'This year will be the most transformational year for Quaker in its history'
EXPO WEST 2018: PepsiCo to take Quaker to the store perimeter
Speaking to FoodNavigator-USA at the Natural Products Expo West show last week, Kaufman said Quaker will also complete the process of removing artificial sweeteners, colors, flavors and preservatives across the portfolio, and unveil a new look and feel for the brand.
“This year will be the most transformational year for Quaker in its history," said Kaufman.
"In the second half of the year all of our products will have been re-engineered – taking out artificial sweeteners, colors, flavors and preservatives - and the visual look and feel will also be much more aligned with how a nutrition brand should look.
“In the second half of this year and the first half of next year, we’ll also deploy really interesting innovations that will take Quaker out of just being a center store brand into the perimeter, which is growing twice as fast as the rest of the store.”
He would not provide details of what the new products would look like, but said there would be refrigerated oat-based products but also products featuring a wider array of whole grains “in forms that are more relevant for today’s consumer needs.”
‘We used to market our nutrition brands like our ‘fun for you’ brands’
The messaging, branding and positioning is also evolving, he added: “We’re making a massive shift in the [nutrition] business. We used to market our nutrition brands like our ‘fun for you’ brands [such as Cheetos, Mtn Dew], but with Quaker, we started in October 2017 by rethinking our consumer engagement model and thinking how does a functional forward, nutrition forward brand show up in the world?
“So rather than the traditional Mom and son or daughter with a warm bowl of oatmeal and a hug, very emotional stuff, we started saying things like, inside oats there is a soluble fiber called beta glucan and it does amazing things. We started actually messaging around the functional benefits and we did that across heart health – lowering cholesterol, gut health, and sustained energy - and that’s really elevated the base business.
“There’s also emerging science that we can’t say direct to consumers yet around things like blood pressure and blood glucose management.”
National chilled distribution network
The move into the perimeter for Quaker comes as PepsiCo expands its chilled distribution network, he added.
“We’re in the midst of building out a national chilled direct store delivery business, so we’ll be the first that’s national to go to every convenience store, every foodservice outlet, which means we can put things like the Sabra cups [hummus and pretzels] and the [new, refrigerated] Naked bars in more places than anyone can.”
North American Nutrition: ‘Our consumers over-index on ecommerce’
That said, the industry overall will struggle in the short term with meeting consumer demand for online orders of chilled food in a cost efficient way outside of urban areas, he predicted.
“The chilled infrastructure in the United States was not built to service same day online ordering of chilled products, so we’re spending a lot of resources on trying to solve this problem. We have to think in an omni-channel way about everything we do because I want to meet consumers’ needs in any channel that they are in at any given time."
Overall, ecommerce is “not a large part of our mix, but we more than doubled our ecommerce business last year and we are poised to more than double it again this year,” he added.
“It is a place where not only do all the CPG companies need to be focused, but especially in the nutrition space as our consumers over-index on ecommerce.”
‘I don’t like to think in terms of category conventions’
One thing that the limitless virtual shelves of online platforms and the growth of meal kits have also highlighted is that CPG companies and retailers need to think beyond the product-focused categories of the past, and sell and merchandise products around consumer need states, added Kaufman.
“My team and I don’t like to think in terms of category conventions, as it really restricts you, so for me, the size of the prize if you are asking about Sabra, for example, is ‘on the go plant protein,’ rather than just hummus, so we’ve paired hummus and guacamole with pretzels or pita chips in single serve cups, and we’ll also look to do the same with our new bean dips.
“We’re doing some work with retailers now on re-engineering parts of their perimeter to be oriented around consumer needs rather than categories.”
‘There’s this whole macro trend of daypart deconstruction going on’
Similar thinking also underpins recent innovations at Naked, he said. “For years, Naked was a fruit and veg smoothie business, whereas today we think of it as a fruit and veg convenience business, so we just launched a refrigerated bar.
“There’s this whole macro trend of daypart deconstruction going on. It used to be about three meals and snacks inbetween. Today it’s more about mini meals throughout the day.”
The sweet spot
Within the broader nutrition space, he said, “The biggest part of the market is mainstream nutrition [eg. brands such as Tropicana], which is almost 90% of the total food and beverage nutrition market, but is not growing that much, around 2%, so it represents about 44% of the total growth.
“What we call ‘on trend nutrition’ – things like hummus, quinoa - is less than 10% of the total size, but is growing at in the mid-20s [percentage growth YoY] and represents around 50% of the growth.
“And then you have emerging nutrition, which is super small, 1% of the market, but with hyper, hyper growth, and it represents something like 6% of the growth, so think of things like apple cider vinegar, beetroot, things that haven’t yet broken through. For us, focusing a lot of our energy on the ‘on trend’ space will be super important, as no one has our ability to make trusted nutrition as accessible as we can.”
Sabra household penetration and share back up to historically high levels post recall
While the voluntary recall of Sabra products in late 2016 driven by concerns over listeria was a learning experience for the brand, the speed with which it recovered is a testament to Sabra's resilience, he claimed.
“We’ve rebounded well post the recall, but what was most encouraging was the passion that consumers have for this brand in an increasingly crowded space. Very shortly after we were back in the market, our household penetration and share was back up to historically high levels.”
‘There are claims that worry me…’
Asked about his thoughts as he walked the Expo West show floor this year, Kaufman said there was a "question mark in my head about how much of what I am seeing claimed is real. There are claims that worry me… for instance I’m a thousand percent confident that our gluten free oats are gluten free and I can’t say the same for the rest of the market. The same goes for some of the label claims on kombucha.
“For us, the key words are ‘clinical evidence.’ We are focused on making sure we can back what we are saying, whether it’s on sustained energy, gut health or cardiovascular health.”
As for claims about some on-trend ingredients he had seen at the show, he said, “Why even risk saying something that potentially is not backed up by clinicals, when all you have to do just say you’ve got turmeric in your products. You don’t have to say this is an anti-inflammatory, consumers can make that connection on their own.”
Sugar and alcohol levels in kombucha products
As for KeVita kombucha, which some kombucha aficionados claim is not an ‘authentic’ raw kombucha because it is heat pasteurized post fermentation, with probiotics added afterwards, he said: “KeVita’s kombucha is a legit kombucha.
“There’s a perception in the trade about what an authentic kombucha is. Not everyone pasteurizes at the same point in the process, but based on our process, I am 100% confident that we have a legitimate kombucha product in the marketplace and I feel really good about KeVita’s products not only being true kombucha, but also having the healthy bacteria that we say we have, right up to the end of the shelf life.”
He added: "I am also really really confident that our sugar and alcohol levels are as we state them on pack at the end of the shelf life [with the implication that other brands may not stand up to the same scrutiny].”
