261. What Big CPG Brands Know About Winning on Shelf (That Emerging Brands Don’t)

0:01Welcome to Startup to Scale, a podcast by FoodBevy. I'm your host Jordan Buckner. Join me as I talk to aspiring entrepreneurs, seasoned industry experts, and everyone in between as we unlock the keys to growing from startup to scale.

0:18When I first started T-Squares, I thought that if I just made a great product and beautiful packaging, then it would just sell itself. But what I didn't understand was that retail isn't about just having the best design product on the shelf. It's about the split-second decisions that customers make when they are buying a product. And for the large CPG brands in the space, they have been really trained in how to exactly win at that moment on shelf. And so today I invited on Kevin, who is the founder and owner of Smash Brands, to talk through what large CPG companies have really understood about shelf psychology, upper behavior, and packaging performance, and how emerging brands can then apply some of that same understanding even as they are kind of growing throughout retail.

1:07Because at a certain point, there are certain buyer psychologies that are just universal that brands need to understand. So Kevin, welcome on into the show today. Thank you so much. Appreciate it. So in starting out, I love just a little bit of idea around, from your experience, what do big CPE companies really understand about winning on shelf that most emerging brands kind of completely miss or don't quite understand because they haven't had that experience? Yeah, I think this is a big one right here. And, you know, you see it all the time. Like if I'm over at Expo West, right, I walk through the show and I'm amazed by all the new innovation.

1:42and at the same time, I can't stop. And oh my gosh, 95 to 98 % of these brands, like they probably don't get it. They're gonna have a very hard time. And the way that I'll kind of talk through this is maybe just really quickly, I'm just gonna explain like where I came from because this is sort of my perspective and it might be different than a big brand's perspective. But I've been in consumer goods now for 25 years and 17 of those years, I've owned and scaled three pretty successful consumer brands all the way from the tiniest challenger to distribution across the U.S. And then my business partner, Christy, also 25 years, but she came from BigCo.

2:20So, you know, like head of brands and innovation at Unilever, Kraft, Pepsi. And what we know is the way that we would go about brand development for me as a tiny little non-capitalized brand is completely different than the how you would do it over at Kraft. And I think like the biggest takeaway, really that the difference is big CPG, treats brand packaging as their number one sales tool, like full stop. They don't treat it as an art project or like, I think this is gonna look great on Instagram or my decks or a pitch deck. That doesn't matter. For big CPG, they know that this is the only asset that your brand will ever have that drives the most margin for the business.

3:03You know, you can get additional sales in a few ways, right? Pump more marketing dollars at it and that's gonna hit margin. You can decrease price or add promotion, and that's going to hit margin. But if you optimize that asset, that is your packaging, to maximize this potential within the set, it's the only one that adds incremental dollars and will never hit margin. And they truly understand that, and that's why they invest so much in it. No, I think that's really interesting because I've done a lot of, you know, just studying in terms of how the packaged goods industry has developed over time.

3:34I mean, you think about it, go back, you know, 100 years, most of the products you buy in the store were commodity based, right? They're flower beans. There was no strong brand behind them. They were a couple of small local ones. But then in terms of how to differentiate, a lot of these larger companies started to build more. A little bit of storytelling around their product was really about how do I get attention on shelf? And especially before the days of social media and being seen all the times, a lot of that discovery for the first time probably happened. either you saw it on the shelf or maybe advertisement, TV, maybe kind of print.

4:10But like those were the only mediums. And so the on-shelf discovery play a much larger impact and train consumers for the past, you know, 50, 75 years on how do you actually understand and buy a product on shelf. It's what you see at that packaging a lot of times when you're kind of at that buying decision. Is that right? That's right. Absolutely. Absolutely. Like when we think about the shopper today and still how they scan the shelf, right? They're going to process it in the same way that they do any complex like visual environment. They sort of triage first and then filter for relevance. So, you know, what I mean by that is you're sort of doing like rapid fixations across the shelf, kind of that's like the gaze sequence.

4:52And then your brain is deciding for you, like, what should I ignore and what should I investigate? And that's like the first two seconds. And it really doesn't matter so much that if have I seen this on a TV commercial or on a TikTok, that does add relevancy, but still that shelf and the way that big brands do look at this today is still like the place that is going to convert. And I think that they call it driving attention. And that is that contrast, that distinctiveness, the color, the shape, structural differences, like anything that can break that visual pattern in the category. That's that kind of first moment of attention because the consumer brain at that point is asking what's different here?

5:33And then it gets into the second step of how is that relevant to me? So the work that you do with Smash Brand is really around how to create a strategy around branding and packaging for CPG brands. And so you have a lot of experience kind of understanding how consumers shop in different categories. And I'm curious to know, has there been any change in how consumers are shopping and discovering product now and how that's maybe evolved over the time that you've been doing this? Yeah, that's a great question. So back when I had owned several brands in like the sports nutrition and health and wellness space, but I wasn't like, you know, an agency person.

6:13I was a person who had a, you know, full time job and decided to go in this and quit and go all in and learn all the scars and receipts, you know, hire designers or agencies. And the one thing that I noticed probably, you know, a couple years in was that it's interesting when people develop packaging that it's sort of subjective. But on the other side of it, when we think about digital marketing, there's no way that you're going to develop one advertisement and then you're going to go put, you know, hundreds of thousands of dollars behind that advertisement. And then maybe if it's not converting that well, make one more advertisement and replace it.

6:48What I noticed was that these digital marketers that we would hire for our company, we would create 10, 15, 20 ads. And we would do these small little tests. And we'd find out that 14 of those creatives really didn't perform, but one did. And then we'd put our money behind that one. And that would scale up. And then we would do the same thing. But for some reason, on the agency, like the brand development side, and that is really what made me take a look at how bigger CPGs do it. And I think like with my own success, with my consumer brands, it was all on the retail shelf. And it was understanding that it's not an art exercise, that it's very much science and you have to get the consumer voice in the room way before you activate it.

7:29But to end the so like to bring that together with your question, I don't believe the way that consumers shop is inherently different other than there's more choices. You know, of course, you can buy direct, you know, direct from the brand. You can get it in all the marketplaces. I can just pull up to the store and have it put in my thing because I shopped online. But overall, like that shelf is still the main place, especially for, I believe, new and emerging brands to get really discovered and selected. But the difference, I think, is the buying behavior where these, you know, legacy brands and then I had we're going to go camping after this.

8:07and my kids wanted mac and cheese. And we're a good old household. Like we don't buy Kraft anymore. That's one of these legacy brands. And so I was going to talk about them a little bit today. And I pulled up some of their like latest POS because it is a fascinating story, right? Of this challenger brand that now is dominating. They're taking on an 87-year-old incumbent brand of Kraft as well as Annie's. And today they are absolutely leading a declining category and they're selling like three boxes a second. Like it's insane what they're doing. And the way that this is happening is consumers have changed how they shopped.

8:42And Goodall's was able to find they're not going to compete on all family. That was, you know, Annie's and that was Kraft. They were like, hey, there's this gap in the market of consumers who are moving more into adulthood. And we can own something that these legacy brands are not. And that was the segment that they went after. And it actually has increased share in that category. They're bringing new consumers back into the mac and cheese. And so the way that relates into your question there is, I believe that consumers still shop in the same way. The decision making, the psychology around it is the same.

9:17But what's changing is the way that their decision making is happening for like usage occasion and jobs to be done. And they're looking for specific, specific products purpose built for them. So here's something, Kevin, that I want you to share your perspective on. because when I first started in the CBG space, everyone always told me, find the blue ocean, find white space, find something that no one else is doing. And that's where you need to innovate instead of creating a Me Too product. You look at something like Google's and on one hand, there's a lot of stuff that they're doing new. On the other hand, it's a box of mac and cheese.

9:51And so help me understand maybe, especially for a lot of founders listening, where's that balance? Like what's different from your perspective about what Google's is doing and taking up craft? Why are they winning on the shelf? And what really differentiates them on the shelf? But also recognizing the consumer behavior that Kraft has built. Yep. So Kraft, clearly they dominated forever, right, on this all-family idea. It's kids. It's all family. And then these brands, a lot of times, the legacy brands, they get stuck there. They've got to protect it and defend it. They can't make these big moves.

10:25And that's where, again, like if I'm walking Expo West and I'm looking at these things, a lot of these products, it's sort of they're trying to be everything for everyone. A lot of times, maybe that's like, you know, we are blue ocean because we're different, but I don't think it's the way, like when I see the brands that really kill it today, that is not what they're doing. And so in relation to sort of good old is you need enough of like the overall category cues for people to recognize, like, this is a standard macaroni and cheese box, right? Like instantly they're saying what it is. They're not over indexing on brand.

10:57Not right. The hierarchy is so, so important there. But you're like, OK, this is macaroni and cheese. What are some of those cues just to get into like some of the specifics? Like when you look at that, what do they keep from the category standard? Yeah. So we're showing the mac and cheese, right? That's super important. This is one, again, like I'm walking those shows. I see so many brands that's going maybe like some huge brand name, minimalistic typography. Like if this is something we're eating, we got to show it, right? That is something that is, every time we run testing on this, if they're not showing it, you are losing points to the competition for sure.

11:29So show me the deliciousness, right? So Kraft is showing it, you know, it's on, you know, a fork or a bowl. The cheese is drippy. It's great. Belveeta, you know, that is, that's a category Q. Goodles is doing it in a different way, but they're still showing it. You know, it's mac and cheese. Same thing with like format and structure. They could have gone into a different type of box, but they didn't. And I believe it's very strategic of, This is the same box as Kraft mac and cheese. And then where they deviate, if you looked at that aisle before Goodles comes into it, right? It's an aisle of blue and red.

12:00And then, of course, you have Annie's, which is kind of a kind of a rainbow, but it's still very like natural feeling. It's all family. And then and then where they do deviate from it then is it's pink. It's crazy colored green. It's Chetty Mac, the way that they're naming it. It's protein. It's all these things that this consumer group that Kraft can't reach into because they've got to defend all family so much. Yeah, you know, it's the box. They didn't go like with a retort kind of cooked mac and cheese product that you reheat. It's still a dry macaroni with a pack of the cheese in there. And so it's a very familiar format.

12:34And I think one thing that stands out right is like they really highlight the macros of like 14 grams of protein, seven grams of fiber, and almost like it's a cooler macaroni and cheese. Like basically they're saying it's like Kraft, but better because it has more protein. It's something that you want to be, can feel good about eating. It's like, you know, an updated version of it. And I think that plays a big difference versus doing a completely new packaging form and a completely new way of selling the product. And instead of going with what Kraft has spent millions and millions of dollars educating people on what mac and cheese is.

13:06No, that's 100 percent right. What I thought was was super interesting when I was taking a look at that this morning, it was that initially, like after launch for the first few years, it was 84 percent of the Goodall's customers hadn't bought a mac and cheese in the last three years. and it like brought them back into the category. Like that's amazing. Like that is, you know, today, you know, emerging brands have really, really, really what you want. Instead of trying to be like a better version of macaroni and cheese, they were different. And I always say that different is better than better.

13:34And they were doing it differently because it was targeting a different consumer segment, relevant enough that you still know it's mac and cheese, different enough that it's attracting that segment and then not having to compete, truly not having to compete with Kraft because they're driving in a whole new audience for that. Yeah, I love that. And I think this is a good example because I think it's a brilliant category because it has a high velocity. A lot of times people like how many boxes do you like when you buy a couple boxes, do you buy one or do you buy like five or 10 for the family for the week?

14:04Yeah. Right. So it's like high velocity, a low enough price point, a simple product and high usage occasion. I think the other thing, you know, I talked with a tea brand and they came up with this innovative packaging. They're like, oh, we have 30 servings of matcha in this bottle. That's cool. It's a shaker body. Just kind of pour it. And customers loved it. The problem was that the repeat was like once every three months because they weren't drinking it every day. And even when they were, it was lasting a month or two months because the product was so innovative. It was cool, but it did not drive velocity and already a slow moving category.

14:42And so I think that's the other thing that I've seen of people making cool products, but don't fit how like usage and buy it buying occasion so that people can actually support the business from it. Yeah, that's right. At the end of the day, all of us in consumer goods, it's really the business of repeat. and even when you're thinking about your innovation, everything matters to that point of when we launch this thing, of course, you want to get trial on it so people buy it. But if you don't build something on repeat, you don't have a business, that's for sure. I agree. So here's one big question too, how brands should be built.

15:15Because I know there's a lot of focus on storytelling, especially founder-led brands and that being a huge differentiator that's not able to be copied by larger competitors. at the same time, where does that storytelling element intersect with packaging on shelf where the consumer can't hear the full story? And just as a quick example, with my brand T-Squares, I remember we were selling at Whole Foods. I was doing a demo and a customer came by and said, hey, I actually saw this on the shelf the other day. It looked interesting, but I did not buy it. And when they tried at the demo and I told them our story, they're like, oh, this is really great.

15:52And they bought two bags. But there's a disconnect between our story and the impact of that story and the actual packaging and how that messaging could resonate when I wasn't there. No, that's funny. I've had the same experience with my initial first run of a brand that I had. Boy, was it a great story. When I would go to stores and I would do the demos myself back in 2000, we would sell a ton of product and then I would leave the store and we wouldn't sell a lot of product. I remember doing that in GNCs. And it was very frustrating. And then fast forward, you know, now 25 years later and just now having, you know, because of all this testing that we do so much data in the category, I had it wrong.

16:33And so I'm going to be maybe a bit provocative here. And I do not believe, and my focus is really on products, you know, moving on shelf and what we've learned from that. The story doesn't matter. It doesn't matter. And as much as I want it to matter, a lot of this, you know, purpose driven, it's very interesting from like a tertiary point. But at the end of the day, people want to understand, like when I'm picking this product for if it's food, is it going to taste good? Is my whole family going to like it? Is it good for me? Right. Like these are the fun of like, what actually is it when I'm looking at it before all the story, we've got to answer usage occasion jobs to be done and make sure that that is so crystal clear for the consumer that now we're being selected over the competition, right?

17:17And that's in that like choice phase. That's like second number three to five. You can't get a story across on that. And that will happening, that will happening, you know, in the marketing channels. But the way that I think of like packaging specifically in retail is it's almost like if I was creating a greater than value sign. And on the packaging is gonna be a very functional component. Again, a lot of challenger brands, I see them way over indexing on like the brand and the tagline where what they really wanna know is what is it? because they don't know your brand yet today. There's not enough exposure and like mental availability from the consumer.

17:50We want to get to really quickly, what is this thing and why should you put it in your life and fire something else and hire this brand? Like that's the most important function of the packaging. In the future, you can get more to that storytelling, but I see it over-indexed constantly. Probably 30 % of the work that we do is it's usually like investment-backed companies, but they were founder-led, they've gone in, they're not selling above category averages. And when we initially first do the testing, it is because of all the things that I just said, and they've way over indexed on brand story or like tagline or being cute, not on the like functional things they need to win on and like the fundamentals like taste and flavor and just backing those things into it and getting rid of the rest.

18:35See, you know, sometimes 100 percent in performance improvements on it. That makes such a big difference. I think it's really lacking. And the last thing I just want to touch on it quick is how do you see function benefit claims showing up on packaging these days because i think that's something large cpg is really honed in on either from like the protein fat fiber sugar content or things like easy meal in five minutes right that going a little bit more towards explaining the job to be done versus just putting macros out there and your take on like how consumers respond yeah it is it's huge again and i can be pretty quick on this one but in the testing data because it is every day that we're pulling this data across so many categories.

19:15These claims are going to be super important, but here's where it works the best is that usually like the hierarchy of that gaze sequence of the consumer is as a challenger brand, it's less about brand. So that can be smaller in the hierarchy, even though you want it to be huge, like people don't care as much in the beginning, but it really is like value proposition of like that is going to be tied into like jobs to be done. Like, what is this thing? You know, if it's laundry detergent, is it about it being liquidless or convenient or less plastic? Like, what is it? And then when we think about the claims, mostly the claims are going to work best again in those functional claims.

19:52And then more we see it test off the charts is if you can also create an outcome with it, like 14 grams of protein. And this is I'm going to this was probably not the best usage because everything is protein today. But then if you can back that, but that, that functional call out up with like an RTB, a reason to believe, like, why does that 14 grams of protein matter to me? That's when we see testing off the charts. So it's really like the hierarchy is that overall value proposition of the product that's unique and different within the category and, and, and to the specific target you're going after.

20:22And then the functional claims backed up with an RTB. And if these brands can do that, they will, they will punch above their weight. I love that, Kevin. Kevin, thanks so much for being on and sharing all these tips if you want the same level of insights for your brand definitely make sure to check out smash brand and understand how they view the category back with analytics to design really effective packaging that sells and i'll put the link in the show notes as well kevin thanks for being on today thanks for having me on jordan