Exploiting Nutritional Trends for Business

Sports nutrition & fitness industry FMCG expert Kyron Sadik joined the Magnet Monster team to discuss nutritional trends & opportunities for business in 2020.

Magnet Monster (MM): Kyron, thanks for joining us. You have a tremendous amount of experience in the functional food/supplement industry. Tell us about some of the latest trends you consider ripe for exploitation in the coming years for businesses?

Kyron: When considering growth opportunities in any industry, I suggest starting with the key trends that are happening at the macro level across the industry and then take a deeper dive into more specific ones. So, for example, at the macro trend level we have:

Less time, more snacking.
Less pills and powders, more real foods (namely functional food).
Less one-size-fits-all and more ‘specific to me, my goals and beliefs’.
Sustainability and making socially responsible decisions.

The health and wellness category is notoriously trend-driven and in the last 8 years I have seen many a trend, and quite honestly, fads come and go. For brands, though, it’s key to understand the trend that sits behind the trend, as this gives them the best chance of actually developing products consumers will want now and into the future. Granted, the formats may change and new innovative ingredients may come to market, however, the end goal for the consumer remains the same. Don’t forget, it’s the result you’re selling; not the means to it.

For example, one of the biggest trends in the market right now is digestive health, and it is the key trend sitting behind the ‘allergen-free’ movement, namely gluten and dairy. A recent example is the huge growth in plant-based milks, which is more off the back of digestive wellness than a desire for plant-based milk. I would be confident that if I asked 1000 consumers of plant-based milk why they buy it, the majority would say “I can’t tolerate lactose”. This is an example of understanding what sits behind consumer decisions and not taking products at face value.

In my opinion, the digestive wellness category is an area brands need to be paying attention to, with a particular emphasis on the microbiome and the gut- brain connection. Most brands are selling the functional benefits heavily. But the clever ones will focus less on the functional sell, and more on the results and specifically the emotional result for the consumer.

Plant-based meat substitutes is another massively growing category, but when you rate it against the key mega trend of ‘naturally functional’ it falls flat on its face. I see more long term potential with grass-fed and sustainably raised meat, given its alignment with the wider industry trends. Always sense-check your moves against those megatrends to decipher long term pull trends from marketing push fads.

Another opportunity brands should consider, especially smaller brands with limited resources, is focusing on a specific market niche such as Keto, Vegan etc. This ties in nicely with the fragmentation trend and gives you a great opportunity to deliver specialized products for a specific group of consumers. It also has the added benefit of lowering marketing and customer acquisition costs, as you can be laser-focused on your target consumer group, and be seen as the expert authority on it.

A pro tip - The vegan and plant-based market is growing exponentially, in addition to having a highly engaged following. Vegan options on the market at this point are still quite limited, especially in areas of taste and convenience.

The day of the faceless mega brand with its one size fits all model is coming to an end, with more specialized brands taking share every year. This is a trend across all FMCG categories and is not unique to health and wellness brands.

It is probably the first step on the road to mass personalized nutrition, which is where I feel the industry will eventually wind up in the years ahead.

MM: What are the main challenges you see for penetrating the marketing for new brands and generating revenue?

Kyron: For new brands, the challenge will mostly be around resources, increasing social media and online costs… and, of course, getting retail buyers to give you their limited time. The market, whilst having lots of great opportunity, is saturated with different versions of the same things, so getting your brand and product to stand out is extremely difficult. There has been next to no meaningful NPD in a long time in this business, so consumers and buyers are bored.

In terms of what to do, brand owners need to be realistic about their strengths, and spend more of their time seeking outsourced experts rather than trying to do everything themselves. It might sound noble, but in reality, unless you have expert skills in what is realistically a scientific discipline at this point – (namely digital marketing) you are wasting your time and limited resources. Having a general understanding of how it all works is key, absolutely, but actually delivering the best result yourself- not gonna happen. FB and Instagram ads, and paid campaigns can burn more money than some of Vegas’ best casinos - trust me, I have lost on both.

Offline is not to be ignored and I see good upside for brands willing to get into the trenches with their target market. Examples being.

Exciting experiential campaigns- better still, co-create one with a larger but relevant brand.
Meaningful interactions with trusted online experts - notice I didn’t say Influencer. My personal opinion is that if you are in the health and wellness business, you need to be extremely tactical here. Your representatives need to have earned the right to influence. Short term operators send product out en masse and ad hoc and hope for the best - The longer-term players build direct meaningful relationships, built around shared values. BE CAREFUL and PLAY the long game.

MM: There is a lot of contention in the industry on managing B2B growth alongside steady, upwards D2C channels. Is it wise to focus on one or the other, or do you think there's a balance you can strike on both without harming the other?

Kyron: Like most things in life, finding the right balance often yields the best long term results. Brand owners need to build a business that not only creates value and brand equity, but one that can retain this value and ultimately profit in the years ahead. This is a fragmented and low barrier to entry market, so you need to be careful to not build your business on shaky foundations.

The original D2C model of cutting out the middle- man and investing the additional margin in low-cost online marketing is no longer viable. Mounting competition is driving up both customer acquisition costs and digital marketing costs whilst driving down product margins. Factor in low customer loyalty and switching costs and you’re very quickly running a non-sustainable business model.

Therefore relying on one channel in today’s market is quite honestly not cost-effective and working with retailer partners should be part of the mix. Getting eyeballs on your product and allowing potential consumers to touch and feel it is priceless and allows for that emotional connection to be developed. Online is more functional, transactional and convenient.

MM: Finally, tell us about your latest venture, Flax & Beets and what it's all about?

Kyron: Flax and Beets is a start-up with a focus on naturally functional food. The tagline “Eat with Purpose” says it all. Considering all of what I have talked about already, we are playing the long game here and initially have been focused on building our audience via unique events, education and engaging social media, namely Instagram - and more recently FB. We are committed to building awareness and consideration in the initial stages, with an extremely limited focus on purchase.

We are busy earning the right to sell, and have spent most of our time testing, listening and educating our growing fan base. I have lost count of the amount of events we have completed over the last few months but everything from running seminars on healthy weight loss to a DOGA event (Doggie Yoga). The end goal here is building organic traffic, such that as digital marketing costs grow and grow, our customer acquisition costs will be that much lower than the industry average when we do begin to sell at full tilt.

Our other mission currently is to build out our capability in content creation, albeit small initially, but with an ultimate goal of doing so at scale, again focusing on valuable organic traffic growth and metrics. Slow and often painful but it’s a marathon not a sprint as I see it. I see the ability to generate organic traffic at scale as a key successful differentiator in the near term for brands in the online space. The HUT group is probably the best example of a scaled-up health and wellness ecosystem that has been focused simultaneously on content and technology.

In terms of products, we have started with a range of medicinal chef-designed chilled meals available on a D2C basis in addition to some trade accounts. Chilled food limits scalability, but it does allow you to test various iterations of ambient potential product with direct consumer feedback, and that has been the focus for now - TESTING NOT SELLING.

It also offers a unique proposition in a saturated industry and has a nice brand halo effect. In addition, we have a range of ambient products in our pipeline, built from the customer feedback, and will launch our first one mid Q1 2020 into nationwide retail. It’s an exciting food based naturally functional product that solves some significant modern-day nutritional deficiencies in mass-market diets. As a business, we are focusing on solving unmet consumer needs with a focus on categories with good profit potential and a high willingness to pay.

On that note, and to finish, it really is a new world we are entering in the health and wellness space, and very different from the one I started 8 years ago. I would advise brands to be focused, be meaningful and think long term customer value. Build a sustainable business built on genuine relationships, great products, profit and consider what the customer wants holistically and not just in product terms. Never be complacent, and consider the lessons you can learn from some of the biggest brands in the industry who are now struggling to stay relevant. As a wise man once said “The arrogance of success is to think what you did yesterday will be sufficient for tomorrow” In this business, it isn’t. I can promise you that.

Good luck and best of luck

Kyron.

You can connect with Kyron Sadik on LinkedIn here.

Follow Flax & Beets here.

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