By Richard Merrick, Sales Director
According to a recent study, Millennial consumers are two times as likely as any other demographic to distrust consumer package goods (CPG) companies. Yet Millennials are largely viewed by CPG companies and retailers as one of the most important demographic segments among consumers. As a result, CPG companies need clear strategies to help them understand shopper concerns and to develop approaches to modifying product development, marketing and transparency that help increase trust. Here is a closer look at what the market research reveals about Millennial concerns and how CPG companies are working hard to address these potential issues.
Artificial Sweeteners, Pesticides and Unpronounceable Ingredients
AdAge recently reported that an RFP went out to advertising agencies that contained the following statement: “Most of our food supply comes from factory farms, is dependent on GMOs and chemicals and is not sustainably grown or raised.” The RFP came from Kashi, a brand owned by the Kellogg company and positioned as a health-oriented product line. The company was actually looking for an agency partner to help “re-establish our identity in the natural foods movement.” As a case study, the RFP is an excellent example of companies that are aware of Millennial concerns and searching for ways to proactively address them.
As documentarians, professors and public agencies have spotlighted major food companies and their manufacturing processes, the public has become more educated about food choices. With an increased interest across demographics in making healthy choices, there is strong resistance to Big Food on multiple fronts. Consumers are wary of artificial sweeteners, sugar, pesticides being used during food production, the ramifications of ingredients that they are unable to pronounce and more. In particular, Millennials and other younger consumers show the highest level of concern about these issues. CPG companies are responding in many ways, from changing the way they think about product development and sourcing vendors to reinventing their approach to marketing. Addressing these issues is both important now for immediate sales and with an eye toward establishing long-term, lifelong relationships with consumers who will be making buying decisions for the next several decades.
Transparency: The Highest Currency for Building Trust
In the study referenced above, transparency was an issue cited again and again. Consumers want to know what’s in their food. What’s more, consumers want insights into aspects as diverse as the agricultural process, what additives are used, manufacturing and more. Transparency is needed throughout the process, from how companies position their brands to how labeling and marketing are handled. Trusting companies to tell the truth is key. For example, several scandals of changing the terms used to describe questionable ingredients has created the demand for higher standards and clearer labeling.
CPG companies are addressing these concerns in a number of different ways. One is by paying more attention to the actual processes they use in manufacturing products. The second is by engaging in clearer labeling. In many cases, companies are striving to use product packaging as a way to communicate clear product values: gluten-free, non-GMO or organic are frequently seen on the labels of products where they apply. Some brands are going even further and using product packaging and labeling as a way to tell brand stories and offering ingredient differentiation. For example, products aren’t being called “spicy” but are instead labeled as flavored with “jalapeño” or “ghost pepper.” A higher degree of transparency is letting Millennials concerned with highly specific ingredients bypass many questions.
Changing Product Development and Marketing
Another area in which Millennials are having a strong impact is product development and marketing. Multiple studies have shown that Millennials care deeply about health and what they put into their bodies. As a result, the market is seeing multiple major brands eliminating artificial ingredients and moving toward a more natural approach. For example, Diet Pepsi is now aspartame free and Nestle USA committed to removing all artificial ingredients from their candy. These are major steps and changes in the face of evolving sentiments about what constitutes a desirable product.
There’s also an overall increasing shift and focus on the way that marketing is approached. It’s not just about transparency and honesty in positioning, although that’s a major trend. There’s also a question of authentic engagement. Not long ago, for example, the breakfast category largely marketed itself through entertaining mascots and celebrity endorsements. Today’s breakfast cereals take a different tact with marketing, focusing on benefits to the consumers such as high fiber, more energy and organic ingredients. Marketing teams are thinking about creative ways to speak to Millennials and show that they understand their concerns. Yet authenticity remains important; inauthentic campaigns along these lines can be viewed as patronizing and have a negative effect.
Millennials have long been a highly desirable segment of the market. In particular, they are becoming a critical segment of the buying population as they become more financially successful and start their own families. CPG companies are paying attention to their concerns and finding ways to increase trust through transparency, more natural ingredients selection, and clear and authentic marketing.