Category Archives: CPG

The Inevitability of Global Online Grocery

Recently I came across a discussion on LinkedIn regarding online grocery shopping that really got my goat. The individual in question was actually an analyst for a very well respected research firm, making a sweeping statement about people that had no basis in truth. In fact, the statement was that women in India – where he is from – will never shop online for groceries because they would miss out on the social aspect, plus, he added, they are not web savvy. A quick Google search brought up the interesting statistic that, in fact, housewives and college students are the top mobile users in India according to Telecom Watch. Add to this the phenomenon of mobile creating a need for new goods not readily available at small rural shops and you have a perfect recipe for online grocery’s success. While my idea of the inevitability of online grocery may seem like a stretch – at least my ideas have some basis in real research – not pure opinion.

I was very curious, having read about online grocery, at how much people were actually spending on online grocery and at what online grocery sites they were spending their money. Only a handful of global grocery retailers have released their annual figures – for most online grocery is fairly new. Also, a handful of the top 25 grocery retailers in the world do not offer eCommerce to their customers. So I took Boston Consulting Group’s $36 billion figure and the estimate (3%) of online grocery’s contribution to revenue and deciphered this chart, showing how big a piece of the pie each grocery retailer has of the online space. It is by no means perfect, but since actual figures for most have not been released – it provides a rough idea of who the top online grocers are. You can read more details about the top online grocery trends happening Globally here in my new Slideshare.

Top Online Grocers

 

Is eCommerce Disrupting the Consumer Packaged Goods Market in China?

Global Consumer Goods Brands Disrupted by eCommerce in China

The findings of Kantar’s Worldpanel Brand Footprint Ranking surprised me last year, when I was just starting to learn about Global Consumer Packaged Goods brands. In my blog for Clavis Insight I described my experience learning about the significance of the brand Maggi for the first time. I wrote in June 2013: “The #1 status of Maggi reflects the world economy, where China is the world’s most populous country with the fastest growing economy. China’s ecommerce sales grew 65% between 2011 and 2012 and it is set to overtake America’s according to a recent report by the China Internet Information Center (reported in TechCrunch).”

These were foreboding statements. First of all, China has overtaken the US in eCommerce sales; secondly populations in China and the continent of Asia are indeed growing, and increasing their spending both offline and online – but they’re actually spending more on regional brands than ever before.

Kantar Worldpanel’s Brand Footprint Ranking 2014 report states: “For global food and drink brands…achieving …local domination in Asia is difficult. Local Asian brands in the Brand Footprint ranking grew at 3.1%, faster than the growth for global brands in the region (2.6%) and ahead of Latin America (1.2%). Globally, the world’s most chosen FMCG brands grew their footprint by 1.7%.”

The 10 Most Chosen Brands in Asia revealed by Kantar Worldpanel’s Brand Footprint study, followed by their consumer reach points in millions, are:
1. Colgate 2,111
2 Mi Sedaap 1,902
3 Indomie 1,820
4 Lifebuoy 1,652
5 Nescafé 1,328
6 Pantene 1,022
7 Kapal Api 944
8 Maggi 940
9 Surf 922
10 Lux 913

The Kantar study continues: “In China, foreign brands lost share in 15 out of 26 categories, notably in oral care, cosmetics and juice. As Chinese businesses become more market-oriented they are leveraging their extensive knowledge of consumers’ lives and acting boldly in response to local trends to establish a strong brand affinity.”

What I speculate here is that eCommerce could be a factor in this loss of market share. Kantar briefly discusses digital in its report, predicting that online consumer packaged goods sales will rise to 5.2% of the market by 2016 in the UK, France, US, China, Spain, Taiwan and South Korea. There is simply no research  – or at least egrocers and eCommerce sites have not released it yet – on exactly what percentage of their consumer packaged goods sales are online Globally. (Note: Tesco is an exception, they are one of the first egrocers to have released their online grocery sales.) If Kantar had those numbers they might learn that eCommerce may be disrupting the growth of Global consumer packaged goods brands. Why?

Take a look at my brief report “Online Grocery Shopping in Asia” – on slide 14 in bold print I write “Most eCommerce occurs on digital marketplaces.” Consumers are buying consumer packaged goods at those digital marketplaces, and this is most likely aiding in the 3.1% growth of local Asian brands.  No one has the exact numbers right now, but the evidence is right there. John Fang of the China market research group describes the current scenario: “Worries about pollution may be making consumers shift to online shopping even faster. So brands absolutely need an online presence to reach their customers where they are looking to buy.”

A Super Quick Look At Online Grocery in Asia

Online Grocery in Asia

A quick walk through the business section of a fairly reputable bookstore left me empty handed this past week. (Yes, I still read books, it’s a nice break from the screen I look at most of my waking hours.) I was looking for a book or books on China or Asia, specifically on the way people in China interact with the web (specifically digital presentation) and how it differs from Americans or Europeans. I found lots of books about digital marketing, but nothing specifically about China or Asia. Just like writing about online grocery, ecommerce in emerging markets is still a relatively new field.

A quick Google search brought up a few statistics and case studies about online grocery in Asia – which I have compiled into a short presentation. You can see the presentation at my Slideshare page here.

 

Keeping Your Brand at Top of Mind with Microsites

Last month the digital marketing agency Mediative released a white paper detailing their success with a Mondelez brand microsite that they designed for Walmart.com. The results were promising for the future of CPG brands online. Using display advertising, Mediative drove “highly interested” online grocery shoppers to the microsite which can be seen here.  The microsite’s goal was to create an interactive and visually appealing online destination where customers could get recipes and have a bit of fun – all in order to “engage, educate and inspire” customers and build awareness about the Mondelez brand.

Mediative reports that the top performing search banner showed a click-through-rate of 5.64%, compared with the much lower average Walmart.ca site click though rates of .11%. Additionally, once customers reached the microsite, they spent 450% more time on each page than average.

Mediative’s statistics show that online advertising such as this Walmart.ca microsite can increase brand affinity by up to 60%. Mediative’s goal was to create “a meaningful connection between the customer and Mondelez’s products” to “keep Mondelez top-of-mind with consumers when shopping for snacks at Walmart.”

Keeping your brand at top of mind, whether you are selling at Walmart, Amazon or several other of the top ecommerce sites, is of the utmost importance on the competive new “online shelf”.  “E-commerce seems to be democratizing ‘shelf space’ as top brands do not dominate the e-commerce channel as much as they dominate brick-and-mortar retail,” says a September 2013 report from Sanford C. Bernstein.

Why Are Companies Dragging their Feet When it Comes to the Digital Space?

This fall Kantar Retail released a digital industry benchmarking study which found that retailers and manufacturers have a long way to go in the digital space.  The study ranked companies in three tiers: the top having made significant investments in digital which they called “performing”; the second “progressing” and those only just emerging from a brick-and-mortar approach “participating”. P&G and Unilever were some of the manufacturers rated as “top tier” or “performing”; but many companies were simply not evolving. One retailer respondent said of their experience with manufacturers that: “No one is doing a good job of building their brands via digital. They are using digital as just another form of advertising.”

The mantra is that “the shopper has gone digital and the industry must follow”  – so why the dragging feet on the part of so many consumer packaged goods manufacturers?  A recent Consumer Goods Technology article called “Optimizing Brand Value” gives some good insight as to why. Much of the issue lies in the complexity of CPG data. Executives from Hub Designs and Stibo Systems related the difficulties that CPG manufacturers are having entering the online space in the Consumer Goods Technology article.

The article states: “Consumers today have many new avenues available for finding products; however the information they seek is often on websites that the CPG company doesn’t even control. As a result, these sites often provide inaccurate information copied or scraped from yet another website or third party app.”

They go on to explain that a combination of staff issues with fragmented business units and information systems that are siloed cause major challenges for brand and product information. Issues such as out-of-stocks; missing or inaccurate ingredients or poor translations of product information, they say, can add up to potentially damaging customers’ experiences with the brand – driving consumers to the competition.  “Poor data quality is not just an internal issue anymore; inaccurate data may have damaging consequences for everyone in the value chain and it can lead to bad press and negatively affect your customers’ perception of your brand.”

 

CPGs Customers Are Changing

Hispanic population is fastest-growing and youngest in US

The new landscape of marketing for CPG is a rapidly, and radically changing US population. If you are an English speaker, you may have noticed the fairly new TV commercials that are in both English and Spanish. Not surprising that companies are doing this, because the Hispanic population is the fastest-growing and youngest segment of the US  population. This population is a key target for growth among CPG brand manufacturers.

What do we need to know about the changing population? A recent eMarketer article had some valuable statistics every CPG manufacturer should know about the Hispanic population: Hispanics do more grocery shopping than the average US shopper and they also spend 20% more. Food is very important to Hispanic culture: 75% of Hispanic families sit down for a meal together every day.

American population is getting older

I have to admit I was taken aback this spring when I saw online ads showing Dancing With the Stars and NFL players sporting Depends. No longer fodder for late night talk show humor, products for the “Depends wearing set” are (literally) coming out of the closet and hitting the mainstream. There’s a good reason for this too – the US population approaching is middle age and getting older. According to the US Census the median age of the US is 37.2  –  right now there are the same number of people older than that age as younger.

And what about the growing population of older folks? What do CPG companies need to know about them in order to attract their dollars? RetailWire recently devoted a blog discussion to the new Amazon site devoted to the 50 plus crowd called “50+ Active and Healthy Living Store”. The articles’ many comments are telling – readers called the site anything from “clinical” to a “turnoff” with a too heavy focus on “incontinence”. Hopefully Amazon read that article and is now thinking about ways to improve the way they market to a graying American population.

There will be some growing pains. This is a new challenge for advertisers who have thought of the US population in very different ways up until now. I can give a pretty funny example. I recently witnessed a 65 plus woman watching a commercial at a local restaurant. The commercial showed active, pretty older ladies dancing around in colorful outfits to upbeat music – then at the end it flashed the name of a product briefly up on the screen. I had to smile when I heard the woman comment, “I like the commercial but I am not sure what it was for”. In their attempt to change the way it marketed a traditionally not very hip item, the manufacturer really confused the target audience  – or at least the potential customer I was sitting next to.

Leah Kinthaert

 

Recent Mobile Marketing Trends for CPG Companies

Leah Kinthaert

A new study by Millennial Media and comScore shows that mobile spending for consumer packaged goods went up 235% from 2011 to 2012. They studied a group of mobile users over a three month period and found that 29% of men and 41% of women used their phones to research consumer product details. For in store mobile usage, 40% of women and 47% of men used their phones to find deals or coupons. These consumers also used their phones to check availability, compare prices or consult with friends or family. The study found that beverage companies are the largest advertisers, with 43% of the mobile advertising spend followed by 28% for personal care, 14% for food, 10% for household products, and 5% for pet products.

Just how are CPG companies and retailers using mobile? I took a look at some major players which include retailers and manufacturers in the CPG space. I discovered that CVS, Coca-Cola, and P&G all have instituted noteworthy mobile advertising campaigns this year. Here’s a look at how these companies are starting to engage customers via Mobile:

CVS has developed a Mobile APP, and to promote it they are giving away 1 million smartphones. As of this writing, customers can get a free smartphone on their website at CVS.com/smartphone.

P & G used mobile video for a recent Tide campaign. Tide is the official laundry detergent of the NFL, so in this campaign they asked users to submit their favorite photos of their game-day gear. Using the knowledge they have about NFL fans – the fact that they constantly check scores and read team news, they had a hunch that asking fans to share content about their favorite team would create an enthusiastic response.

For their first all–digital campaign, Coca-Cola – with agency Wieden + Kennedy – is targeting teens using games and other digital content based on their marketing research.

These efforts have literally all just begun, so it will be interesting to see if their results will prove that the spending is justified – and how these mobile advertising campaigns will evolve as consumers access and interact with this new breed of digital content. Pio Schunker, svp of integrated marketing communications at Coca-Cola North America admits that Coca-Cola’s new campaign is experimental, but they are prepared for this challenge with a campaign that will be constantly in test mode. Interviewed in Adweek, he described their strategy: Coca- Cola will analyze the digital content two times a week and switch out mediocre performers to test new ones. Shunker says: “This is meant to be a constantly iterating campaign…We fully expect to end up in a completely different place compared to where we started.”

Do Consumers Want Organic Products?

Leah KinthaertAlthough it seems everywhere you turn around these days organic and all natural products seem to be very popular, with retail chains going so far as to grow produce on their own rooftop greenhouses and almost daily news reports about food and its relation to health and the environment, the bottom line is that consumers are not necessarily reaching for organic products – shown very vividly in a recent poll done by SmartBrief where only 3.88% of respondents said they were willing to pay more for organic grocery products. A new study by Mintel research shows that new product launches are reflecting this “consumer fatigue” for organic – in 2010 natural claims were featured on 14% of new products, while in 2012 that number dipped to 10%. And according to a March 2013 Harris Poll, the majority of consumers (55%) believe that organic products are healthier, however they are wary of the phenomenon of “greenwashing” – which is where jargon is used to confuse consumers and rack up prices. 59% see labeling products as organic as an excuse to charge more.

Other research has viewed recent trends a bit differently. The Organic Trade Association’s recent study says that 81% of households purchase organics “at least sometimes”. When they asked parents specifically, 42% said their trust in organic products has increased, versus 32% who said this a year ago. Organic products have definitely increased in a huge way since the mid 2000s. Research from World Watch Institute shows that the number of products marketed with environmental claims each year in the US grew from around 100 in 2004 to more than 1,500 in 2009.

Consumers are definitely aware of the affect that food has on both their health and the environment than they once were, but they are concerned about cost and don’t want the wool pulled over their eyes when it comes to advertising. A survey done by Cone Communications shows that 71% of consumers “wish companies would do a better job helping them understand environmental terms” and 48% “are overwhelmed by environmental messages”. In 2012 the FTC updated its “Green Guides” for the first time since 1998; they are aggressively taking action on deceptive or otherwise incorrect environmental marketing claims. More than ever before, customers are seeking precise information about products – and this information needs to be consistent on product packaging, in stores and online – wherever the product is represented or sold.