Salad Bowl Branding

Markets are Changing... Is your brand's packaging strategy?

Over the next decade alone the demand for authentic ethnic specialty foods is slated to increase by a staggering 50%.  What is clear is that today's opportunities reside in creating brands and brand packaging strategies that are tailored to the intricate tastes of cultural segments, not mass audiences. With over 40 years of experience building brands, Arcanna understands the nuances of these emerging trends and employs proven methods for food and beverage companies to capitalize on them.

Salad Bowl Branding was created to share positioning insight, discuss clever marketing strategies and to report on the facts and figures shaping America's new cultural tastemakers.  We hope you find the information on this site useful for developing a more effective product positioning strategy.  If you need help, contact us to schedule a brand packaging analysis.

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ECONOMY CHANGES EATING HABITS

People don't stop eating during a recession.  Instead, they adjust what they eat and where they have their meals.  As a N.Y. branding and packaging agency that specializes in tracking trends in food purchasing preferences, it is quite visible to us here at Arcanna.

Home-based dining and food preparation is on an upswing, which can bode well for supermarkets and other food retailers.  It also has encouraging implications for makers of specialty foods, as people look to substitute the dining variety they would get from eating at ethnic restaurants with experimenting with new foods at home.

When it comes to food preferences, the U.S. isn't a melting pot and hasn't been for years. Instead, it's more like a salad bowl of diverse ethnicities, with ingredients that get tossed together but retain their individuality, influencing everything else.

The growing immigrant population has put new flavors and products on the map, from yellow rice to Wasabi Peas to San Marzano Tomatoes.  The mainstream American population, already familiar with concepts like Tex-Mex and Pan-Asian, have been eager to try them, to the extent that ethnic and specialty foods now account for one out of every seven grocery dollars, and 73 percent of consumers reported purchasing specialty foods in 2007, compared to 64 percent in 2006.

Despite price hikes in retail foods, the grocery store is still less expensive than eating in a restaurant.  Food marketers have helped to fuel the upswing in specialty food sales by getting recipes out via food magazines and on packaging, with ideas for using leftovers and how to increase serving sizes, as well as more creative ways to use packaged products with different seasonings and spices.

Even lower-end convenience stores are using specialty foods to entice more food purchases and bring more profits.  C-store chains are catering to local palates, with items ranging from carnitas pita sandwiches to beef and green chili burritos and sugar cinnamon twist pastries.

The Piscataway, N.J.-based makers of Buenos Dias, a line of imported bakery products, recently adjusted its packaging and positioning to appeal to the Spanish market but found that a majority of its sales were from mainstream consumers seeking authentic Spanish products.

Foodtown, a Woodbridge, N.J.-based chain of supermarkets in New Jersey, New York and Long Island, has been increasing its sales in basic staple commodity items such as cheese, pasta, eggs, coffee and peanut butter, not only because of price increases but because consumers are cooking more at home - as much as a 35% increase in home cooking. 

Private brand sales have increased and will continue to grow as consumers seek better cost value in their food purchase.  "The trend toward organic, prepared and natural products has slowed as shoppers become more price sensitive," said Foodtown Vice President of Center Stores Gus Lebiak.

As interest in and acceptance of ethnic foods by mainstream America will continue, we expect tough economic times will accelerate this trend.

Specialty Foods Continue Their Soar To Mainstream Status

In the $75 billion-dollar specialty foods market, forecast to grow by 50% over the next decade while other food sectors remain relatively flat, an insightful new report has just been released. And for food and beverage companies, there’s A LOT to like about it.

Today’s Specialty Food Consumer 2008, developed by the National Association for the Specialty Food Trade (NASFT) and Mintel International,  cites that 56% of American consumers are currently purchasing specialty foods and beverages—offerings the report defines as “distinctive” in taste, such as premium and ethnic products.

With the average specialty foods consumer now spending $115.50 weekly (an 8% increase from 2006 figures) and allocating nearly 23% of their food dollars for specialty products, the findings illuminate a set of lucrative new trends, including:

America's New (Minority) Mainstream Has Arrived... 4 decades ahead of forecasts

By now, all Americans are aware of the stunning 2000 Census data citing that minorities—groups  spanning Hispanics, African-Americans and Asians—currently represent 1 in 3 Americans and will grow to constitute 50% of the U.S. population by 2050.

But what many companies may not yet know is that in much of the country these forecasts are already a reality… 4 decades ahead of schedule.

Recent Census data heralds that a new “majority-minority” has arrived in 1 out of every 10 of the nation’s 3,000+ counties. In other words, 303 of the nation’s counties already have more than 50% minority-status residents, with cities like Los Angeles already totaling over 70%.

In explaining the sheer gravity of these shifts, Census Bureau Director Louis Kincannon drew this comparison, “To put this into perspective, there are more minorities in this country today than there were people in the United States in 1910. In fact, the minority population in the U.S. is larger than the total population of all but 11 countries.”

Indeed, markets are changing at remarkable clips, and well ahead of schedule. As brands struggle in this economy, the good news is that the cultural markets that are sweeping the nation are opening a host of new opportunities for today’s food and beverage marketers.

Just look at the other trends fueling more demand for specialty and ethnic offerings...

Cutting Back On Dining Out, Consumers Seek New Source Of Variety In Home-Based Food Preparation

With the current market conditions placing the economy on a roller coaster and leaving consumers concerned over their jobs, eating out is increasingly becoming perceived as a luxury item.

In an article covering the decreased traffic at restaurants, The LA Times cited data from NPD Group's newest "Eating Patterns in America" report detailing how restaurant meals now cost on average about three times what it takes to make a similar meal at home... and that when people do eat out, they are frequenting quick-serve and fast food restaurants more often than pricier ones.

Said another way, consumers don't stop eating during a downturn--but they do adjust where they have their meals.

What does this mean for food retailers?  Home-based dining (and food preparation) are poised for an upswing. Amid price hikes in retail foods, the grocery store is still less expensive than the restaurant. A recent Wall Street Journal article tied this trend to increased demand for recipes and advice by way of food magazines. 

The data found that Everyday Food's newsstand sales rose 8.9% in the first half of the year while Everyday with Rachael Ray gained 6.2% and Gourmet increased 3.5%--compared with overall sales for consumer magazines falling by 6.3% (all figures according to the Audit Bureau of Circulations).

So, what does this mean for the specialty foods sector? Eating in saves money but lacks variety since consumers have been used to special dishes at specialty restaurants...thus, consumers will be seeking variety from ethnic and artisan foods that they can prepare at home.

 According to a recent article tracking Goya Foods' booming growth, a representative explained, "Many consumers have shifted away from food service and restaurants and are back to the supermarket and preparing their own meals. In many cases they're searching for something a little different. They're looking to indulge themselves, they're looking for new flavors and new items that bring some excitement to the dinner table since they're eating out less. That's where specialty and ethnic foods can do really well."

The BIG takeaway? In the short term, look for a more loyal audience at the local grocery store (vs. local restaurants) and for a slow economy to spur growth of specialty foods. After all, consumers who are tired of the same thing, may just be the bolstering force of your new (and next) brands. And in the longer term, many foods that are currently considered "niche" will likely get exalted to mainstream status once the market strengthens. In the meantime, we'll keep tracking this trend.

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Amid Market Concerns, Marketing Trends Tell A Larger Story

While news of the economic downturn is blazing the nation’s headlines the fact is, it’s only part of the current story. After all, the economy is not the only entity in America experiencing dramatic shifts.

With one-third of the U.S. population currently of minority status—a figure forecast to soar to half the population by 2050—a far larger story of change is occurring. And with sales of specialty foods rising 17 percent over the last two years (compared to only 4 percent of overall food growth), these long-term marketplace changes hold near-term implications for the specialty foods and beverages industry.

A look at many of the current trends tells the broader story—which includes opportunity, not just economic challenge:

• Purchasing power increases. Minority market segments are not only growing in size but in spending power—and that power is pegged to fervently rise by 30 percent, to $1.9 trillion, within only three years. These markets are essential to the overall economy, and a key driver within our own sector.

• The new “tastemakers” wield wide-ranging influence. With sales of specialty foods slated to grow by an astonishing 50 percent over the next decade, the real phenomenon is that 75% of sales generated for specialty foods are from mainstream customers, not the niche cultural segments originating the foods. Indeed, American palates are now influenced by an entirely new set of tastemakers.

• Home-based dining poised for growth. Consumers don’t stop eating during a downturn, but they do adjust where they have their meals. This is good news for food producers as home-based food preparation is undoubtedly poised for an upswing. Moreover, consumers will seek more variety in their home-based diets since they will not be frequenting specialty and ethnic restaurants at the rates of the past few years.

A Look Back Gives Future Insight

As history has proven time and again, the economy will turn back around--just as the stock market took some steps toward recovery this week. But as history has also taught us, the chance to gain a strong foothold into emerging markets is time-sensitive, too.

Opportunities with new markets of this magnitude—that are influencing the purchasing decisions of much larger markets—come and go quickly…which begs the ultimate question: In this economy, is your company’s growth strategy reactionary or truly visionary?

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Sent via email, the briefings cover America's shifting markets, changing tastes and growth opportunities in the specialty foods and beverages sector. Just send us an email here to receive the briefings.

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Salad Bowl Branding, and America's New Tastemakers, Covered by MediaPost

"The U.S. isn't a melting pot, and hasn't been for years. It's more like a salad bowl of diverse ethnicities, with ingredients that get tossed together but retain their individuality. And these flavors are influencing everything else.

First, these tastemakers put new flavors and products--from yellow rice to wasabi peas to San Marzano tomatoes--on the map. Then mainstream Americans, already familiar with concepts like Tex-Mex and Pan-Asian, are eager to try them too. Ethnic and specialty foods now account for one out of every seven grocery dollars, and 73% of consumers reported purchasing specialty foods in 2007, compared to 64% in 2006, he says. And in the last two years, sales of specialty foods have risen 17%, far outpacing other food sales."

The above quote is from a recent interview with MediaPost (PDF of article located here) where we discussed the Salad Bowl Branding concept--as well as how America's array of cultural niches have given rise to the nation's new tastemakers.

Fact is, America is witnessing an unprecedented period of growth, with opportunities for innovation in specialty foods at an all-time high due to the mainstream's demand and adoption of new offerings. Again, the article is located right here--and if you're looking for more information on Salad Bowl Branding please check out these FAQs.
 

America's ethnic mix: From melting pot to Salad Bowl

That treasured description of America as the great melting pot is no longer true.  It hasn't been true, in fact, for decades. 

A more accurate description would be America as a great salad bowl, where each of the many ingredients are tossed together while retaining its own identity.

Marketers have for decades subscribed to the melting pot concept, demographically segmenting their efforts and their messages according to one location, one age range and one race.  That method of targeting is in need of dramatic change.

In the salad bowl society in America, we share many common values that make for the American Dream.  But immigrant populations also retain key aspects of their heritage, which is evident in the foods they eat.

A recent New York Times article quotes an immigrant parent on the challenges of assimilation.  "Because we are trying to raise our daughter as bi-cultural, much in our family is up for grabs, from the food we eat — and what we say before and after eating it," the parent lamented.

This is an exemplary opportunity for marketers to develop offerings that speak to the various heritages that these consumers identify with.  It is becoming clear that they certainly don't identify with just one, as many marketers had previously assumed. There is already a solid trend afoot in fusion foods -- the blending of flavors and ideas from different cultures and ethnicities to develop brand new dishes (e.g. Taco Pizza, Mango Green Tea), even new food categories (e.g. Tex-Mex, Pan-Asian).

What are the possibilities in serving these new markets? Between the levels of choice and authenticity that today's consumers are demanding, the innovations are near endless. Moreover, as foods that are of rooted in the histories of one culture continue to migrate to the palates of other cultures, and into the mainstream, the profit potential provides a solid business case for more experimentation, not less.

The first step will be for marketers to better understand these markets and how to effectively connect with them.  A July, 2007 Washington Post article cautions us that "Multicultural Marketing 101 does not understand such nuances, just as it does not understand the animus of many middle-class and upper-income blacks against advertising campaigns that seem to portray all black people as hip-hop artists or sports figures. It seems to think that all Asians are from Japan, China or Korea, and all Spanish-speaking people are from Mexico, and all Mexicans are alike."

The challenge marketers face today begins with recognizing that differences exist.  We then need to do a better job of understanding them, so we can speak to them in a way that reflects that understanding of their uniqueness and by offering products that serve their tastes with authenticity.

After all, today's dynamic changes in America's demographics are unprecedented and those specialty foods companies that ignore the demands of these rich and varied audiences will do so at the price of market share for many years ahead.

U.S. Hispanic Market: a force to reckon with...and a boon to savvy marketers

An article from The Wall Street Journal (May 1st) titled Surge in U.S. Hispanic Population Driven by Births, Not Immigration, illuminates just how profoundly the U.S. demographic shifts that are currently taking place will forever change the nation -- and the breakneck speeds at which those changes are occurring.

The 45.5 million Hispanics currently in the U.S. are up from 35.7 million in 2000, with the growth among Hispanics responsible for half of the U.S. population gains between 2000 and 2007. While that increase is nothing short of astronomical, what is most surprising is how it's happened. According the article:

"Hispanics now account for more than 15% of the U.S. population, and their surge is largely the result of births among people already in the country--not immigration. In the 1990s, a flood of Hispanic immigrants explained most of the group's population rise. That has changed in recent years. Between 2006 and 2007, about 62% of the increase in Hispanics came from births."

Hispanic families tend to have more children, while white families are having less. But what is also increasing is Hispanics' purchasing power. As the article states:

"Growth in spending by Hispanics is likely to outstrip that of the general population in coming years. Hispanics control more disposable income than any other minority group. The figure stands at $860 billion a year and is expected to hit $1.3 trillion by 2012, according to Jeffrey Humphreys, who monitors Hispanic demographic and economic trends at the University of Georgia's Selig Center.

Between their numbers and disposable income, Hispanics are already a vital market for politicians and marketers. But these numbers point to how they'll only become more so. And while Hispanics are quickly redefining mainstream America, they're also fragmenting into many micro-niches (read more on micro-niches here) who seek products that align with their cultural heritage as well as the country they now call home.

That only leaves the door open for more innovations across many industries including television programs, music, fashion and, most notably, specialty foods. After all, our markets are changing, so too must our branding. Some reading that covers these new "tastemakers" that are influencing their growing market's preferences--as well as those of the mainstream--is located here. And a three-minute video by The Wall Street Journal on the Hispanic market's dramatic growth and its implications is located below (RSS and email subscribers, please click through to the blog to view).

If multiculturalism is mainstream...why is Hollywood behind the trend?

"I feel like Hollywood is a little behind the curve usually in terms of what America is ready to accept from a cultural standpoint," said Jon Hurwitz  [co-writer and co-director of the Harold and Kumar film franchise]. "Film-goers are a bit savvier than they are given credit for."

In an insightful take on the comedic sequel to "Harold and Kumar go to White Castle," the film that developed a strong cult-like following,  LA Times writer Mark Olsen begs an interesting question on whether cinematic media is ahead of the trends, or behind them.

In both films, the lead characters, who are Indian American and Korean American, have strong ethnic and cultural identities, which marks a departure for mainstream movies. But, what is more telling is how the characters perceive themselves--namely, as mainstream Americans.

And they should. Because they are. After all, America is not a melting pot of one unified culture but a rich "salad bowl" of many cultural segments.

"The theme in these movies is that Harold and Kumar are sort of beyond race," said Hayden Schlossberg [co-writer and co-director of the films]. "They don't really care that much about their own identities; it's the people around them that sort of haven't gotten it yet."

The culturally diverse market segments in America share a common bond through their set of values--like freedom, equality and prosperity--but are unique in their respective heritages. And with one in three Americans already of minority status and forecasts for those numbers set to explode, the fact is, our diverse cultures are no longer minorities...they are, in every sense of the word, mainstream Americans.

What's the key takeaway for film studios? Just as specialty foods are reflecting these cultural influences, so too should our media. It's not only a question of adequately reflecting our nation's demographic makeup...but serving its multi-cultural markets (markets who happen to be avid movie-goers). On the other hand, major television networks have been making some smart casting choices as of late to more adequately reflect diversity. Shows like Lost, Grey's Anatomy and House feature Asian, African-American and Indian actors in lead roles--to much acclaim, loyal audiences and high ratings.

According to Kal Penn, the actor who plays Kumar, "It's probably too soon to say, but hopefully you're seeing a shift where the real America is actually being reflected in all its diversity. I find it really refreshing and more interesting to watch when things are more fleshed out."

We couldn't agree more. If Hollywood needs more assurance that audiences will embrace diversity, they need only look at the growth of the specialty foods industry (17%) compared to overall food sales (4%). The growth rates of multicultural markets, coupled with the surging demand for more specialty foods and the high ratings of TV shows featuring culturally diverse casts make it all too clear: promoting diversity--be it through movies or consumer packaged goods--is a profitable venture for the savvy companies who are reflecting and building upon today's trends in their offerings.

One size does not fit all: marketers must dig deeper to connect with cultural markets

An article in AdvertisingAge by Tommy Thompson (April 22nd) sheds some much-needed light on today's cultural markets in the U.S--most especially on the fact that while they may be of the same ethnic backgrounds, that is where many of their similarities end.

But, as Thompson points out, many of today's marketers are the last to know.

Arguing that targeting as large a group as the 45 million Hispanics currently in the U.S., he explains that profiles based solely-- and far too simply --on benchmarks like "Hispanic Adults ages 18-49" doesn't adequately reflect these groups' wants, needs, views or preferences.

And while Thompson's piece focuses on the Hispanic market, with the surging growth rates across multiple cultures and ethnicities, his counsel provides a cautionary tale across all market segments.
According to Thompson:

"The reality is that the Hispanic consumer is not a homogeneous group and therefore these types of broad statements won't work for most brands in today's changing environment. In order to effectively connect with today's Hispanic consumer, we must understand that there are sub-segments united by common interests that make the whole. Let's say there are niches within the niche.

"There are in many ways vast differences between the consumer of Mexican decent in San Antonio vs. one in Sacramento vs. one in Dallas or one in New York (yes, there are Mexicans in New York). Most importantly, there are differences in the strategies and tactics that a brand should use to reach them and engage them. The reality is there are many factors that our Hispanic consumers are exposed to that shape who they are, what they like, what sports they play or watch, what they consider entertainment, what brands they buy and the list goes on, but you get the point. Our job as marketers is to find the common thread that unites as many consumers as possible so that we can be effective and efficient with our client's dollars."

In this era of mass-market fragmentation, when marketers start digging deeper to better understand the various (and highly varied) new niches of consumers, their intelligence will pay off in both profits and competitive advantages. Innovating in specialty foods is an especially ripe opportunity due to two key reasons: first, it's clear these micro niches need to be better understood and, thusly, better served. And, second, specialty foods are not only being enjoyed by their niche of origin, but by mainstream audiences. Given that sales of specialty foods are up 17% over the last two years, compared with only 4% for overall food sales, we're already seeing success resulting from better targeting and branding.

Indeed markets are changing-- as are the micro-markets within them --which begs the question for today's marketers...is your branding changing, too?