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.
By Web Smith｜Editor: Hilary Milnes