Newsletter Spring 2012 Issue
TREND SUMMARY – Storm
Clouds on NPE Horizon
2012 Natural Products Expo – West
March 8-10, 2012
This was one of the largest Natural Product Expos that we
recall with a reported 2,000+ booths and 60,000+ attendees.
The show was definitely upbeat and, as always, somewhat off-beat.
This remains the food industry’s major idea incubator, where idea-driven entrepreneurs come
to be born and struggle to survive. The food industry needs this! However, there is a deepening
shadow over this event: impending food-safety driven regulatory compliance requirements,
deriving from the Global Food Safety Initiative and last-year’s Food Safety Modernization Act,
will impose significant constraints on the ability of small companies to introduce and place
products on retailer shelves. Some of the attendees knew this. Most did not. Forget GMP.
Forget AIB. The NPE-WEST organization could do its attendees a great favor by helping their
customer base adapt to this new GFSI and FSMA-defined reality. This show and its attendees
are too important to our industry to allow themselves to be buried into regulatory oblivion!
Ten Major Trends:
Foods for kids. Everywhere. And not just foods: organic diapers and sustainable bath
products, too. This underlines a healthy focus on children.
Gluten-free products and ingredients showed evidence of a maturing proven market
concept. More importantly, the technical knowledge and commitment of food manufacturers and ingredient suppliers confirmed the increasing sophistication of this segment. This trend is here
to stay. Big challenge this year will be if the price of rice flour shoots up.
Coconut water. There was a flood of coconut water supplies. What was hard to discern
was how they differentiated themselves from one another. Thankfully, flavored coconut water
products appear to be making good progress. Potassium imbalance in diet is a real public
health concern, so this trend likely has legs.
Agave, too, is here to stay as a reduced-calorie sweetener, as evidenced by the many,
many suppliers on the floor. The flavor/taste profile for Agave syrup is exceptional. Its high
fructose content, almost twice that of honey, has become an issue for some market
The rise of the cracker. Although an abundance of health bar vendors were still present, companies may finally have realized the market is “beyond saturated” for these products.
What’s the new “kid on the block?”…crackers…composed of a wide range of plant material…
from legumes to seaweed, grains to seeds.
Black soybeans. Said to be more healthful and delivering more antioxidants than the
more common beige soybeans, black soybeans products include the dark outer skin of this
popular protein source.
Algal omega-3s. New suppliers of omega-3s from cultivated algae are entering the
market. Production efficiency (will this translate to lower cost?) and omega-3 fatty acid profiles
(DHA and/or EPA) are two points of differentiation.
Foods as supplements. “Whole foods” have been touted for some time with supplements
such as Alive offering dehydrated veggies, fruits and grains in pill form. Surveys consistently
show consumers prefer nutrients from food and supplement vendors are responding.
Protein. Although protein is the “in” nutrient with a variety of plant proteins emerging in use,
the red meat industry is taking advantage of the trend and positioning products such as jerky
as a health food.
Vegan. Seaweed to specialty oat products, vegetable chips to Indian vegan prepared meals,
products positioned for vegans continue to grow in numbers and variety.
- Daniel Best & Claudia O’Donnell
The 5 Biggest Mistakes in Advertising & Promotions
Claudia O’Donnell, BEST
VANTAGE Inc. senior consultant and former food trade magazine editor, notes the most common and expensive mistakes typically made in advertising and
promotion and how to fix
Promotions and advertising
(P & A) are critical to a product
and company’s success, but how do you maximize the value of money spent? This has
become all the more challenging as communication avenues to target customers
undergo fundamental changes.
The following “Five Biggest Mistakes” address primarily business-to-business challenges;
however, the fundamentals are universal to any P & A campaign.
1. Speak to Your Target Audience.
This is usually the first lesson presented on the first day of a Marketing
101 class; maybe this is why it is so frequently forgotten.
Reasons are many. For example, the energetic, bright young ad execs populating an agency
often have little in common with those targeted in a marketing campaign, especially if the target
is a technical audience. Perhaps the difference is generational, or the audience comprises
engineers and scientists with very different interests and career experiences.
Perhaps the target market has a different language, values or culture than those employed
by the liberal arts- or B-school-trained marketing execs. Examples can be amusing—for
those not involved.
When the California Milk Processor Board translated its highly successful “Got Milk?” into
Spanish for the Latino population, the resulting “Tienes leche?” had a double entendre that
asked, “Are you lactating?”
An international pharmaceutical company is said to have used pictures to convey its product’s
benefits in the United Arab Emirates (UAE). A picture on the left showed an ill person; in the
middle a person taking the medication; and, on the right, the patient looked healthy.
Unfortunately, in Arabic, people read from right to left.
Very recently, General Motors apologized for an ad running on college campuses showing a
bike rider embarrassed for his (economical, pollution-free, healthy) mode of transportation.
In this case, perhaps bright young ad execs should have taken the lead.
2. Don’t Forget the Marketing Metrics.
Metrics matter! Do your homework and put the right value on the market to be reached.
Quantitative data can help determine which part of your P & A effort is “wasted” and which
part is priceless. Metrics help you view your P & A costs as an investment, not an expense.
With thought, campaign costs can be tracked against revenue. Print circulations are better
defined (through publisher audits) than digital, but digital is catching up. A consumer
website’s click-through rates can be tracked against sales. Web analytics installed
(but not used) equates to having no tracking software at all.
Creative thinking can improve the efficiency of print ads: One advertiser ran different
telephone numbers in the various print publications in which it advertised. Calls generated
by specific publications were then tracked.
Ads priced at half the cost in one media venue versus its competitor are a poor deal,
if the ads access less than half the follow-through activity from the desired market.
3. Advertising AND Promotions (or Promotions AND Advertising).
Don’t forget that a two prong approach of advertising and promotions is
synergistic in effect.
Editorial and the advertising community are not divorced from each other. This is truer for trade
media, which is almost wholly dependent upon advertising revenues, than for the consumer
press, which also generates income from paid subscriptions. Advertisers may fail to
leverage the awareness that they generate in ads by not spending a few additional dollars
for PR efforts.
The reverse situation also exists where a campaign is “all P and no A,” as one media person
was overheard saying. Media companies easily track market share by advertisers and may
share it among editorial staff. If the editors know that you are not willing to invest in a product
they believe in (i.e., their own), they will be less vested in yours.
4. Don’t Forget the Influencers.
New food product decision-makers are many… unless the product fails in the
marketplace, of course. Then, they are nowhere to be found.
American advertising, more so than European advertising, is very message-based.
A relationship—whether during dating or a marriage—is easier to maintain when friends
and family approve of the union. So, too, are product sales easier to achieve when awareness
and a positive image is generated among parties or demographics that are not the prime
target, but are influential. One classic example is mothers as “gate-keepers” of children’s
food products (increasingly, children heavily influence family food decisions).
In the marketing of consumer-branded ingredients (think NutraSweet), marketing departments
play a key role in the decision to incorporate the ingredient in formulas as compared to more
generic components. Purchasing, quality assurance and operations…even CEOs…can have
a major say, as well. It can be a challenge to “speak to your target audience” while trying to
influence the influencers.
5. Don’t Forget the Product/Service.
Pretty pictures are nice, but they don’t necessarily tell you why you
should buy the product.
Or, better put, don’t let your audience forget the product or service and its benefits. In the end,
a P & A campaign, no matter or creative, humorous, artistic or striking is of poor quality if it
doesn’t do what it is supposed to do—i.e., develop the brand and generate more sales. Leaving
a lasting, positive impression is difficult enough. The effort is even more difficult when products
and services are not clearly identified. The world is an impression-crowded place, populated
by distracted, busy customers. Making them struggle to discern your message is rarely a good idea.
A clear, concise message always gets attention when it benefits the reader.
Claudia O’Donnell joins BEST VANTAGE Inc.
Claudia O’Donnell, formerly editor-in-chief of
Prepared Foods magazine, brings
her experience in food technology, quality
assurance and food ingredient marketing…
…to the food business and technology consulting team of BEST VANTAGE Inc. (Northbrook, IL). “Claudia made a reputation for herself both as a food technology and nutrition trends analyst and as a marketing and business advisor to companies that sell food ingredients, equipment and services to the food and nutrition manufacturing industries,” explains Dan Best, president. “Claudia adds both breadth and depth to our ability to serve the food and nutrition
technology industry at the technology-business interface.
” O’Donnell will spearhead market and technology research projects and provide marketing and advertising guidance for BEST VANTAGE Inc. clients. O’Donnell spent the
early part of her career as a director of R&D and Quality Assurance with several food
companies before joining the trade publishing industry. She holds an MS degree in food
science from the University of Minnesota and an MBA in marketing from Northern Illinois University.
Toward Point-of-Sale Profitability
Does your company reward its sales people
for contribution to sales or for contributions
to profitability? Yeah, we thought so! What
if you could, in real time, assess…
…how much each sale contributes
to corporate profitability before the
deal is done?
Yeah, sure, we know… a sales representative is
often told how much each sale contributes to the
bottom line. But, does it really?
In our experience, many companies mistakenly
price ingredients to generate volume sales rather
than contribute to bottom-line profitability. In this
business environment, that can be an
Conventional cost-accounting can be very misleading.
BEST VANTAGE Inc. was asked by a major international client to investigate why the
company’snew dietary-fiber ingredient could not seem to turn a profit, even though the
ingredient more than met the gross margin targets. The answer lay in the variable costs—
the company’saccounting system was not capturing all the transactional costs (e.g.,
technical support) allocatable to that specific ingredient. Once those costs were properly
captured, the company realized, to its horror, that it had underpriced its new, highly publicized
market entry, and it was now stuck in a profitless corner—unless it was willing to announce
a very significant priceincrease (see preceding newsletter article on Advertising & Promotions).
Recently, BEST VANTAGE Inc. worked with a specialty food ingredient supplier to develop
a real-time pricing model that would allow the company to make point-of-sale pricing
determinations based upon the sales opportunities’ contributions to profit at the point in
time of the sales agreement. This way, each sales person could rationalize whether or not
a sale should be made, based on whether it improved or hurt profitability, rather than on its
impact on sales volume. This allowed the company to shed contracts that, in the final
determination, did not meet the company’s profitability goals. That is not to say sales
volume is not important—it is! For one, profitability is positively impacted as production
capacity is increased. This, too, is reflected in the point-of-sale profitability model that was
created for the client.
Successful competition is often a process of consistently ratcheting-up small
advantages against the competition over time. One way to do this is to ensure that every
transaction entered into translates into a net contribution to your profitability and letting
your competitors’ “hemorrhage value.”
- Daniel Best
Gluten-free Compliance Challenges
Gluten-free foods are taking off. However,
gluten-free compliance involves more than
FDA standards and buying gluten-free ingredients…
Several BEST VANTAGE Inc. customers have complained about finding gluten in ingredients that were touted as being “gluten-free.” Mostly, this involved grain ingredients.
Typically, gluten-free product developers substitute wheat, barley, or rye and oat ingredients with alternate grains, such as rice, sorghum, flax seed, quinoa, amaranth, corn or millet, using gums and stabilizers to substitute for the gluten. However, cross-contamination of these other ostensibly “gluten-free” ingredients can occur in many ways.
The United Nations’ Food & Agriculture Organization, World Health Organization (FAO/WHO)
Codex and pending FDA regulations allow less-than 20ppm gluten residues in gluten-free
labeled products, but many in the gluten-free industry are pushing for independently-mandated,
tighter standards: the Gluten Free Standards Association (GFSA), the Gluten-Free Certificate Organization (GFCO) and the Celiac Sprue Associations are all pushing for standards that
range from 10ppm to below the limit of detectability, before products can receive their seals
of approval. It is these organizations, not the FDA, that are setting the retail standards.
Problems can arise due to a number of reasons:
Cross-contamination of gluten-free crops in the field. If the grains are grown
near wheat crops, pollen can jump fields. In addition, leftover wheat, barley, oat or rye seeds
from previous harvests can grow intermingled and be harvested simultaneously with
gluten-free grain crops at harvest.
Contamination of agricultural harvest and storage equipment. This
happens more often that you can imagine. This makes traceability to the agricultural
source even more important.
Contamination of bulk shipping containers. Rail cars and bulk trucks are typical
culprits. Make sure theyare properly washed out, as part of the shipping agreement.
Improper cleaning of grains. Wheat, barley, rye or oat seeds can inadvertently be
mixed with gluten-free grains. These can break or be ground to flour dust during shipping
and handling, resulting in gluten “hot spots.” The only way to remove these residues is
by properlycleaning the grains before accepting them into your receiving bays.
There are a number of relatively inexpensive ELISA-based, rapid-test kits for gluten available
in the marketplace, for conducting spot-checks in incoming ingredients or outgoing products.
- Daniel Best
Global Food Forums
Global Food Forums, a new food industry
in-person events provider, offers food ingredient
and technology suppliers an opportunity to
differentiate themselves …
… while cementing their relationship
with their customers.
Sophisticated companies demand accountability to
evaluate the return on their marketing investment.
In-person events are highly quantifiable and provide a very tangible return. This focused effort
is in contrast to more generic and broader forms of customer interactions. Simply said,
in-person events offer unique opportunities for private networking and highly cost-effective
personal sales interactions with pre-qualified attendees.
Customized in-person events also provide enterprises the opportunity to enhance their brand
and further their organizational goals by delivering educational information to a targeted
market. For example, a food ingredient vendor may offer information on product functionality
and applications; provide insight into key trends; and/or offer product development solutions.
Consider, for example:
· A conference focused on resolving specific challenges facing the food industry.
· A hands-on applications workshop event with rich networking opportunities.
· A global conference offering consumer and regulatory trend information.
Global Food Forums provides a full array of event services personalized to its clients’ needs.
By outsourcing conference projects to a trusted and experienced partner, such as Global
Food Forums, companies benefit by freeing up scarce resources. This allows companies
to concentrate on their core business activities; increase sales and market share; enhance
customer loyalty; and carry out organizational goals.
© 2012 to BEST VANTAGE Inc.