot more than a cool design, a few diehard buyers, and some swagger. We’ve done this before, with great success. So, if you’re ready to make a power move, let’s talk about how we can help you.

David Lemley

David was two decades into a design career with a wall full of shiny awards and a portfolio of clients including Nordstrom, Starbucks, Nintendo, and REI. His rocket trajectory veered when his oldest child faced a health challenge of indeterminate origin. Hundreds of research hours later, David identified food allergy as the issue and convinced skeptical medical professionals caring for his child. Since that experience, David and Retail Voodoo have been on a mission to create a cleaner, healthier, more sustainable food system for all.

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What’s the Problem: Your Brand Strategy or Your Marketing Tactics?

Your latest campaign isn’t driving the velocity you expected. Instead of growing your sales, the new flavor you’ve introduced is cannibalizing your legacy product. Your leading retail outlet is preparing to launch a private label version of your offering.

If your food or beverage brand is facing headwinds, do you know if the problem is your marketing tactics? Or your brand strategy?

To find a fix, you need to understand the cause.

Identifying Tactical Problems & Fixes

If your sales and marketing teams are throwing a bunch of “stuff” against the wall to see what sticks, it can be difficult to isolate what’s working and what’s not.

Let’s look at some common problems that arise from sales and marketing tactical misfires:

  • Lack of awareness — you struggle to reach beyond your core audience of longtime fans; while they’re loyal buyers, they aren’t going to grow your bottom line.
  • Emphasis on product attributes — your messaging leads with features and benefits, not who, what, and why you exist. You’re on your way to becoming a commodity if you don’t retool your consumer communication.
  • Product cannibalization — your new flavors, sizes, or packs are eating away at your strongest offerings. When you emphasize attributes, not mission, you’re likely to grab consumers’ attention only with something shiny and new.
  • Placement and pricing friction — your products only move when on deal. Again, if your marketing doesn’t shout your brand’s mission from the rooftops, the consumer thinks, “well, this is a cheap option this week” instead of, “I need this brand in my life.”

To address a lack of consumer awareness, you might start with research (a competitive audit, category audit, and audience analysis) and then evaluate and refine your messaging based upon those insights.

If a marketing review reveals that your messaging is overly focused on your products’ attributes (Low carb! Now in vanilla!), then you need to retool your communication to explain your features and benefits through the lens of the brand. Let the brand’s WHY lead the dialog.

When you have a product cannibalization problem, the tactical fix is pretty straightforward: Develop the discipline to say no. Don’t make more varieties just because you can. Use consumer research, flavor trends, and retailer insights to anticipate consumer demands beyond just a copycat line extension.

Finally, if you’re facing pressure on pricing and placement, then leverage your consumer insights to help your retail partners understand that your audience is their audience. Knowing who your consumer is and how the brand fits into their lives will change the conversation about placement and channel strategy.

Brand Strategy Problems & Solutions

While product-specific data might reveal issues with your sales and marketing tactics, broader insights related to your consumer base and your performance against your competitive set are flashing red lights that you have a brand strategy problem.

We’ll dig into these warning signs in a couple of different business categories, and look at some potential strategic fixes.

AUDIENCE

Key indicators:

  • Brand erosion (loss of brand relevance)
  • Loss of key, long-time loyalist consumers
  • Lack of new audience cohorts
  • Misunderstanding among your internal team of what matters to your consumers

Strategic fixes:

In short, there’s a disconnect between your brand and your customers, one that goes both ways. Your team doesn’t understand who they are (or who they could be) or what they need. They, in turn, don’t get (or have forgotten) what you stand for.

Chances are, your company is sleeping on consumer data, ignoring it, discounting it, or thinking the brand is immune to changing consumer preferences. So research is the place to start fixing an audience strategy problem.

First, you need to look backward to understand the audience you have and how you got them, looking at SPINS data, syndicated research, or a Usage and Attitude Study.

Second, you need to look forward to identify an untapped group that doesn’t yet know they need your brand in their world. Decide who you want to reach out to, who you have a right to talk to, who you want to invite into the group — and then find ways to create linkage to them.

Remember: Your brand doesn’t have to be for everyone. If you’re an undifferentiated brand, you need millions of people to care. If you’re a brand with a purpose, you need a focused group of fans, both current and future, to care.

Always, your capital-B Brand — the promise you make and the way you keep it — drives decisions about who you’re inviting into the tribe. Defining a new audience should not change why you exist; why you exist should illuminate the new audience.

RETAIL ENVIRONMENT

Key indicators:

  • You have unhappy retail customers
  • Low velocity means category managers are days away from dropping your brand
  • Your business is not solving your retailer partners’ main problems
  • New competition is taking significant market share
  • You compete on price rather than value
  • You have low profit margins
  • You’re seeing stagnant ACV (Annual Case Volume) in key accounts

Strategic fixes:

Your salespeople are charismatic folks who could sell water to a drowning person. But they need more than personality; they need tools and language to explain why your brand exists and how it fits into the retailer’s universe. Just as you work to win your consumer’s affection, you need to woo your retail partners.

This retail relationship-building effort involves knowing your existing audience and working to expand it. (See above.) Retailers want to see that you’re constantly driving shoppers to their shelves to find your products: More fans for you equals more business for them. Emphasize, too, your brand’s mission and its power to attract devoted fans who’ll seek you out and pay a premium.

Armed with data and brand strategy, your sales team can build partnerships with retailers based on the goal of shared success. When you work as equals, you’ll face less price pressure, threat of discontinuation, or dictation of shelf placement.

INNOVATION

Key indicators:

  • Competitors’ products or services are no different from yours
  • Your product offering is outdated and no longer desirable
  • You’re behind in understanding new industry standards, consumer preferences, and competitive moves

Strategic fixes:

Throwing new products on retail shelves simply in response to trends or competitive moves is a recipe for becoming a commodity — because every other brand can make those same products. Pumpkin spice is not a brand strategy, it’s an opportunistic product play that may get you a spike in November but is not sustainable.

When you anchor R&D to your brand strategy, you’ll make things that only you can make. Things that are so attuned to your fan base’s needs that they can’t say no.

Consider the promise your brand makes and and how you keep it: What items in your current lineup deliver on that promise? Are there outages or opportunities that you’re not serving? Where do you have permission from your audience to introduce something new? That’s the target area for innovation.

MISSION

Key indicators:

  • You’ve lost track of (or never identified) your brand’s mission: why it exists beyond just making a product
  • You have difficulty finding and keeping talent
  • Your product offering doesn’t match its promise

Strategic fixes:

Really, there’s only one thing to do if the brand does not stand on a strong, defensible mission: Go to Chapter 1 of our book Beloved & Dominant Brands and do all the homework.

Without a mission, you shouldn’t be innovating. Without a mission, you’re selling to the masses instead of singing with the choir. Your competitive advantage isn’t your product features and attributes, it’s the flag you’ve planted in the sand.

Without a brand strategy built on a singular mission, the savviest marketing plan and the most persuasive sales team won’t move the needle.If your brand is struggling with strategy, that’s our superpower. Let’s talk about what you need.

David Lemley

David was two decades into a design career with a wall full of shiny awards and a portfolio of clients including Nordstrom, Starbucks, Nintendo, and REI. His rocket trajectory veered when his oldest child faced a health challenge of indeterminate origin. Hundreds of research hours later, David identified food allergy as the issue and convinced skeptical medical professionals caring for his child. Since that experience, David and Retail Voodoo have been on a mission to create a cleaner, healthier, more sustainable food system for all.

Connect with David
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How do I address the market shifts I suspect are happening?

The better-for-you food and beverage categories — indeed, the wider consumer packaged goods marketplace — have shown repeatedly that consumer preferences change unpredictably. And those changes happen more quickly today than even five years ago. For marketing and growth executives, that means simply buying and reading the latest trends report is no longer enough to maintain a competitive advantage.

Marketers and CGOs are tasked with getting more done and having a higher success rate than ever. So they need tools and teammates that work.

Data is important, but anyone can get data. Trends are important, but anyone can buy a trend report. Real opportunity lies at the intersection of the two, along with a competitive and category audit conducted through the lens of your brand’s culture and team dynamics. Information plus analysis equals actionable, category-exploding insight.

Do you have a spidey sense that the market may be shifting right under your feet? Worry that your brand may not be keeping up?

Let’s look at ways to verify or disprove those hunches, and how to act on what you learn to drive business results.

Signs Your Old Assumptions are Incorrect

First of all, your instinct is correct: The market is shifting constantly. Consumers are fickle, even those who are super loyal to your brand and choose your products every time.

Brands can get away with coasting on old assumptions and tactics for a while. But eventually, you’ll begin to see signs that you’re missing market shifts that impact your results. Maybe that award-winning new packaging design system didn’t boost velocity. That massive ad spend didn’t pay off. Social media engagement isn’t translating to real-world sales. (We’ve kinda heard it all.)

So leaders think, “Hmm, this didn’t work the way we thought. It didn’t disrupt our competitors or gain net new customers.” They begin to question their thinking and to recognize that the issue lies up-funnel from creative expression. There’s something much more human going on in the market.

How can you make better hypotheses about your brand positioning and product offering that account for those shifts? How can your brand thrive in a world that keeps proving to us that forecasting what’s coming is impossible?

Consumer Data is Only the Start

Begin by understanding where and how to get (and keep) the pulse of your industry beyond SPINS and IRI data. Market data are backward-facing views of the market; they don’t predict future consumer demand. (Plus, everyone in your category has access to the same data.)

A competitive brand traction audit is a good place to start. Different from a category audit (which focuses on how your brand stacks up to others in your retail set), a competitive audit surveys the full landscape of the consumer’s life your brand lives in. It examines what else a consumer might spend their dollars on if not on your products. Would they buy a snack for their kids instead of buying your product for themselves? Buy a high-end skincare product instead of your nutritional supplement?

Our competitive audit often starts with purchased category and demographic data. Then we benchmark the brand against seven key marketing disciplines to understand how it succeeds, or doesn’t. (Interested in learning more about these seven factors? My book Beloved & Dominant Brands dives deep into them.) This rigorous examination often reveals problems brand leaders didn’t know they had and opportunities they didn’t know to look for.

Know When to Trust Your Gut

Even the veteran CPG marketers we work with can start to lose confidence in their own decision making over time, because the tactics they know and trust start to fail. So they hedge. They and their teams overthink consumer testing and design studies to verify their own point of view. They rely too heavily on data, become paralyzed, and take way too long to make decisions.

Trusting your gut can be useful, especially in highly uncertain circumstances where gathering more data and analysis simply will not change the evidence. When your team is tasked with creating the next new horizon for your brand, too much data can become debilitating.

So how do you learn to build the “trust your gut” muscle?

First, understand the type of problem at hand and be candid about the level of unknowability. Consider this: A true category disruption (for example, determining a new category or ingredient or seeing when dietary trend will become a real opportunity) comes with a higher degree of unknowability than line extending a successful product in pursuit of incremental growth. Routine brand evolutions are typically based upon high probability of success with clear and minimized risks.

By contrast, when you’re reaching for an audacious goal with a high degree of unknowability, attempting to reassure your decision making with consumer testing and data gathering beyond what’s readily available is unrealistic and damaging. Not only does this overanalysis delay important decisions, but all the second-guessing can also demoralize your team.

Next, understand the corporate cultural context. If your company values charts and graphs, KPIs, mental models and canvases, by all means use those to emphasize what can be known (for example, stage-gate methodology and execution planning).

Then you can better explain known, vs. unknowable decisions that need to be made and speak about the areas that require gut instinct. And then agree to respect using your gut as another input based upon the myriad of experiences that, in addition to the available KPIs and research available, have gotten you here. When you’re confident in your brand promise — its mission to right a wrong or serve the consumer in a meaningful way — then data should verify, not make, your decisions.

Your brand strategy tells you who you are. A competitive audit shows you where opportunity lies. And data says, “yep” to your decisions.

With that trio of inputs, your team can act in an entrepreneurial fashion. Your innovation process will be more focused and product launches more successful. Your organization will be more nimble and less beholden to the way you’ve always done things.

One closing note about consumer data: When we’re advising food and beverage brand leaders, sometimes we know we’re on the right track because there’s no data there. A lack of consumer research or syndicated reports can indicate there’s a huge opportunity that’s ready to explode.

That’s when we know we’re onto something.

If you have a hunch that an opportunity is ripe for the taking and you’d like us to help verify your thinking, let’s start a conversation.

David Lemley

David was two decades into a design career with a wall full of shiny awards and a portfolio of clients including Nordstrom, Starbucks, Nintendo, and REI. His rocket trajectory veered when his oldest child faced a health challenge of indeterminate origin. Hundreds of research hours later, David identified food allergy as the issue and convinced skeptical medical professionals caring for his child. Since that experience, David and Retail Voodoo have been on a mission to create a cleaner, healthier, more sustainable food system for all.

Connect with David