Peanut butter began as a paste-like substance produced by the Incas in South America. The peanut crop traveled to Africa, Spain and finally to the American colonies. It was George Washington Carver who helped the southern states recovering from the Civil War understand the value of crop rotation and growing crops such as peanuts instead of just cotton and tobacco.
Peanut butter was introduced to the modern world at the Louisiana Purchase Expo of 1904 in St. Louis. Peter Pan Peanut Butter, utilizing the Rosenfield churning process, made a smooth peanut butter in 1928 and enabled a shelf life of up to a year. After a dispute, Rosenfield took the process to Skippy and created the first crunchy style peanut butter by adding chopped peanuts to the mix in 1934. Procter & Gamble's Jif brand enter the market in 1958.
Peanut butter is in 90 percent of households and most families with kids consider it a staple and kid-friendly food. However, 3 million kids have a peanut allergy, so schools have either become nut-free or nut-conscious. The Peanut Institute has worked hard to educated consumers on the nutritional value of peanuts and peanut butter and the products' benefits in snacking. Median usage is low with households using only 1 to 1-1/2 jars per month.
Smart Balance has stepped back and reconsidered peanut butter's standard of identity. What is peanut butter? Is it a protein source with fat or is it a fat source with protein? During World War II, peanut butter was an affordable protein source. But as nutritional research began to understand the value of "good" fats, Smart Balance has reframed the idea of peanut butter (and many other oils) from protein source with fat to fat source with protein. They have focused on the healthy "good" fats and enhanced them with additional healthy oils to enable easy access to omega-3 fatty acids and lower saturated fats.
Understanding the marketplace
Sales of the sweet spread category have increased 11 percent since 2000 with a market size of $1.8 billion in 2004. Year-to-year growth from 2003 onward has been on the order of 0.5 percent, according to a 2005 study by Mintel International. This change in growth is driven by the fact sweet spreads are not stand-alone products. They are typically consumed as a topping on breads or as an ingredient in a recipe.
The emphasis on low-carb diets impacted this category substantially in the past few years. Peanut butter sales are $880 million of this $1.8 billion Sweet Spread category for 2004 and have a growth rate of 2 percent.
Peanut butter is still viewed as too high in calorie content to be considered entirely "healthy." At retail, consumers see Jif, Skippy, Peter Pan and private label as the category leaders. Creamy peanut butter outsells chunky peanut butter by 4 to 1 (in dollar sales) and is reported to be preferred 2 to 1.
Peanut butter-flavored products have increased in new product introductions by 68 percent since 2000 to 619 new products that have peanut butter-flavor notes. This ubiquity of peanut butter flavor enables consumers to get their peanut butter needs met without actually consuming peanut butter itself.
Smart Balance is entering this category and needs to differentiate itself from the category brand leaders. The category is crowded and is growing only in the premium and natural areas.
Consumers are very confused with regard to what is "healthy." Diets that highlight protein have subsided recently. A recent Women's Health Initiative study found low-fat dieting does not help cancer or heart disease in post-menopausal women, contrary to what many people, even researchers, believe. Consumers are questioning what are the basic rules they should use to eat healthy.
Wine and chocolate, once considered "bad" foods, are now being highlighted as high in antioxidants and "good" for you. The messages consumers hear are about the right carbohydrates and the right fats. But finding and understand those carbohydrates and fats may require an advanced degree in nutrition. And even that today may not help. The average consumer just does not have the time. He is looking for easy identifiers of trustworthy healthfulness.
Our Healthy You! research integrates 20 to 30 conjoint studies to generate a database that can be used to understand the experience of foods - from product, situation, emotions and brands/ benefits. It tells us the key attributes for a healthy peanut butter are taste, texture, aroma, price and brand.
Consumers are looking for taste and an inherent value of healthiness from structure-function claims like fiber to reduce your risk of heart disease and diabetes; builds and maintains strong bones; part of a low fat/ low cholesterol diet to reduce the risk of some forms of cancer; just two tablespoons provide important heart healthy nutrients. In short, if the consumer is going to eat peanut butter, he wants good taste and some insurance claim of health.
Key trends that can impact this idea are: convenience and healthfulness.
Convenience: Manufactures are responding to consumers' hectic lifestyles by creating packaging that assists convenience. Peanut butter comes in squeezable packages, with jelly and as a premade sandwich (J.M. Smucker Co.'s Uncrustables).
Healthfulness: Nuts have both the halo of health and reality of health. Nuts are a nutritionally dense whole food. Various health claims for nuts are allowed such as "scientific evidence suggests but does not prove that eating 1.5 ounces per day of most nuts [such as almonds, hazelnuts, peanuts, pecans, pistachios, and walnuts] as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease. See nutrition information for fat content."
However, peanut butter does not have this overall halo of health. In addition to the whole peanut allergy area, peanut butter is perceived as a fatty food. Peanut butter contains on the level of 24 percent fat. Eighty percent of this fat is unsaturated fat - "the good fat" - which may actually help lower LDL cholesterol levels in blood. It has become included in many medically endorsed weight loss and diabetic diets, due to its ability to met consumers' cravings in a healthy way.
The question for a manufacturer is how much do consumers understand the knowledge regarding nuts and health?
Smart Balance is available in a creamy version in a 16-oz. plastic jar priced at $2.49-2.99. Health messages are all over the front of the jar. The fact it has 1,000 mg of omega-3 fatty acids is a separate burst, and the package notes the omega-3s come from flax oil. On the back is a story of why omega-3s are important to children and adults.
The product also proclaims "trans fat-free - naturally" across the top. There is no hydrogenated oil, no trans fatty acids, 25 percent less saturated fat and no refined sugar.
Taste and texture are critical to the perception of peanut butter. Texture is experienced via the consistency in the jar, spreading on the food and mouthfeel in the mouth. Most tasters, when they opened the package, felt this product looked like peanut butter. It had a distinct peanut butter smell - with a roasted peanut note fairly obvious. It tasted like peanut butter and many commented that if you hid the jar and gave them a sandwich with this peanut butter, they would not be able to tell the difference between this nutrition-loaded product and the familiar product they use on a regular basis.
Many of the mothers, when they realized this, thought this would be great to give to their kids. Quite nutritious. Some tasters felt it did not taste peanuty enough and wanted a more familiar sweet peanut flavor. This may be due to the 1g of sugar per serving (most lead brands have 2-3g).
Others, our health nuts, felt that the flavor blend and the texture gave enough healthy cues that they might use this product instead of the natural stuff they picked up at local health food stores. Peanutty, not too sweet, spreadable and healthy.
Many tasters looked at the back of the jar and were happy with the sodium level of 110mg (compared to 125-150 mg in many others) and the fat level of 16g or 25 percent of daily values, with each fat defined (2.5g of saturated fat, 0g trans fat, 2g polyunsaturated fats and 10g of monounsaturated fats).
Does the product deliver?
Smart Balance has focused on a fat blend mixture based on research from Brandeis University. The idea is to improve the ratio of HDL "good" to LDL "bad" cholesterol by using a balanced blend of fats of approximately equal proportions of the three principal fatty acids: polyunsaturated, monounsaturated and saturates.
Smart Balance walks the line between a natural food product and a nutraceutical. While other spreads have tried additions of plant stanols as their key drivers to reduce cholesterol, Smart Balance made this idea more accessible by talking about healthy fats and not about ingredients. This new product is a change not only in terms of product category for Smart Balance, but also in terms of talking about the addition of an ingredient (in this case omega-3s).
Omega-3s are naturally part of the peanut butter since they are contained in the flax seed oil that is used in the natural oil blend. The real question is do consumers understand the benefits of omega-3s enough for this to be a driver for choice?
Smart Balance has figured out how to "stay the course" and this product fits well with the message they have been delivering to consumers for many years now. That makes a new message easier for a consumer to understand.
How to make the idea bigger
This product is likely to grow the category. It redefines what peanut butter is for consumers looking for a healthier option than just "natural." The health message is strong and naturally occurring. However, the package label does not look like peanut butter, so some consumers were unsure of its expected taste.
Repeat with this product will be driven by the trade-off of the price-value proposition vs. the health halo of the product. Value is a complex idea to measure. For some it will be about the healthfulness of the product (in this case a whole food), for some it is the quantity of product and for some it is the flavor and texture experience.
The key is not the other peanut butter competitors, but getting across to the consumer that this is a great healthy spread alternative to other spreads that are less healthy.
Rating: Smart Balance Peanut Butter delivers on its promises of health. It reframes peanut butter from a "good" protein with fat to a "good" fat with protein. This is an innovative way to focus consumers on their choice and usage of fats and spreads.
Market Potential: Yes, but this will take some time to move beyond just Smart Balance users.
Hollis Ashman is chief strategist and Jacqueline Beckley is president of the Understanding & Insight Group, a strategy, business and product development firm that connects with consumers using qualitative and quantitative approaches. For more information, see www.theuandigroup.com.