How recalls create category parity

frozen food, grocery, shopping, cpg, Eggo
Consumers might freeze Eggo out in light of their recall

Last month, Kellogg’s announced a voluntary recall of their Eggo Whole Grain products due to concerns about potential listeria contamination. They deserve kudos for proactively taking that action. Especially with the knowledge that many brands never fully recover from recalls.

For example, Perrier, which built its brand on natural purity was forced to issue a wide-sweeping recall in the early ’90’s due to the discovery of benzene in their product.

Ironically, the product was being used as a control by a US government agency testing local water supplies when the chemical was discovered. Perrier was forced to recall hundreds of millions of bottles and their share price dropped by $40 after returning to the stock market.

Perrier was once the gold standard for bottled water, and helped invent the category. Though the brand stabilized after being purchased by Nestlé, it lost its leader position.

Things are just as dire for Kellogg’s. Cereal sales are ever-slowing, and all non-protein rich (or perceived) breakfast products are out of vogue. Eggo is a staple in a lot of homes, but sales have also suffered.

Like Perrier, Eggo lovers will now seek out alternate brands in the freezer case. What’s worse, the new generation of shoppers has told us in multiple research studies that they aren’t shy about switching to store brands. Millennials add a new wrinkle with this behavior.

Unlike Perrier which owned first-mover status in their category and had built the brand of a premium or luxury product (depending on the market) Eggo is essentially a commodity. Though a fine product, and well-branded for awareness over my lifetime, it doesn’t occupy a specific emotional niche.

That’s supposed to be why we choose branded products over store brands or unknown brands.

Not only are there other waffles that can fill that space in the freezer, but there are others that share the unique attribute of Eggo – the shape. That some or all of those are also produced by Kellogg’s is a conversation for another article. Once a product in this situation is replaced in the shopping cart once or twice, it is awfully challenging to reclaim that place, especially when private label waffles can be up to 35% cheaper.

That’s the biggest problem here. What did the recall trigger in the minds of consumers? Yes, this event is a literal instance of Eggo being unable to guarantee the safety of its food product. But subconsciously, it’s something bigger. That’s supposed to be why we choose branded products over store brands or unknown brands. That’s why Eggo has been advertising since its inception in the 1970.

Before brand love comes brand trust. If consumers can’t trust the brand, they won’t buy it and can’t come to love it. Young consumers have proven that they are more open to store brands, so instances like this can open the floodgates of customers straying and leaving permanently. A recall is a serious strain on trust that tests the brand in question.

What is a brand to do?

First, Kellogg’s did the right thing for its customers and brand by being proactive. They deserve credit for taking action. They have to find a way to take credit without reminding shoppers (or tipping them off in the first place) that there was a health concern. They might wait until the threat is proven null to do anything.

Since they got proactive with safety, they should get proactive with outreach. Use their owned channels to communicate as the brand returns to stores and offer other Kellogg’s product before that happens. Push complimentary products now to build favorability for those, then offer a compelling offer for Eggo as a bounceback.

Think about the box. Assuming a 6-8 week absence from the shelf, consider this a new product launch. How can Kellogg’s capture the attention of their core shoppers – and new ones – to get them to pick up the product again?

Recalls are never good. Does a health-based recall kill a food brand? Not necessarily, but it won’t be an easy road back to pre-recall sales.

Ten Stamps Later and Your Customers Still Aren’t Loyal

What makes you come back for more? Really think about what makes you loyal for a second, because it’s something you never really question.

For brands relying on frequency like restaurants, the loyalty club has become standard practice. Buy 10, get the 11th free. Some can prove that those clubs drive increased frequency, maybe by .5 visits per month. That kind of increase is certainly valuable. But does it drive true loyalty?

The brands I know with successful loyalty programs are also successful in a bunch of other metrics as well. Funny how that works, isn’t it. Zoe’s Kitchen boasts a great performance from its loyalty club and app. But they do pretty well in store traffic and sales per unit across the board. Maybe it’s because they offer a unique menu mix not found at many other places at a reasonable price and executed well, operationally. They serve the food in a cool environment. Their employees are bright and friendly.

Which of those factors brings people back for that extra .5 of a visit? The free panini in five months or good meals and friendly people while you’re earning it?

Humanity Over Apps

I don’t belong to many loyalty clubs. I don’t like treating meals like a contract with Columbia House. I do use the Starbucks app because it provides more than just loyalty rewards. It offers a fast store finder, ordering tools, and nice payment functionality. The loyalty rewards themselves are on the silly side; access to apps and songs and refills.

A funny thing happened at my local store. I ordered a cup in a hurry, and they had just run out of my roast. The barista recommended a different drink I had never tried, and I accepted because of my helpless caffeine addiction. As she handed it to me, she said “On the house, thanks for trying this.” Super good experience.

Later that week, the Starbucks app crapped out on me and wouldn’t let me pay. I pulled out a credit card and haven’t used the app since. What I learned is that I wasn’t going for the gamification. Or the potential for a free 50th cup of coffee. I was going for the rare spark I get when there is an exchange of humanity.

As slick as I think the app is, (it is one of the best) it deleted part of the brand experience when the customer had to fidget with their phone to pay instead of interacting with the barista. Is that the kind of experience we want customers to be loyal to?

Experience Over Everything

Any store can offer your 11th thing free. It’s easy. Not every store can sell you something you want to have 11 times, in a way that makes you happy to do so. Experience is a huge driver for future visits. Most of that made up of elements that aren’t on the menu or with a UPC.

Are loyalty programs worthless? No. Can they alone drive traffic to a mediocre experience? No. If you are examining a loyalty program, make sure to put the same level of effort into the customer experience you expect customers to be loyal to.

Why Dairy Brands Need to Re-Think Packaging

dairy, cpg, grocery, milk, yogurt, butter, cows, farm
Just because all cows look similar to most people doesn’t mean dairy products should.

Starting at the top, I spend more time than is normal in grocery stores. I walk down the middle aisles of the store, stopping at random spots to just stare at different types of canned tuna. I was recently shopping for some sweetener, stevia to be exact, and I was looking at all my options. Liquid Stevia, Stevia in the Raw, Organic Stevia and then there was Truvia. I picked up the Truvia, and the packaging was a bit different. It was more of a rectangular shape than the other “square-like” package stevias. The design was simple, different shades of green on the top and a strawberry on a white background. Even though it was more expensive than the surrounding products, I bought it. The lesson: PACKAGE DESIGN IS EVERYTHING.

Product design can create breakthroughs in any category, take soap for example. Method was (and continues to be) a company going up against giants like Procter and Gamble, SC Johnson and Dial that was able to breakthrough with its unique design, making the bottle a statement piece at everyone’s sink with a focus on responsible ingredients. While the packaging was what got the product to stand out on the shelves, the environmental responsibility the soap represents is what really makes the point of differentiation. Since Method’s emergence, we have seen the larger players in this category create products to compete with Method.

Opportunities like this are still out there in grocery stores, I look specifically to the dairy section for the next breakthrough. (Now, I realize I’m about to sound like Andy Rooney, so please excuse me, but) why does every bottle of milk or container of sour cream need to have a cow and a grassy field on it? You know what message this sends to the consumer? That all milk is the same!

When it comes to dairy, all brands are treated equally.

Sometimes the cow looks like a cartoon, sometimes it’ll look like a half cow – half human. Sometimes the grassy field is a rolling one, sometimes it’s flat with a tree in the distance. Regardless of the type of cow or field on the bottle, the real question is why? Even a brand like Horizon, which owns 4.2% of the total organic product market still falls prey to this trap.

Think about the audience. For the most part, the consumers are mothers with children under the age of 18 buying the product. Is it really necessary to put a cartoon cow on your milk? Can’t we re-think what the gallon of milk looks like today?

We discovered from our own research study conducted in Q2 of 2015, 68% of Millennials purchase store brand dairy items (click here to download our study on millennial grocery shopping habits). Knowing that other generations tend to mirror the behavior of the Millennial, I’m going to make the assumption that this 68% doesn’t fluctuate much when you look at mothers older than 34.

So what does this mean? Well, when it comes to dairy, all brands are treated equally. Obviously, you’ll have your mothers that will always choose to buy organic dairy but regardless of that fact, if you are a dairy brand, why are you not doing everything you can (which right now wouldn’t take much effort) to stand out in the dairy aisle?

Another Missed Opportunity – Shamrock Farms

Take Shamrock Farms, one of the largest family-owned dairy processors in the country. They provide dairy products to most of the western United States.

A few points of differentiation Shamrock Farms have over their competitors is that they don’t use the growth hormone rBST and don’t use High Fructose Corn Syrup in their milk. But the brand really doesn’t take advantage of that. They do give small real estate on their packaging to the fact that they are rBST free but don’t take advantage of branding themselves as being “better dairy.” How do they choose to show off their unique product? They put a damn cartoon cow on the carton, just like everyone else.

Product Packaging Done Right

One brand that I think is doing it right is Noosa Yoghurt. Their packaging is very simple with black lettering and the product description is in the color associated with the specific ingredient. The container is different than most other yogurts (theirs is flatter) and it’s a clear container so you can actually see the product. This may not seem like anything groundbreaking but just do a quick Google image search for yogurt brands and you’ll see why Noosa stands out.

It’s only a matter of time before a company comes along and totally changes the way we look at dairy. If it can happen to the soap industry, it can happen to any industry.