Memo: Just Meat

It’s one of the most difficult tasks in marketing or advertising.

Over the course of the last year, I have tried and tested over a dozen direct-to-consumer brands that have each taken a stab at de-commodifying a commodity. The most recent: a DTC service called Just Meat. The product’s ease of use is enough of a differentiator to make it interesting. But even that will not be enough to overcome the obstacles it will face further along the growth curve. Over time, I have observed a correlation between meat and alt meat’s growth curves and their new woes.

Each month, it seems that there was a new meat retailer looking to piggy-back on the early successes of ButcherBox, which until recently was mum about the hundreds of millions of dollars it was generating each year in top line revenue. With the cow out of the pasture, so to speak, the market for DTC meat has popularized. “If x can do it, so can y,” is the basic logic. But the truth is that in most cases, there is an invisible wall that real meat companies share with alt-meat companies.

For alt meat, it’s the fact that the top competitors alienated the American heartland with much of their progressive marketing. In a recent look into this, AdWeek quoted Peter McGuinness, the CEO of Impossible Foods, on this matter:

So the way to get meat eaters to actually buy your product is not to piss them off, vilify them, insult them and judge them. We need to go from insulting to inviting, which is a hell of a journey.

He goes on to say, “There was a wokeness to it, there was a bicoastalness to it, there was an academia to it … and there was an elitism to it and that pissed most of America off.” Even those are gutsy words for McGuinness. Frankly, regular meat has a similar issue.

Every brand is competing for market share, hoping to scale what I do not believe is infinitely scalable. Ranchers, farmers, and fishermen can only ethically produce so much meat with the whitewashed labels that we’ve come to know: sustainable, grass-fed, grass-finished, wild caught, free range, and so on. So if there are a growing number of companies looking to out rank the other by growing the pie, the DTC meat industry will continue to run into issues producing profitability.

Recent developments in both the traditional and alternative meat sectors suggest an ongoing struggle for market dominance, with each segment grappling with unique challenges. The decline in the popularity of plant-based meats, juxtaposed with the potential for growth in the traditional meat industry, paints a picture of an industry at a crossroads. This will explore the reasons behind the alt meat industry’s struggles, the projected growth of the commodity meat industry, and the pivotal role of marketing in determining the future leaders of this sector.

The Alt Meat Industry’s Struggles: The alt meat industry, once heralded as a revolutionary solution to environmental and ethical concerns associated with traditional meat production, has encountered significant roadblocks.

Startups in the nascent category face a marketing conundrum, with McGuinness pointing to “very little awareness and understanding” of the pork, chicken and beef substitutes, along with a raft of disinformation often spread by “Big Beef” and its deep-pocketed friends. (AdWeek)

Articles from sources like Grist and Alltech elucidate these challenges. The initial surge in popularity of brands like Beyond Meat and Impossible Foods has been tempered by issues around health perceptions, taste, and price. Consumers’ disillusionment, coupled with the reality of these products being highly processed, has led to a decline in their appeal. Moreover, as a vintage Force of Nature article emphasized, the commodification of real meat – a challenge that alt meats have not been immune to – raises questions about the authenticity and sustainability of these products. These factors collectively contribute and impact both sides of the industry.

One is angering traditional Americans and the other is fibbing to them.

Growth in the Commodity Meat Industry: Conversely, the traditional meat industry, despite its environmental baggage, is poised for ethical growth as health influencers and other market signals indicate a coefficient of growth ahead. The Alltech article highlights a potential transformation within this sector, emphasizing sustainable practices like regenerative agriculture. Dr. Mark Lyons, president and CEO of Alltech:

There is no other industry that plays such a fundamental role in terms of not only producing food, but also preserving our planet. If we produce our food in the right way, we can deliver on some of those big objectives of having the right nutrition, of creating new economic opportunities, and protecting and renewing our natural resources.

These ethical practices could mitigate some of the environmental impacts traditionally associated with meat production. Furthermore, as consumer awareness increases, there is a growing demand for meat products that are ethically sourced and environmentally friendly. This shift presents an opportunity for the traditional meat industry to reinvent itself and cater to this new consumer consciousness. But there is a sizable caveat. There are limits to the ethics of these DTC brands that claim altruism as their core tenet. Eventually, all meat production resembles a derivative of Upton Sinclair’s worse nightmare. Sinclair’s fiction about the horrors of American Industrialization still resonates today, albeit with greater oversight.

The Struggle of Individual Brands: The path to growth is not without its challenges for individual brands within the traditional meat industry. The commodification of meat, as critiqued by upstart DTC brand Force of Nature, leads to a race to the bottom in terms of price and quality.

Farmers who produce commodity foods—whether animals or produce—are forced to accommodate the market. And the market, that is to say the consumer, is usually concerned about price instead of quality.

This, in turn, makes it difficult for brands to differentiate themselves and establish a unique selling proposition. But the entry of major players like Amazon, as noted in a recent Business Journals article, could provide clarity for how a DTC retailer could establish themselves well enough to improve pricing models, reduce strain on struggling CMOs, and establish a stake near the top of the marketing food chain (in a way that nearly every other commoditized food seller must).

For $9.99 a month, Denver Prime [and Columbus, Ohio] members will have access to unlimited grocery delivery on orders totaling more than $35. This includes products from Amazon Fresh, its same-day grocery delivery service, and Whole Foods Market. The subscription also gives members unlimited 30-minute pickup on orders of any size.

Amazon is moving further into the grocery subscription service market as the dense market further intensifies infighting, petty blogs about competitors, and general competition. These services, offering convenience and variety, put additional pressure on individual meat brands to stand out in an increasingly crowded marketplace.

The Crucial Role of Brand Marketing Done Well

The most legendary employee at a commoditized product provider is its marketer. Whether this is true about shoes, soft drinks, or cars, the Chief Marketer decides the entire fate of the venture. Why? In this competitive landscape, brand marketing emerges as the key differentiator. DTC retailers in the space that succeed in establishing marketing superiority will likely lead the industry for good. Take a step away from meat / alt meat for a moment. Liquid Death sells the most commodified-yet-limited product on planet earth and yet, more and more grocery aisles, gas station refrigerators, concert venues, and sporting events feature its product as if Mike Cessario (the brand’s founder) discovered packaged water in 2019:

High favorability toward Liquid Death’s marketing efforts makes them a “brand to watch.” Among those aware of Liquid Death, a whopping 51% are favorable to their packaging and marketing – including their can designs, “Don’t be scared. It’s just water” advertisements, social media posts, and more. Conversely, 30% say they’re neutral and 19% are unfavorable toward their branding. (Civic Science)

One key figure that I am still digesting is that, according to Civic Science, 16% of Americans have tried Liquid Death. Now apply this to meat. This requires a nuanced understanding of consumer preferences and a strategic approach to communication. Brands need to navigate the thin line between commodification and differentiation, emphasizing the unique attributes of their products while addressing broader consumer concerns about health, sustainability, and ethics.

So how can brand marketers, with much pressure to perform, achieve marketing superiority?

Authenticity and Transparency: In an era where consumers are increasingly skeptical, authenticity and transparency in marketing are non-negotiable. Brands need to provide clear, verifiable information about their sourcing, production processes, and environmental impact. This is particularly crucial for alt meat companies that need to address concerns about processing and healthfulness. But this can also apply to traditional meat companies. Tell consumers:

Only a few of these brands like ours can last with proper unit economics. Ranchers can’t produce much more than they are right now. They deserve more respect, not more pricing pressure. And, in fact, we should be charging more and not less for this wonderful product. To that, we need to end the competition.

I’ve seen this done before in another consumer market. It’s not at all simple, easy or clean but it’s possible. Face it, 30 DTC brands (and climbing) selling meat primarily through eCommerce channels makes the eventual winner harder to come by.

Emphasizing Sustainability: With growing awareness about the environmental impact of meat production, sustainability becomes a key marketing theme. This excerpt is about alt meat, but fully applies to the discussion about traditional meat sellers:

Food companies—even ones with a cool technological edge—do not grow like a software company, he says. Food companies operate on razor-thin margins, prices are volatile, and customers can be extremely picky about what they’ll put in their mouths. There’s also a scaling issue. Software companies can scale rapidly because getting their product to new customers costs almost nothing. It’s just a matter of duplicating lines of code, or hooking up a user to a centralized database that already exists. Food isn’t like that. (Wired)

Traditional meat brands that adopt sustainable practices, such as regenerative farming, and communicate these effectively can capture a significant market share with a successful marketing approach; they may also alleviate pricing pressures. Alt-meat companies, on the other hand, need to reinforce their environmental benefits while addressing other consumer concerns about taste, ingredients, and its impact on health.

Targeted Messaging: Understanding and targeting specific consumer segments is critical. For instance, health-conscious consumers might be more receptive to messages about the nutritional benefits of highly nutritious meats, while environmentally conscious consumers might be swayed by the sustainability aspect. Tailoring messages to these specific interests can enhance marketing effectiveness. As of now, most top competitors in this space segment through bloggers and YouTube and TikTok influencers rather than envelop these different brand character traits into one cohesive message.

Innovative Distribution Channels: This happens to be the most critical of the points. Leveraging direct-to-consumer models and subscription services is commonplace. But becoming the go-to commodity retailer within Amazon’s platform would become the arbitrage that separates the challengers from the challenged, for good. Amazon’s expansion of Prime by allowing infinite monthly purchases will influence the mechanism of repeat purchases, and render the traditional, recurring model less critical than it was just one year ago. Tony Hoggett, Amazon’s senior vice president of worldwide grocery stores, in a statement:

We’re always experimenting with features to make shopping easier, faster, and more affordable, and we look forward to hearing how members who take advantage of this offer respond.

Marketing is excellence in brand voice, value proposition, and differentiation. Distribution is equally important in this context. Whichever brand convinces Amazon Prime (and non-Prime) users that it is the go-to meat in the ecosystem will unlock a recurring purchase pattern that elevates the brand beyond its own marketing mechanism. Amazon is the foremost competitive edge in grocery today, because it resembles a top of funnel that influences purchasing habits in all other grocery stores and their delivery networks. These channels offer convenience and can help build brand loyalty.

The meat and alt-meat industries share a characteristic or two, chief among them that growth is difficult, and their workforces are either stagnating or failing to grow as a result. The alt-meat sector is grappling with challenges and the traditional meat industry is facing both growth opportunities and the need for differentiation. The success of individual brands within this complex and evolving landscape will largely hinge on marketing and distribution. As consumer preferences continue to evolve, the industry must adapt, ensuring that it meets the demands of the modern consumer in a way that is both environmentally responsible for their producers and economically viable for the brands themselves.

The brand that best decommoditizes a commodity wins.

Por Web Smith | Editor: Hilary Milnes

Memo: DTC Brands And Secondaries

It’s not farfetched to argue that brands are capable of attracting consumer attention and commerce in ways that resemble traditional media and entertainment companies. A Vuori yoga studio would be in high demand for daily classes. An LMNT trail run series would attract enthusiasts in a number of cities known for outdoor activity. Both of these venture-backed companies share more than fitness in common; they share tremendous secondary market interest.

If given the option (even in today’s depressed secondaries market), the brand’s most avid supporters advocates, would buy shares of Vuori or LMNT or Gymshark or Liquid Death. The purchase of secondaries is an expression of brand equity, and it may be the best indicator for a brand’s market viability moving forward.

Brands and their equities are not determined solely by their retail sales. A pop entertainer’s value is not determined solely by primary market sales. If you’ve ever tried to buy Taylor Swift tickets from Seatgeek, you’ll know what I mean. Swifties, perhaps the purest expression of brand advocacy in modern entertainment, are willing to pay a premium just to be there for the show.

In the contemporary marketplace, brands have evolved to become much more than mere purveyors of products or services; they are, in many ways, entertainers. This reality is particularly evident in how consumer engagement and brand experience play central roles in shaping customer perceptions and loyalty. Just as a blockbuster show or a high-profile concert captivates an audience, successful brands like Vuori, Shein, Skims, Faherty, Whoop, and LMNT enrapture many of their customers. These brands leave customers wanting more from them, leaving open the idea of creating immersive and emotionally resonant experiences for then.

This extends into the realm of financial valuations. For the aforementioned brands, a cross section of extraordinary DTCs, their secondary interest can be likened to after-market ticket prices for major entertainment events. Across the market, valuation multiples in DTC are depressed according to the Drivepoint index that includes: Lululemon., Yeti, Canada Goose, Purple, Hims, Solo Brands, FIGS, Brilliant Earth, Lulu’s, Allbirds, and Laird Superfood Inc. But according to a recent report by Carta, secondary interest in internet-based companies till remains high.

A plurality of startups conducting liquidity programs so far this year on Carta have been in the SaaS sector, which is in line with historical norms. Two other sectors have seen substantial increases in their share of secondary activity: About 23% of deals so far this year involved internet & media companies, up from 18% for the full year 2022. (H1 Report – Carta)

But while this is an indicator of industry health, it is somehwat Carta added: “When the percentage of employees who are sellers declines, the percentage of sellers who are founders and investors increases.” In the context of the ratio of employee offering to founder offering, “Back in H1 2021, nearly seven out of every eight sellers was an employee.” That rate fell to three out of four in H1 2022, and it indicates a reflection of market appeal and the level of excitement a brand generates among investors, akin to a must-see show that draws crowds willing to pay premium second-market prices for the experience.

A barometer for brand equity: what’s the brand’s secondary market like? If the answer is non-existent, it could be a cause for concern. A brand advocate should always want behind-the-scenes access to the top brands.

Just as a sold-out concert or a hit Broadway show signifies high demand and popularity, robust and rising secondary interest in the private market signal a brand’s strong position and the high regard in which it is held by investors. These prices are not just numbers; they represent the collective anticipation and enthusiasm of the brand’s future in the market, mirroring how audience demand drives up ticket prices for a hit entertainment event. While not representative of a secondary market, we commonly see this stock vs. product purchase discussion in the context of Tesla. A Reddit thread on the psychology of this situation is fascinating:

Based on my current behavior, I would rather invest in the company…really want one of the cars though, just not enough to sell the stock.

Or this one:

I have 643 shares of Tesla and don’t own a Tesla. I have a Toyota Tacoma (paid off) and will keep that until the new quad CyberTruck comes out. I will definitely be purchasing that.

When this pattern of thinking is considered, the dynamics of private stock trading become a barometer of a brand’s ‘star power’ in the market. Brands that successfully engage and entertain their audience – with innovative products, compelling marketing, and strong customer relationships – see their ‘ticket prices’ rise, reflecting their desirability and success. Conversely, brands that fail to captivate an audience, much like a lackluster show, might find their secondary interest languishing, indicative of waning investor interest and market appeal. Consider this quote from the Academy of Business Research Journal. There, in 2017, Wei Feng examined the relationship between a firm’s brand equity and its investment value:

Stocks with deteriorating brand equity generally feature lower return potential.

Why do we only consider this with respect to public stock value? Combining the concepts from the business journal review on brand equity with the discussion about secondary stock sale interest for private companies reveals an intricate correlation between increased brand equity and secondary market interest.

High brand equity often translates to a strong, favorable, and unique presence in the consumer’s mind, which can significantly influence their purchasing decisions. Here are three correlations:

Brand Awareness and Equity: The journal article indicates that brand awareness, encompassing recognition and recall of a brand, plays a pivotal role in building brand equity. A private company with high brand awareness is likely to be more recognizable in the market, attracting investor attention. This awareness, especially in the upper echelons of DTC brands, signifies a strong market presence and suggests a robust potential for growth and profitability – key factors that make the company’s shares attractive in secondary markets.

Brand Image and Equity: A positive and strong brand image – comprising attributes, benefits, values, culture, personality, and user type – directly contributes to enhanced brand equity. For private companies, a compelling brand image can be a decisive factor for investors in secondary markets. A favorable brand image often reflects a company’s stability, market strength, and potential for long-term success, making its stocks a desirable commodity in secondary transactions.

Sales Promotions and Equity: Effective sales promotion strategies, both monetary and non-monetary, can bolster a brand’s market presence, directly influencing its equity. For private companies, innovative and successful promotional strategies can signal market agility and consumer appeal, traits that investors seek in secondary market transactions.

When it comes to secondary stock sale interest, this is where the concept of brand equity becomes even more crucial for private companies. High brand equity suggests to potential investors that the company has a strong market position, loyal customer base, and significant growth potential, making its shares a valuable investment.

On platforms like Hiive Markets, Forge Global, and Equity Zen, where secondary transactions for private companies occur, the level of activity and interest in a company’s shares can and should be measured as a data point. Active trading is itself a product offering and can signal strong brand awareness and a positive brand image, suggesting overall robust brand equity.

Summary: For private companies, the interest in secondary stock sales is closely correlated with the brand equity, which is a composite of brand awareness, brand image, and the impact of sales promotions. Strong brand equity not only enhances a company’s standing in the eyes of consumers but also elevates its attractiveness to investors in secondary markets, thereby influencing the liquidity and perceived value of its shares. It can be a virtuous cycle.

In the modern era of branding, where customer engagement is paramount, brands must think and act like entertainers, constantly seeking to captivate and delight their audience. They should also expand their definitions of what a customer is to a brand. A retailer’s ability to do so is not just a matter of market strategy but is directly mirrored in the valuation of their secondary interest. And like a Swiftie’s desire for a ticket at almost any cost, the higher the perceived brand-as-entertainer value, the more customers will be willing to invest. The effort to assess and publish secondary interest in top brands should become a priority, it should become as common as any other subjective measure of equity.

By Web Smith | Editor: Hilary Milnes with art by Alex Remy 

Editor’s Note: to join this memo, we’ve added a study to the DTC Power List. For the new feature on polled secondaries interest, we combined a poll (n=97) with internal data on this update’s top 250 brands to assess whether those polled and others would pursue an interest in secondary stock sales from employees, founders, and / or existing shareholders of the retailers mentioned. We weighted the poll as 90% of the the assessment and we plan on growing the list to the full 800+ in the coming weeks. As mentioned above, interest in purchasing secondaries is a positive indicator for the current brand equity, potential brand equity, and current financial health of the retailers mentioned.

Deep Dive: Two DTC Brands

Both companies set out to take on Nike and Adidas. The eventual divergence of their paths can be attributed to a number of differences in decisions: funding methods, geographies, early adopters, and design philosophies. But what ultimately set one shoe brand up for international dominance ($8+ billion market cap) and the other into survival mode ($100 million market cap) came down to this: comfort.

It can be easy to forget that Allbirds, at one time, seemed to be on the same trajectory as On. Wrote Rachel Syme in 2018 for the New Yorker:

In their initial wave of popularity, Allbirds became an essential part of the daily uniform of Bay Area tech entrepreneurs. But in the past year Allbirds have travelled outside the clean hallways of Silicon Valley headquarters and tipped into the mainstream. Mila Kunis wears Allbirds. So does Jennifer Garner. So do Park Slope dads and modern dancers and trendy teen-agers and kooky aunts and registered nurses and bartenders and pretty much every overworked, weary thirtysomething you see on the New York subway.”

The cascading effects of comfort as a variable would take volumes of essays to explain but here I will try to simplify as best I can. I wrote this about Allbirds in February of 2022 when it was still a $1.5 billion company. 

Allbirds is cozying up to wholesale. It’s an interesting paradox in omnichannel strategy that takes brand awareness and unit economics into consideration. The brands with sales velocity and stature to own their distribution can and will move towards an owned-store / DTC model. Brands working to reach profitability and scale are moving towards third-party retail wholesale partnerships.

In that essay entitled “Omnichannel Nirvana“, I opined that the strongest brands are pursuing DTC strategies while brands in need of sales growth are highly reliant on wholesale partnerships. The irony of the timing of this new report is that Allbirds is still pursuing wholesale and On Running is shifting in the opposite direction, according to this report in WWD.

The Swiss sports brand reported the strongest quarter in its history Tuesday morning with a jump of 46.5 percent in net sales to 480.5 million Swiss francs, driven in large part by its direct-to-consumer business.

As a result, the company will focus primarily on its own DTC efforts going forward and stick with the wholesale partners it already has without significantly adding to its stable. DTC accounts for 35 percent of overall sales.

The journey from performance to fashion statement encapsulates the evolving dynamics of consumer preferences and market trends. Nike, Adidas, and Reebok followed this pattern. Today, it is On Running. And I suspect that it will tilt the brand’s trajectory even higher.

Phil Knight, the visionary behind Nike, initially believed that running shoes were solely meant for sports. He found out that he was wrong. Over time, basketball shoes, epitomized by brands like Nike and Adidas, became the casual footwear of choice, transcending their functional roots to become fashion staples. Without many exceptions, the trend has pivoted away from basketball and returned to running shoes as the primary exhibitor of daily wear (and fashion in some cases).

Today, brands like Hoka and On Running, renowned for their exceptionally comfortable soles, are worn casually by the executive classes, a demographic that Allbirds once firmly held thanks to the early adoption by west coast venture capitalists alluded to in the introduction. This transition from performance to casual wear reflects the changing landscape of the athletic footwear industry and consumer priorities. The great contrast between the two brands began with comfort. People wear Hoka and On because it feels good to wear the shoe. Eventually, enough people wore them that their appearance became more socially acceptable outside of running circles. Like Hoka, On shoes have a particular look that was more unconventional than their counterparts at Nike and Adidas.

Good Steps and Missteps

The rise of On Running is noteworthy and generational. Founded in 2010 by Swiss Ironman champion Olivier Bernhard, On has experienced a meteoric rise in popularity, especially in the last few years. A significant boost in its profile came in 2019 when Swiss tennis great Roger Federer became a shareholder. In 2023, On announced $490 million in net sales in the second quarter, marking its sixth consecutive best-ever quarter. The brand’s appeal transcends its athletic origins, finding favor among various consumer segments, from tech workers to boomer parents and the athleisure crowd. Keys to its growth:

  • Product Innovation: On Running’s unique cloud-like cushioning technology has appealed to both serious athletes and casual wearers. Its focus on technological innovation in footwear has set it apart in terms of performance and comfort.
  • Market Positioning: On Running has successfully positioned itself across multiple segments, catering to both high-performance athletes and consumers looking for comfortable, stylish footwear. This dual appeal has broadened its customer base significantly.
  • Global Expansion: On Running has expanded its market reach globally, making significant inroads in Europe, North America, and Asia. This global presence has contributed to its growing revenue.
  • Brand Partnerships: The involvement of high-profile figures like Roger Federer has boosted On Running’s brand visibility and appeal. These partnerships have helped the brand gain credibility and attract a diverse range of consumers.

On’s shoes, known for their patented CloudTec soles, have historically been relatively firm, catering to a different runner preference than the traditionally softer American market. However, their recent models like the Cloudmonster and partnerships with athletes like Kristian Blummenfelt indicate a renewed focus on athletic performance.

Allbirds, on the other hand, initially captivated the market with its sustainable Wool Runner shoes. Founded in 2016 with a sustainability bend, Allbirds quickly gained popularity, especially in tech hubs like Silicon Valley. However, as the company tried to expand rapidly into new market segments and product lines, like running shoes and apparel, it faced significant challenges. The materials used in its running shoes were not well-suited for intensive activity, leading to durability issues. Its apparel line, made entirely of merino wool, was criticized for being too warm and uncomfortable. Furthermore, Allbirds’ expansion into younger consumer demographics and other product categories without sufficient market research diluted its brand image and confused consumers about what the brand stood for. Keys to its struggles:

  • Segmentation Missteps: Allbirds’ expansion into running shoes and apparel was not well-received. The materials used in their products, while sustainable, did not meet the performance and comfort expectations of the new segments they targeted, particularly in the athletic footwear market.
  • Brand Dilution: The rapid expansion into various product lines and market segments diluted Allbirds’ core brand image. This lack of focus led to confusion about the brand’s identity and diminished its appeal to its original customer base.
  • Pricing and Product Quality: The higher price points of Allbirds’ new products, combined with quality issues, especially in terms of durability and suitability for athletic use, led to customer dissatisfaction and lower sales.

Looking ahead, for Allbirds to reemerge successfully, a pivot in strategy may be crucial. Transitioning from a sustainability-focused brand to one that emphasizes comfort could open new avenues. Developing and patenting exceptional soles, akin to On Running’s CloudTec, could help Allbirds regain a foothold in the market. This focus on comfort, combined with its existing commitment to sustainability, could potentially redefine its brand identity and appeal to a broader consumer base. This strategic shift requires not only technological innovation but also a deep understanding of consumer preferences and market trends.

Asia As The Next Emerging Market For Running

Asia’s burgeoning market for running and athletic footwear presents significant growth opportunities for brands like On Running and Allbirds. The impact of this growth on comfort categories can be substantial, offering new avenues for market expansion and product innovation. Here are a few key points:

Rising Health Consciousness: In many Asian countries, there’s a growing trend towards health and wellness. This shift is driving an increase in activities like running, which in turn boosts the demand for high-quality running shoes. Brands that can tap into this health-conscious market with products that offer both performance and comfort are likely to see success.

Expanding Middle Class: Asia’s expanding middle class is fueling consumer spending on lifestyle and wellness products, including athletic footwear. This demographic is not only looking for functional products but also values comfort and style, blending their needs for athletic and casual footwear.

Urbanization and Lifestyle Changes: Rapid urbanization across Asia has led to lifestyle changes that blend fitness activities with daily life. As a result, there’s a growing preference for versatile footwear that serves both athletic and casual purposes, which is where the comfort category can greatly benefit.

Online Retail and Digital Engagement: The superiority of eCommerce platforms in Asia offers brands an effective channel to reach a broader audience. These platforms also provide valuable consumer data, enabling brands to tailor their products and marketing strategies to local preferences, including comfort-oriented features.

Cultural Trends and Brand Perception: In many Asian markets, Western brands are often perceived as status symbols. Brands like On Running and Allbirds can leverage this perception, emphasizing their unique value propositions in comfort and sustainability to appeal to a wide range of consumers.

Influence on Comfort Categories: The emphasis on running and athletic footwear in Asia is likely to have a trickle-down effect on comfort categories. Consumers who prioritize performance in their athletic wear also seek comfort in their everyday footwear. This overlap creates opportunities for brands to develop products that cater to both needs.

Asia’s growing market for running and athletic footwear is the key area for future growth in this segment, with significant implications for the comfort category. Both can effectively tap into this market by balancing performance, comfort, and style, and adapting to local preferences, stand to gain a significant competitive advantage in this rapidly evolving market landscape.

Allbirds will need to refocus on its core strengths while also innovating in product comfort and performance. Developing and patenting new technologies for soles, similar to On Running’s approach, could help turn it around. This strategic shift should be accompanied by a renewed focus on understanding and catering to its target segments’ needs, particularly around comfort, sustainability, and performance.

The stories of On Running and Allbirds in the athletic footwear industry offer valuable lessons in brand positioning, market segmentation, and the importance of aligning product offerings with consumer expectations. While On Running has successfully navigated these challenges, Allbirds has faced hurdles. However, with the strategic pivot mentioned above, Allbirds could potentially reclaim its position in the market. In the same New Yorker article, Syme wrote: “I have never been the kind of person who selects my shoes based on their orthopedic function.” The irony for high flying running shoe brands like Hoka and On is that this was their appeal before appeal was their appeal. And with that, more consumers prioritized comfort over appearance. Even Adidas and Nike have taken note.

Over four years, emerging sportswear companies Hoka and On Running spent the equivalent of what Nike spends in two weeks to grow their market shares — and added $3 billion worth of revenue over that period, according to TD Cowen. (Business Insider, 2023)

Allbirds can learn from this. Nike is focused on China to continue growing market share. The athletic footwear industry continues to evolve, and brands that can adapt to changing consumer preferences while maintaining a clear and consistent brand identity are likely to succeed in this competitive landscape. This is the tale of the two DTCs. 

Por Web Smith | Editado por Hilary Milnes con arte de Alex Remy y Christina Williams