UK-headquartered Graze.com entered the US market in early January with 55,000 subscribers – a figure it has since tripled. With a $5m starter investment to build a production kitchen, develop a logistics system and assess the market potential, the company has now pledged $75m over the next two years.
Speaking exclusively to BakeryandSnacks.com, company CEO Anthony Fletcher said business in the US since January had been “pretty extraordinary”.
“The rate of growth has been phenomenal,” he said. When Graze.com launched it had 55,000 US subscribers, but it has now surpassed the 150,000 mark, he said.
Eating into the $500m subscription snacking pie
Fletcher said Graze.com had an advantage in the US snacks market because the nature of the business model enabled fast reaction to consumer data.
Other typical fast-moving-consumer-goods (FMGC) companies had very opaque consumer insight, he said, but being online gave Graze.com fast and detailed information that could be acted on.
The company stood a better chance at success in the US compared to a FMGC firm, he said, because of this flexibility.
“Subscription snacking didn’t exist in America until three months ago, and we’re fairly confident the opportunity is pretty large,” says Anthony Fletcher, Graze.com CEO
“You get very rich data on consumer behaviors – the conversion rate, what they buy, the demographics buying certain products. You can see what’s selling, what’s popular… All the time we’re receiving this information we can make our products better. We can act quicker.”
This feedback had enabled the company to value the level of opportunity in US postal snacks at a minimum of $500m, he said.
“Subscription snacking didn’t exist in America until three months ago, and we’re fairly confident the opportunity is pretty large,” the CEO said. “To be completely frank, I think a lot of people are cottoning on that this is a very effective area. Look at General Mills who has come into the market.”
General Mills launched its subscription snacking business Nibblr in mid-November, 2013.
Taste and education: The US and UK are very different...
Fletcher said the US subscription snacking market was different to the UK – with diverse taste preferences and a completely different level of education and understanding on snacking.
“What we see is taste profiles are different in the US, but that doesn’t mean that some very European taste profiles aren’t appealing to them. So, for instance we’ve found that cuisines that are very popular in Britain, like Indian, aren’t as popular with Americans. They prefer tastes that are closer to Mexican – it’s fairly obvious, but interesting,” he said.
Graze.com had replaced 30% of its portfolio with new variants specifically tailored to US consumers, he said. For example, the company had introduced a poppy seed bakery and nut combo that resembled the taste of a cinnamon roll.
Education around snacking also, interestingly, differed hugely between the UK and US, Fletcher said.
“With satiety, Americans are far more aware that when they have a snack that fills them up, they’re less likely to eat later… Americans seem to have become very educated in satiety – they recognize that eating nuts is a good thing, for example, but the same consumer in the UK is still worried that nuts are fatty. It almost feels their education levels are very different.”
He said this could be due to companies making satiety claims in the US; something EU companies were unable to do, but added that whatever the cause, it was an interesting trend contrast.
Asked if Graze.com would work to call out satiety on pack for its US products, he said the company had made a start but said there was a lot more it could do. In addition to calling satiety out on pack, he said the company was working to make the protein content far more visible for US consumers who were more concerned about the amount each snack contained.