Hey folks! Thanks for all the wonderful feedback and debate from Biggest Challenge in Food, Pt. I: Naturally Re-thinking Manufacturing. The community surrounding Idea Gallery is starting to blow me away.
Today I published Part II: Diverging Brands and Manufacturers. Please give it a read and let me know what you think. This sets us up for the finale in the series where I will make the case that private label is on its way to a central role in the future of CPG food.
I hope you’ve all had a nice couple weeks. As Fall kicks off, the deal community is getting active and I’ve been slammed. I’ll do my best to stay on the weekly cadence. In the meantime, lots of recent time on airplanes has allowed for some great reading:
Positional Scarcity: We have more options than shelf space. Venture capital investor Alex Danco is something of an expert on the phenomenon of scarcity. In Positional Scarcity, he examines the idea that technology has enabled an abundance of available goods and services for consumers. This makes shelf space, search results, and social media customer acquisition extremely competitive. To differentiate, brands must leverage one or more key channels: (1) Curation, (2) Access, and (3) Prestige. A combination of two is great, and a combination of all three creates what he calls a “Loyalty Business.” His drawing is almost as bad as mine, but this is a real framework.
The CPG Apocalypse: Zachary DeAngelo is a VC investor and business development expert in the CPG space. In this article, he talks about the future of brokers, distributors, retailers, and manufacturers. Note that when he references “Manufacturers” he is actually referring to brands, whereas in my articles I refer to manufacturers as those doing the “making.” In any case, innovation abounds not only in product development but distribution. Data and transparency are at the heart of oncoming disruption. Brokers are being disrupted by the likes of Survey.com, edgy distributors add value by consolidating a fragmented specialty brand and retail market through curation-as-a-service, and small-format hyper-localized store concepts are emerging in cities. Lastly, he advocates that brands adopt omni-channel strategies centered on innovation and lifetime customer value.
Escape from Burning Boeing 737: Regardless of your politics, if you like aviation, you’ll find this read by the late David Koch interesting. He, of all people, was on USAir Flight 1493 which collided with Skywest Flight 5569 on runway 24L at LAX in 1991. He wrote of his account which was later used by the National Transportation Safety Board to improve evacuation and runway standards.
Amazon Private Label Brands: For all the discourse on Amazon’s inherent data advantage, its private label brands are not doing very well. So far, the media coverage is much ado about nothing. AmazonBasics has been successful in commodity/replenishment items, but anything unique or innovative struggles. They are not a CPG innovation company. In fact, the notion that historical data enables innovation is off-base. Innovation is a creative process that involves bringing something into existence out of nothing. It usually comes from a core belief about that world that appears contrarian. Obvious, non-controversial data like purchasing behavior and trends make good copycats, not innovators. Amazon has a distinct advantage in commodity, price driven items. If value = “customer delight” / price, Amazon may be able to shave pennies off the bottom, allowing them to win when delight is not possible. But those who specialize in delight are safe.
Don’t You Even Think About It, Hollywood
Glad it Worked Out
Endurance is Valor
Pretty Much
Real Christianity
Never Forget