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Marc DeSandre

Random Thoughts

So for at least the next couple of days, we’re in that weird time period between reflection and anticipation, closing out last year’s unfinished business and preparing for the next year’s challenges.

As I reflect and anticipate, a few random thoughts come to mind I thought would be fun to share.

Some phrases I collected in 2016 are:

The highly alliterative “Cultured poultry”, which is growing meat in machines – it’s not a new idea, nor does it sound particularly appetizing IMHO, but it’s an idea that has certainly been gaining momentum.

“Battle of the Buzz” – In 2016, more than half the states have legalized marijuana for certain medical conditions, and more than half a dozen states legalized recreational use. With craft breweries and craft spirits already disrupting the landscape, the alcohol (and pharmaceutical) companies, are terrified they may lose more market share and have bankrolled the fight against legalization.

And then there are established companies like Constellation Brands considering embracing the weed.

“Aging in place” –  By 2050, I will have joined the more than quarter of the US population who will be 60 and older. For several years now Venadar has observed emerging companies innovating products to enable a higher quality of life for aging adults. The rationalism is that seniors will be more active by addressing everything from mobility, nutrition, safety, home environment and social aspects. Move over Clapper and Life Call, CES 2017 boasts the following, many of whom are addressing the needs of older adults:

  • Health & Biotech – 510 exhibitors
  • Wearables – 881 exhibitors
  • Smart home/Appliances – 1108 listings
  • Personal Privacy and Cyber Security – 108 exhibitors
  • Robotics – includes 341 exhibitors

Asset light – To be a manufacturer, you don’t need machines, or HR, or an office… or employees for that matter. Companies that employ nobody, yet the owner soars – however, some worry it won’t help job growth.

What other things did I find scribbled in my notes that clients and prospects talked about…?

2016 Driveway moment – Favorite story on Marketplace:

Cottage cheese wants to be the new Greek yogurt

Ellen Byron was interviewed about her article “Could Cottage Cheese Ever Be Cool?” wherein cottage cheese manufacturers are hoping that new flavors like cucumber & dill, or maple & vanilla, as well as lower sugar and high protein will bring cottage cheese the same level of attention as Greek yogurt.

Several years ago, we recommended that a client invest in Greek yogurt.  We observed an emerging trend of high in protein, on-the-go snacks and meal replacements, etc.  As of 2014, Greek yogurt  accounted for over 50% of the U.S. yogurt market, compared to about 4 percent in 2008. Our client passed on the opportunity, and has since told us they regretted the decision, never wanting to be “greeked” again.

Based on our work, we know entrepreneurs are typically 3-5 years ahead of major corporations in addressing new market opportunities. If you are only seeing the things investment bankers and VCs are shopping around, are you really seeing the right things? The best things?

What are we anticipating? Folks here at the office are looking forward to helping our current and future clients create venturing arms and connect with the entrepreneurial community, as well as the next season of Stranger Things, Luke Cage and Better Call Saul…

Brands Under Attack

McCormickUnderAttack

Your business is under attack – if you don’t think so, consider this. During a recent conversation, a colleague shared a quote he read from a Unilever VP who said, “I’m not losing share to P&G and other CPG companies.  I’m losing it to small players who are finding niche products.”

The VP has got it right.

Consumer goods companies are facing “death by a thousand cuts.” Brands are under attack. Market researcher Mintel says the number of new packaged goods introduced each year—everything from food to cosmetics—has grown more than 30-fold over the past 50 years. And IRI and Boston Consulting Group report that CPG sales grew to $670bn last year, except half of those sales were made by small to mid-sized companies.

The recent news about Unilever’s intended acquisition of The Honest Company could put Unilever in a pole position in the fast-growing “natural” or “green” cleaning products and diaper market. Honest was created to confront mainstream products that typically use harsh chemicals. More importantly The Honest Company’s Direct-to-Consumer business model with auto replenishment will allow Unilever to build a new platform, extend their existing brands into home delivery, and provide them valuable data to fuel new product development.

Someone is gunning for you

Entrepreneurs recognize unmet needs very early because they are often close to the problem – in the case of The Honest Company, founder Jessica Alba was inspired by the birth of her first child and her own experience with childhood illnesses to create a company that provided safe alternatives to the usual baby products. The current products or services not only work for these entrepreneurs personally, they see a way to make improvements to, or use an existing product in a different way. While they may dream of selling to a Fortune 500 company someday, most entrepreneurs have 2 aspirations:

  1. Become a $100 million company; or
  2. Become a $1BN company

The best entrepreneurs are too busy building their business to participate in competitions, exhibit at trade shows, or generally schmooze. For many successful entrepreneurs, partnering with any big company is not a priority. Recently, cofounder Nikhil Arora said of his start-up food company Back to the Roots, “How do we build in some way the next Kraft? How do we build a brand that outlives all of us, and how is that going to impact the food system that can last generations?”

And then there’s Maddy Hasulak, the Chief Love Officer of Love Grown, who made Forbes’ 30 under 30 by thinking outside of the cereal box – she makes breakfast cereal out of navy, lentil, and garbanzo beans. Maddy states in a recent interview, “We didn’t want to just be a Raisin Bran or a Cheerio; we want to innovate in a category that’s really been stagnant… And so we totally revolutionized breakfast by making the first wheat-free corn-free breakfast cereal, which has higher protein, higher fiber, and they totally taste !” While still working at Wells Fargo, she approached City Market, a subsidiary of Kroger, directly for advice on how to get on their shelves. Within 2 months her product was on an end cap in one of their stores, and within 6 months Love Grown’s products were in 80 stores.

It’s difficult to stay ahead of consumer preferences.

Due to consumers’ rapidly changing habits and evolving demands, consumer packaged goods companies are hard pressed to innovate and offer products that cater to specific tastes or a set of principles. Large CPG companies are hamstrung by their legacy systems and traditions, lacking the nimbleness to deliver quickly. Consumers want products that are authentic, focus on health, contain natural ingredients, sustainably sourced, easy to access and personalized. Deloitte’s American Pantry Study found that 81 percent of Americans will pay a premium for healthier products, and 55 percent are willing pay more for eco-friendly options. Unilever understands this, which is why they are talking to The Honest Company and have acquired Seventh Generation.

How do you anticipate an attack?

We recommend measuring entrepreneurial activity, particularly activity outside of measured channels such as Nielsen and Symphony IRI, while there is still time to do something about them. Where there is smoke, there is fire. For most client engagements, it is not unusual for us to discover hundreds of unique, emerging, independent brands working in the spaces occupied by our client’s brands. For a health & wellness client, Venadar curated a list of emerging and early stage brands across 6 categories who were focused on a common goal: products and services to enhance our aging population’s quality of life. Starting from over 635 companies, Venadar created product portfolios to address the transitions of aging.

Your next competitor will likely be an innovative entrepreneur creating solutions that are more relevant and more resonant with your consumers, and they are creating them more quickly than you. This has already lead those consumers to turn elsewhere. Small players will continue to find niche markets, so it’s important to figure out a way to discover what’s emerging, whether it’s information to fuel a CVC effort, drive strategy or to inspire internal innovation.