Alyssa (Berlin) Boris

Starbucks Q2 results, just announced. A lot to unpack tomorrow on this, but it raises the flare on some larger industry trends. Namely, I think we're in for a tumultuous traffic climate in the months to come. Fewer customers to compete for as pricing has stressed the equation to the limits. North America and U.S. same-store sales declined 3 percent, driven by a 7 percent decline in comparable transactions, partially offset by a 4 percent increase in average ticket. Net revenues for the North America segment of $6.4 billion in Q2 2024 were flat to Q2 2023. Operating income decreased to $1.1 billion in Q2 compared to $1.2 billion in Q2 23. Operating margin of 18 percent contracted from 19.1 percent in the prior year, primarily driven by deleverage, incremental investments in store partner wages and benefits, and increased promotional activity. This contraction was partially offset by pricing and in-store operational efficiencies. The company opened 364 net new stores in Q2, ending the period with 38,951 stores: 52 percent company-operated and 48 percent licensed. At the end of Q2, stores in the U.S. and China comprised 61 percent of the company’s global portfolio, with 16,600 and 7,093 stores in the U.S. and China, respectively. CEO Laxman Narasimhan: “In a highly challenged environment, this quarter's results do not reflect the power of our brand, our capabilities or the opportunities ahead. It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us. We have a clear plan to execute and the entire organization is mobilized around it."

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Astute recap from AdLingo on the Hershey's session at POSSIBLE, featuring Vinny Rinaldi and Chalice's Tylynn Pettrey. Free read with signup. https://lnkd.in/efit344b Highlights: "The program's principle was elegantly simple but required serious technical chops to implement. In short, the idea is to take real-time (weekly) SKU-level sales data from a retailer and use it to dynamically adjust ad loads in the geographic area surrounding each store. If sales were going well at a specific store, scale back the advertising. If sales lagged at any given store, dial up the tonnage in that particular geo. This approach allowed Hershey’s to maximize their advertising impact by ensuring that marketing dollars are spent in areas that are most likely to convert to sales... ... Brands should take a page from Rinaldi's playbook. He went directly to Chalice to discuss his business problem and worked with Pettrey's team to develop the solution. This open, direct communication among teams was clearly a driver of the project's success." Thanks Lou Paskalis for moderating and Jeffrey Hirsch for rounding out the point of view. And for the great write-up, Travis Lusk - AdLingo is going to be on my must-read list!

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Ads on Grocery TV’s In-Store Retail Media Network Achieve an Average 14% Sales Lift for CPG Brands: NEW YORK, April 16, 2024 — Grocery TV, an in-store digital advertising network reaching 1 in 5 Americans, today announced the results of a meta analysis that showed, on average, consumer packaged goods (CPG) brands achieve a 14% incremental lift in sales by advertising on their network. The meta analysis included studies from the last […] #DOOH #digitalbillboards #digitalsignage

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Oh no! People in Massachusetts are buying less meat and doing more cooking from scratch. Strong regional chains like Market Basket and Stop & Shop are successfully competing against global behemoths like Walmart and Aldi. New animal welfare regulations are pushing against the worst practices of factory farming. That’s terrible! What’s terrible, of course, is that these positive developments are either causing or caused by rising food prices in the Bay State. And when it comes to food prices, even smart people have a hard time thinking clearly. “We never buy meat anymore,” says one interviewee in a recent Boston Globe article on the subject. “That’s a luxury we save for special occasions.” Which is historically how most people ate meat, until it became more affordable and taken-for-granted, enabled by practices that most eaters are happier knowing nothing about. There’s lots and lots of evidence that eating less meat is good for a whole lot of reasons, but the implication here is that this is a loss rather than a positive change. A reporter at WGBH is similarly conflicted about the effects of Massachusetts’ less-monopolized grocery sector. “The abundance of small and medium-sized businesses in Boston prevents any single chain from having the power to reduce prices and sway others to follow,” she notes. And despite my Tufts colleague Corby Kummer trying to point out that we could see this as a good thing, her takeaway is that more market consolidation would be just fine if it lowered food prices. The big chains are certainly heading in that direction whenever they can. Ahold Delhaize, the European behemoth that owns several regional chains, is planning to close some “underperforming” Stop & Shop supermarkets so it can invest in “strategic price reductions” for the remaining ones. Dollar stores are filling in the gaps in many places even as they, too, abandon their least-profitable locations. The race to the bottom continues apace. https://lnkd.in/eC-mANYc.

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Zyn is the fastest growing CPG in 50 years. 22m pouches are consumed by Americans every day. What can we learn from the rise in mascuzynity? A little background. Zyn are sachets of wood pulp, nicotine and sweeteners that you tuck between your lip and gum. They are supposed to give you a buzz and make you more alert. In 2019, 50M tins were sold. In Q1 2024 alone, more than 136M tins were sold. Fuelled by "zinfluencers" like Tucker Carlson on social media, nicotine pouches (unlike tobacco and vapes) can be advertised and sold in different flavours. In 2022, Phillip Morris acquired Swedish Match, the parent company of Zyn. For many, the appeal is the nicotine. Peter Thiel often states that nicotine provides a 10 point IQ boost. Zyn reflects a shifting perception of male identity and reinforces certain attitudes. “A man with nicotine, protein, caffeine, and creatine coursing through his veins is an unstoppable force.” - Greg Price, a conservative political operator. We talked about this in the End of Men at Nearly Now 2024. Amongst a certain segment of disaffected men, the masculine archetype of strong and stoic has shifted to the hustle bro. Mascuzynity, a term coined by Anna North is about the constant self optimizing "hustle bro." This is the target zyn consumer. Consumers are buying and "popping a cool mint upper decky" because it is a totem of identity around a set of masculine traits that many find desireable. It is a connection to a lost sense of virility that the sensation the nicotine provides reinforces. While seeming abstract, this is an important shift in cultural values and mores to be aware of. Developments like Zyn demonstrate the importance of scanning for early signals of change. That something can get to the scale of Zyn and not be on our radars makes you wonder what else is out there that we are missing. Many of us are aware of the challenges arising from shifting concepts of masculinity and identity. The growth in products like Zyn highlights the scale of the issue.

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On paper, the story of Mars Needs Moms is serviceable. However, the film serves as a startling reminder that film is a visual medium, and Mars Needs Moms ended up being one of the last motion-capture animated films to get a wide release for a reason (though, as I mention in this review, Steven Spielberg's The Adventures of Tintin demonstrates how amazing this technology can be when used properly): https://lnkd.in/gB6uX5kk

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New from me (from last week): Ampla, a consumer startup-focused fintech that has loaned money to buzzy food and beverage brands like Carbone Fine Food pasta sauces and MrBeast-backed snack brand Feastables, is trying to find a buyer after failing to raise a fresh equity round, highlighting how a pullback in consumer spending has had ripple effects far beyond retailers and brands. More on what led up to the sale attempts and Ampla's recent changes to clients' credit lines, including cutting some borrowers off altogether, in my story for The Information: https://lnkd.in/eVuyfkRm

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Claritas has empirically proven that Asian Americans love food. Asian American households spend $5,588/yr on “Food at Home” which is 10% above the national average. Interestingly they also spent 27.5% than the national average on “Food Away from Home.” Asian American consumers are more likely to try new cuisines, especially when dining out. The demographic is also more likely to be interested in eating healthy and organic foods. Food as medicine is a relatively common concept within the community. From halal to lactose intolerance, Asian Americans have dietary needs that differ from the average American consumer. Due to this, Asian American consumers tend to be willing to pay more for their food. This difference in spend compounds each year, meaning Asian American consumers have significantly higher #customerlifetimevalue for food and beverage companies who meet their needs. 

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New media channels have to prove that they work. Recently, we released an incremental sales lift benchmark for CPG brands using in-store retail media based on 16 studies over the last 5 years. In a follow up interview with Sara Lebow and Arielle Feger at EMARKETER, I had the opportunity to share a bit more about the study and what we’ve seen in terms of adoption of in-store retail media over the last 8 years. In short, it’s been easier for non-endemic brands to jump on board vs. CPG brands primarily because of the budget silos. The non-endemic brands have thought of Grocery TV as another opportunity to reach their audience in a brand-safe environment where they're more likely to be paying attention. The idea of non-endemic in a grocery store is somewhat controversial, but we’ve seen a number of creative, contextual campaigns that tie the environment to the product (ex: credit card companies including messaging about grocery points at the point-of-sale). We're looking forward to providing more benchmarks for both CPG and non-endemic brands to make it easier for them to invest. #DigitalAdvertising #CPG

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As a general rule we tell a lot of our CPG and retail clients not to rely on discounts and promos for customer acquisition. It’s not a sustainable model to bring long-term buyers to your brand. And it’s sound advice. Someone buying your products just because they’re cheap is not a consumer who will drive your brand via loyalty and stickiness - two crucial aspects of the consumer reltationship. Which makes the recent acceleration to the bottom in terms of fees and scoping by agencies to secure new business all the more concerning. If brands are choosing an agency based mostly on price, the likelihood of it leading to a solid partnership is low. If the work is good, the price should be, too. This weeks newsletter is live (and a bit spicy, but that’s what an 18th banner will do to a Celtics fan.)

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If there is more of a time to not listen to raw milk influencers, it is now. For Mother Jones, I wrote about the problematic trend of raw milk influencers, and how pasteurization of milk protects you from getting the bird flu from drinking milk. Thank you to Brian Labus and Jessica Gall Myrick, PhD for your insights.

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This is a must-read for CMOs! Mars United Commerce recently spoke with CMOs at leading retailers to hear what business challenges they are currently facing. Michele Roney outlines three key capabilities retailer CMOs must build within their marketing organizations to help tackle these challenges. Link to read it in the comments 👇

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Katz's Deli is popping up in Los Angeles this weekend and GUESS how much one sandwich costs... $45 (!!!) And you know what? They are DEFINITELY going to sell out. This is another prime example of the power of brand. Katz’s is known for their iconic mile high sandwiches and commitment to quality (And the iconic When Harry Met Sally scene… IYKYK)  They have built a legacy as a top sandwich that you can only get in NYC. So, by offering the sandwich in LA for just one day, you create scarcity, allowing you to sell it at a higher price. But this isn't a new idea. Consider All' Antico Vinaio, the famous Florentine sandwich shop that recently created a permanent shop on Abbot Kinney in LA. The result? Long lines, viral social posts, and sandwiches that people pay 4x the initial cost in Italy. The shop's been open for months, and people are still lined up around the corner every day. Another great example is In-N-Out Burger. A West Coast cult classic, In-N-Out created mass hysteria when they expanded into Texas and Colorado. People waited in line for OVER 12 HOURS to get a burger. The limited availability outside of California has made each new state expansion a scene, driving demand and reinforcing the west coast exclusivity. My takeaway? Things are more appealing when they are not available to everyone. So... would you pay $45 for a FAVORITE sandwich? #brandmarketing #katzsdeli #brandexpansion #marketing

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This is a must-read for CMOs! Mars United Commerce recently spoke with CMOs at leading retailers to hear what business challenges they are currently facing. Michele Roney outlines three key capabilities retailer CMOs must build within their marketing organizations to help tackle these challenges. Link to read it in the comments 👇

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One of the strands of history I follow in "Food Margins" is the Minute Tapioca Company saga, starting with its invention by a woman named Susan Stavers in Boston in the late 1880s or early 90s. Stavers was basically done out of the rights to her product by businessmen in Orange, Massachusetts who figured out how to mechanize and scale up production of her signature silky-smooth tapioca pudding. She died in poverty shortly afterward, a sad non-success story that I don't think anyone had uncovered before now. And I hadn't really thought of Stavers as part of the thick layer of un- or under-compensated labor that the whole modern food system rests on, until I read this piece by Adam Reiner in TASTE about how Trader Joe's seemingly clones smaller "ethnic" food brands for its own wildly successful private-label products. TJ's has "a colonial mindset," notes an entrepreneur who talked to Reiner about seeing the chain launch a product suspiciously similar to their own after abruptly breaking off negotiations about collaboration. "Whenever something is cheap, somewhere along the line, someone is being taken advantage of." The article is talking about colonialism in terms of cultural differences and distances, as we tend to do. But thinking about the similiarities with Susan Stavers' experience makes me realize that that colonial mindset is quite willing to throw anybody under the bus--Stavers was a white, middle-class Yankee--if there's a profit to be made. At bottom, extractiveness is the real name of the game.

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More shoppers are buying hard goods like car seats, strollers and bicycle helmets secondhand. But these items typically have safety risks or expiration dates. And manufacturer warranties don't always carry over to secondhand marketplaces. So how do platforms make sure these products are fine for consumers to use? Here's what eBay, Kaiyo and GoodBuy Gear do to vet items for sale. (Huge thanks to Michael Carson, Petra Wise and Megan Larsen for speaking to me for this piece for Modern Retail!)

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SCOOP: Foxbusiness has the post mortem on Target's 2024 "Pride Month" displays and it aint pretty for the retailer. Following customer backlash in 2023, Target $TGT decided to eliminate Pride merchandise in stores that showed no customer interest, and that translated into Pride merchandise being eliminated by 50% across all of its stores, markets execs with direct knowledge say. Other brands are closely following Target's experience to gauge how best to handle "woke" business practices going forward. More now w LizClaman

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