Each month I write a feature for Media Post:CPG, an integrated publishing and content company whose mission is to provide a complete array of resources for media, marketing and advertising professionals. This article first appeared on Media Post: CPG in March 2015.
I had to smile upon seeing McDonald’s announcement this week of its plans to add kale as a salad or smoothie ingredient to the menu. McDonald’s also recently announced plans to serve chicken with “less antibiotics.” And, of course, they also announced a 4% same store sales drop and named a new CEO.
At last weekend’s Natural Food Expo, Chipotle’s CMO, Mark Crumpacker, shared with the crowd that there are a lot more ingredients than two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun in a Big Mac. Forty-eight ingredients by his count. Most we don’t know and can’t pronounce. Does sprinkling a little kale on the menu or serving up less antibiotics fix that?
The race is on at Big Food, whether restaurant or grocery, to meet accelerating consumer demand for better-for-you choices. Kellogg acquires Kashi. Campbell acquires Bolthouse Farms. Pinnacle acquires Gardein. General Mills acquires Annie’s. Hershey acquires Krave Jerky. Big Food’s appetite for the much higher growth trajectory of natural and organic brands, along with the face-saving cover they provide at press events and annual meetings, is leading to a land rush of sorts. And that’s a good thing for consumers and manufacturers alike.
1. Because it shows U. S. consumers have turned the corner.They’ve slowly but surely come to an understanding that all that taste and convenience came with a big price: 35+% adult obesity (doubled from 1980 to 2000), 21 million Americans with diagnosed diabetes (tripled since 1980), 37% of Americans with cardiovascular disease. Baby Boomers are changing their diet because they’re coming to grips with mortality. Millennials have adopted BFY diets because they’ve gotten the message.
2. Because it shows Big Food is listening to consumers. Big Food isn’t doing this out of some sense of altruism. They’re paying 3+ multiples of annual sales for these brands because these brands are hot. Joining them by buying them is less expensive and less risky than trying to innovate and compete with them.
3. Because BFY food only works if you eat it. When Big Food buys a natural and organic brand, they do so with the expectation that the high velocity of that brand at narrow distribution (like natural sales channels and Whole Foods) can be scaled at grocery and mass where Big Food has long-standing distribution power. Big Food’s win in expanding natural and organic brands’ reach can also be the consumer’s win — more access to BFY food and, hopefully, lower prices that also come with scale.
Skepticism is both natural and healthy. Can Big Food be trusted to steward these values-based, natural and organic brands? Or will Big Food’s voracious need to reward shareholders inevitably suck the values out of these brands? There will certainly be those that stumble. But most know that the growth and margins they are paying for so dearly today, are dependent on the certifications, high-quality ingredients and fair labor practices on which these brands are built. Good Food is just Good Business these days.
It seems author Michael Pollan’s seven words of wisdom to guide our personal eating habits can be equally well applied to Big Food’s purchase of BFY brands: “Eat Food. Not too much. Mostly plants.”