A new emphasis on Millennials and Hispanic consumers is driving a huge shift in the way Kraft markets its vast menu of center-store brands and products. The food marketer is now relying much more on applications of “Big Data” and digital marketing to continue to reap gains in an area of the supermarket it has traditionally dominated.
Transformation of consumer demographics and habits by Millennials, Hispanics, tech-savvy consumers and those mostly concerned about nutrition and health, as well as some other groups, “is challenging the investments the CPG industry is making in our historical vehicles,” Deanie Elsner, executive vice president and chief marketing officer of the Northfield, Ill.-based CPG giant, said during a presentation at the Barclays Back-to-School Consumer Conference in Boston earlier this month.
The emergence of e-commerce and the “increase in instant consumption” is being driven by these demographic cohorts, she said, “and their rapid adoption of digital and mobile is reinventing the communication landscape.”
The temptation is there for any relatively slow-growing CPG company to de-emphasize the center of the store and focus more instead on the perimeter, which is certainly de rigueur and where categories are faster-growing. But Elsner noted that the store’s center still represents about 75% of total grocery sales and of total profits and that the perimeter would have to grow by more than 2.5 times to be the size and scope of what the center store yields for the retailer.
But Kraft has triaged its own center-store presence into those categories that are driving grocery trips (including yogurt, coffee, salty snacks, lunch meat, nuts), those that are lagging the rest of the market (such as candy, salad dressing and dry pasta) and those that are losing ground (frozen vegetables, hot cereal, ready-to-eat cereal, shelf-stable juices and drinks and soft drinks among them).
“The Kraft Foods portfolio is relatively well positioned” within that environment with fast growers such as Gevalie coffees and Oscar Mayer lunch meat and bacon products and Planters nuts, “but the question becomes how do you change the trajectory?” Elsner asked. “It’s a big question. And the answer is you follow the consumer. Today within CPG we are in the middle of a transformational shift in the landscape, and it’s all being driven by the consumer.”
And the way that Kraft increasingly is “following the consumer” is through use of Big Data and digital marketing. Big Data, of course, describes today’s emphasis on taking advantage of massive computing power to gather and analyze all the sets of data that are being generated internally and externally in a business, creating new insights with the data and harnessing that information in new ways to boost sales and profits.
Meanwhile, the effectiveness of traditional advertising is being diluted by plummeting broadcast-TV ratings, the fragmentation of TV viewers and their shorter attention spans, and other factors. That’s been forcing a reassessment of the go-to-market aspects of marketing with more of an emphasis on buying access to the “individual” instead of to the medium. And that, of course, leads to a greater focus on social media and other digital channels for reaching increasingly connected – yet in some ways more and more elusive – consumers, especially in Kraft’s preferred demographic targets.
Kraft took unprecedented advantage of Big Data and digital marketing, for instance, in reintroducing its Philadelphia Cream Cheese business recently. The company “was challenged with users walking away” from the Philly brand, Elsner said. So the brand “renovated and reinvented the soft Philly cream cheese line by simplifying their ingredient line, getting to a better package [and] adding more fruits and vegetables.”
At that point, Kraft’s emergent Big Data platform “gave them the confidence to understand the different consumer segments,” Elsner explained. “Tying it to purchase data, we were able to define and locate where those consumers were. Understanding what motivated them between sweet and savory, we served up messages that were appropriate to the target in the right medium at the right moment.”
For instance, aiming at a consumer cohort Kraft labeled as “lapsed loyals,” Philadelphia’s message as conveyed with relevantly targeted banner ads online was, “More Real Veggies. No Artificial Flavors.” And as aimed at bagel buyers, for example, one message was “More Real Strawberries. No Artificial Flavors.” The results of such niche targeting, Elsner said, “have been tremendous.”
Kraft also has taken a major plunge into more “branded content,” which is increasingly seen by American consumers as on a par with content that they seek out from traditional publishers. Kraftrecipes.com, for instance, is a storehouse of 27,000 culinary professional recipes, and 30,000 consumer-submitted recipes, and 68,000 images, and gets one billion recipe views a year. That’s good enough to rank Kraftrecipes.com as No. 7 among all recipe web sites with a paid subscription base greater than that of Food & Wine, and it’s the No. 1 Spanish-language recipe source in print and online combined.
The sea changes, while fast, Kraft Foods CEO Tony Vernon said at the Barclays conference, present “real opportunities for Kraft, and the food and beverage industry as a whole. Those who can adapt, who can contemporize their offerings, and who can get their products in the right location, at the right price, will prosper.”