The sad consumer: what American disillusionment means for the future of food marketing.

By Jonathan DeVito, Principal | jdevito@pivitasresarch.com

 

The sad society.

Societal disillusionment and alienation is widespread in American society.

According to the World Happiness Report, happiness among adults has been declining since the early 1970s and, while the US is the world’s most sought-after consumer market, it only ranks 19th in terms of happiness.  In addition, loneliness is reaching epidemic proportions. According to research conducted by Cigna, nearly half of Americans state that they sometimes or always feel alone and 20% of Americans feel like they are never feel close to other people.

Trust in large institutions is also under siege with 80% of Americans expressing distrust in big businesses, compared to 80% expressing trust in small businesses.

What is surprising about American disillusionment is that, in many ways, we have it better than ever. Disposable personal income (DPI) has grown steadily over the preceding decades, food spending as a percent of household income has generally been stagnant or declining, and the average life expectancy has increased by approximately a decade since 1960.

Yet American “progress” may be a mixed bag. For example, while we have increasing amounts of money to spend on new technologies, these same technologies may be making us less happy. Referring back to the World Happiness Report, the study mentions that 95% of adolescents now have a smartphone and nearly half say that they are online “almost constantly”. We might think this would make adolescents more connected, but the rise of internet usage among 8th and 10th graders has  co-occured with declines in sleep, happiness, and in-person social interaction.

But what does this all of this mean for the food brands?

The rise of small brands is a widely recognized phenomenon and societal disillusionment may, at least in part, be a driving force behind this development. Specifically, small firms may be simultaneously benefitting from distrust in large institutions while also supplying unhappy or isolated consumers with a sense of connectedness. The inverse may also hold true from large firms: they may be hampered by distrust in large institutions while also having sales consolidation across legacy brands that are viewed as commoditized or impersonal.

The following dives into how emotional and societal levers may be reshaping the food industry along with key insights for small and big brands alike.

The connection between food, feelings, and identity.

Before looking at the implications of increasing disillusionment on food purchasing behavior, it is important to establish that there is an interplay between food and emotions.

The reception of taste and smell are housed the limbic system, the same part of the brain as memories and emotions. We are hardwired to intermingle the senses of taste and smell with memories and emotions. The co-mingling of senses, emotions, and memories often result in what we call “nostalgia”. According to Hadley Bergstrom, a psychologist and neuroscientist at Vassar:

Food memories feel so nostalgic because there’s all this context of when you were preparing or eating this food, so the food becomes almost symbolic of other meaning… A lot of our memories as children, it’s not so much the apple pie, for example, but the whole experience of being a family, being nourished, and that acquires a lot of symbolism apart from the sensory quality.

Aside from the neuroscience or psychology of our relationships with food, there are also the myriad of cultural or societal connotations. As Jean Anthelme Brillat-Saverin once quipped: “Tell me what you eat, and I will tell you what you are.”

Although many products may be connected to the state of our emotions, food may be the product that is one of the most, if not the most, interconnected with our state of consciousness. In fact, being meaningfully, as in purpose or authenticity-driven, different can allow products to command 10%+ premiums over products that are not meaningfully different.

Also, trust tends to be a bigger driver of consumers’ willingness to pay a premium than many clean label attributes.  The implications here are two-fold: a) trust continues to be a leading purchase driver in an environment where people feel alienated and distrust large institutions and b) consumers may place more value in how food brands make them “feel” than functional criteria, such as specific product features and benefits.

Scale may be inversely related with relatability.

Scale and relatability may be opposed to one another. In addition, and in conjunction with, distrust in large institutions, big firms’ ability to relate to consumers at scale may be limited by the following factors:

Localized consumption: Food consumption is hyper-localized. The average distance between a consumer and where that person purchases food (retail or foodservice) is 2.6 miles. The result is that consumer food preferences may be regional or local and this leads to downward pressures on scalability. For example, Campbell’s acquisition of Garden Fresh struggled in large part due to geography: the latter’s product had unique appeal to regional consumers, but couldn’t be scaled on a national level.

It’s hard to be friends with everyone: Increased scale may lead to the  degradation of customer communities. In the case of Pabst Blue Ribbon, the brand was resurrected by turning itself into a hipster brand. The other side of this strategy is that scalability will likely have a glass ceiling: the product is emblematic of a community. To have an in-group, excluding others in an out-group is also necessary. Being connected to, or part of, a community requires that some people are not part of that community. Many established legacy brands are now universal consumer staples. A consequence of the past success of these products is that many of these products don’t enjoy a special relationship with any particular consumer group anymore.  Saturation or ubiquity, across legacy product categories has led to a lack of defensibility: not only does this open the door for emerging brands that are seeking to take share, it also makes legacy products a target for price competitive private labels.

Scale and mechanization: It’s hard not to become mechanized as an organization scales. However, while mechanization may lead to efficiency and consistency, it can also lead to the degradation of authenticity and entrepreneurial spirit. Authenticity (or inauthenticity as the case may be) has a remarkable way of permeating every part of a business, its brand, and its ability to create products that connect with customers. For example, despite initial success, Kellogg’s introduction of corporatized ways severely damaged Kashi’s innovation capacity and profits in the late 2000s. An opposite example is Annie’s. General Mills (which acquired Annie’s) has been disciplined enough to lend its resources to Annie’s without tampering with what made the brand successful in the first place. Many big firms could benefit from a healthy dose of humility, empathy, and human-centered thinking.

The  appeal of small firms.

It isn’t necessary to speak at length about the advantages of small firms. Put simply, from a branding perspective, their advantage is being almost everything that the big firms are not.

Small firms simultaneously avoid the bad PR of being big and may benefit from consumers’ positive perceptions regarding small businesses.

As regards geography, they can enjoy all the trappings of having products tailored to local geographies, regions, or groups. Although this type of focus puts limits on scalability, it also allows these products to resonate with their core customer in-groups. And as a side note, many of these firms also benefit from their ability to describe themselves as “local” (although what local is seems to be in the eye of the beholder).

And lastly, these small firms haven’t become big enough to develop detached management and MBA-itis. Many are able to maintain authenticity because that is just what they are and they haven’t become big enough to be something else.

It’s still not time to eulogize the big brands.

It seems safe to say that, like trust and relatability, growth will also be inversely related to scale. Small firms will likely continue to take share, leading to an industry that is a mosaic scattered with many firms, most without the ability to gain notable share. For further reading, I suggest referring to the previous articles on the rise of small firms and why market share means everything in food.

With that said, it isn’t time to discount the big firms completely. The reasons for this are two-fold:

Being a legacy brand means having history: Many of the big firms seem to have plenty of nostalgia to play on. Whether it is carbonated soft drinks or salty snacks, many legacy brands have a longstanding place in the American diet. And while some losses may be inevitable, big firms may be able to stave off losses with a combination of investment into new categories combined with reviving mature categories via nostalgia marketing. A good example of a brand that has been revived with nostalgia marketing is Twinkies, simultaneously one of most notorious and legendary products of modern CPG.

It’s easier to change yourself than to change the world: A big piece of small firms’ collective advantage is of the big guys own making: the big firms have heavily corporatized cultures and have a tendency to not keep their hands off their authenticity-driven acquisitions. Being more hands-off or trying to find ways to make corporate cultures more empathetic are things that are completely within large firms capabilities if they can demonstrate sufficient disciple combined with introspection.

Final thoughts

Alienation is reshaping brand preferences and this has profound implications for the food industry.

Big firms are hampered by American distrust in big business and the constraints that scalability places on brand relatability and innovation management. Small firms, on the other hand, are often more relatable due to their perceived authenticity and appeal across distinct customer groups.

It is important to note that the rise of small firms and the redistribution of market share are happening at a market level, but the outcomes for each individual  firm may be vastly different. Many small firms will need to find ways of maintaining their authenticity as they scale- if they don’t they may lose share to the next wave of emerging firms. At the same time, big firms may need to rediscover their authenticity and purpose to successfully grow acquired firms and maintain the relevancy of legacy brands.

The catch is that these tasks may be easier said than done. Firms, both big and small, seem to have their work cut out for them.


About the author:

Jonathan DeVito: Jonathan is a food industry analyst and Principal at PIVITAS. He works with food industry clients to help them make informed product, market, and growth strategy decisions. Jonathan maintains tactical industry expertise by spending weekends picking up restaurant shifts in Chicago.

FEATURED IMAGE SOURCE: PIMCHAWEE/SHUTTERSTOCK.COM.