The Influential Power of the Food & Beverage CMO

June 28, 2017
The role of chief marketing officers is greatly expanding. Food and beverage CMOs must have passion as they create strategies, deal with sales, accountability and service pressures. and keep tabs on consumer behavior. That's why communication with R&D counts.

In this increasingly consumer-driven economy, chief marketing officers (CMOs) in the food and beverage industry are driving organizational transformations beyond conventional advertising, point-of-purchase promotions and brand building. They have an increasingly large impact on product development.

Senior marketing managers create new visions, strategies and business models, while staying ahead of constantly changing consumer trends and social media, globalization and digital technology. They contribute new ways of thinking. In almost all companies with CMOs, the marketing department is closely aligned with product development; in many cases, R&D reports to the CMO.

Food companies look to their CMOs to drive an agenda that, in today’s dynamic environment, include responsibilities and expertise atypical of the traditional marketing position. They often manage social media and internet communications, which provide important information to and gather it from consumers, both positive and negative, which can have a dramatic impact on product innovation.

“In recent years, America’s food companies have tried to increase consumer sales by either lowering prices or cutting costs -- often both. This is a death spiral for most companies,” says John Stanton, a highly regarded professor of food marketing at Saint Joseph’s University in Philadelphia and our monthly Market View columnist (see his column from the July issue). “This has led companies to view marketing as a solution to the death spiral; that is, making products that consumers want to buy and not making consumers buy the products the company wants to sell.

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“This has led the migration of power – ever so slowly – from the CFO to the CMO. The marketing officer will do whatever is possible to make the products that consumers want to and will buy. But in order for that to happen, two functions in the firm must get more resources: Marketing Research and R&D.

“In the new world of the CMO with more corporate influence, we should see greater emphasis on consumer-directed R&D and consumer marketing research,” Stanton continues. “We may not see all firms making that change but then again, we might not see those firms at all in the future!”

Some oversee R&D

"At Ready Pac Foods, R&D reports into the CMO," explains Galit Feinreich, relatively new CMO at Ready Pac Foods, Irwindale, Calif. a wholly owned subsidiary of France's Bonduelle. With 20-plus years of innovation and strategy experience, 12 of them at Nestlé USA's confections and snacks division, Feinreich joined the company in July 2016 as director of innovation.

Ready Pac has been moving up the value chain. Starting with pre-cut, fresh produce, it now offers salad kits in bowls that add meats, cheeses, fruits, even tortilla chips to the greens. "We are in lock-step [with R&D], able to act on consumer and culinary trends and develop products and innovation consumers want and need," she says. "At Ready Pac, the consumer comes first, so we have a nice balance of working on very applicable projects in addition to exploring and developing future innovation. I really enjoy working closely with our executive chef and food scientists."

During the past year, Feinreich led an R&D group of food scientists and culinary experts she says helped make substantial progress and delicious products in a relatively short timeframe. She says Ready Pac is most excited about trends driven by millennials and openness to ethnic cuisines. The company recently added a limited-edition roasted corn and pulled pork salad to its Bistro Bowl lineup in time for the summer grilling season.

"The genesis for that concept was elote, or grilled Mexican street corn," Feinreich says. "The response from customers and consumers has been incredibly positive. We now have the green light to move into more ethnic cuisines, regional flavors and more adventurous eating in general, which is a lot of fun for us."

The fresh category is at the center of today’s consumer needs, what she calls the intersection of healthy, delicious and convenient. "I was incredibly intrigued with the fresh meal segment, for which I have immense personal passion. I love salads more than the average person should, making it even more attractive.

"I'm incredibly passionate about marketing – truly understanding consumer needs and tensions, and being able to provide for those needs. I relate to the needs of busy, time-strapped consumers who care tremendously about feeding themselves and their families fresh, healthy, tasty food. Our current products and the ones in our innovation pipeline [find] real needs for real folks. And the variety, recipes and flavors we offer can bring reluctant salad eaters into the category."

Joel Warady was involved with Enjoy Life Foods even before its inception in 2000. The two co-founders came to Warady for advice and shared an early draft of their business plan, which he helped further develop and execute. The company, which is dedicated to foods free of 14 major allergens, grew fast and was acquired by Mondelez International in 2014. Warady remains chief sales and marketing officer.

"Not only am I fortunate to be able to oversee the sales and marketing teams within the company, but the innovation team reports into me as well," he says. That means there are no internal silos. R&D works with marketing and works with sales, etc. Warady insists companies are best when they are 100 percent integrated.

"When we develop products, we do so with input from sales, marketing, finance and innovation. We're an integrated company with a shared passion. This allows us to achieve and maintain our position as the No. 1 free-from company in North America.

"To be a strong CMO, especially in the food category, one must have a mission, possess passion and be filled with love," Warady explains. "We're focused on how food serves a role in an individual’s overall well-being; in essence food as medicine. We're in the early stages of this concept, but the future is bright as we learn more about the healing properties of many ingredients, and how they impact the microbiome balance of the human gut."

The company uses free-from ingredients in all of its products, and when it develops something new, such as free-from Seed & Fruit mixes in single-serve bags, it first examines how to provide great taste with functionality. "Imagine the challenge of creating great-tasting foods free from 14 allergens. Sounds impossible, but we have accomplished this across 67 stock-keeping units, and are just getting started," Warady explains.

New marketing channels are changing the way companies dialogue with consumers. At Enjoy Life, marketing, digital and e-commerce go hand-in-hand. Marketing identifies the channels shoppers use to purchase its products, researches retailer needs and customizes engagement accordingly.

The warp speed at which challenges occur is a game-changer, he finds. "Products are given less time to become successful because of the speed to market, and reviews of new products are now shared instantaneously via social platforms."

Focusing on Enjoy Life's great-tasting, safe products for those who need them most keeps Warady going. "I'm passionate about healthy eating, about using the best quality ingredients and about great-tasting foods. Passion drives me. I love what I do. Mission, passion and love are vital attributes if a good CMO is going to become a great one."

Turning aspirations into inspirations

Food and beverage CMOs get involved with impacting consumers, customer experiences and brand perceptions, but many veer away from the traditional marketing role. Chobani's CMO Peter McGuinness has been one of the more nontraditional, boosting brand visibility with sampling trucks, a Greenwich Village café and extensive community events and online and social media engagement. Most recently, he helped devise a contest for a weekend stay in a townhouse adorned with a wall of vegetables to promote the new Meze yogurt dips.

"For us, innovation means sticking to our roots, using simple recipes and only natural ingredients to build on our momentum and guide us into new areas that could use some better options," says McGuinness, who has been with the company since 2013. Before Chobani, he spent 20 years in agencies, helping the brand-building at companies that included Unilever, Nestle, McDonald's and Coca-Cola. McGuinness oversees all marketing and communication efforts for the top selling Greek yogurt company, including advertising, brand strategy, innovation, experiential, retail café, digital, social and public relations.

"It really started with our founding food philosophy of making delicious, nutritious, natural and accessible food -- better food for more people," he says. "Early on, it wasn’t easy finding high quality natural ingredients that were affordable and met our standards. As we’ve grown, we’ve really partnered with suppliers and brought these to scale, which helped pave the way for other food makers to get off the ground and source natural ingredients for their products."

Now Chobani is getting directly involved in getting new food companies off the ground. McGuinness is instrumental in the Chobani Food Incubator, a program that selects a handful of innovative, early stage food & beverage startups, teaches them how to successfully scale-up, provides them with $25,000 in equity-free capital and connects them with the Chobani network of experts, founders, retailers and investors. The first group of six recently "graduated," and the company is recruiting a second class to begin in September.

"We mentor and support food entrepreneurs to challenge the food industry and build a community of people who want to improve broken systems and make a difference," McGuinness adds. "We saw great success from our first [incubator] class and are excited to launch the second class in the fall."

"The element of surprise" is a key tool of Michael Simon, CMO at antioxidant infusion drinks brand, Bai Brands, LLC s, Hamilton, N.J. (acquired this year by Dr Pepper Snapple Group). Bai's series of "Unbelieve" film videos challenge the status quo, conveying a "do the impossible" challenge, with the underlying message that Bai is healthy but doesn't sacrifice taste.

Simon has called Bai a brand challenger and helped elevate the brand from a relatively unknown status. Forbes data shows Bai achieved tremendous growth in consumer awareness and product trial since the launch of its marketing campaign in 2015. In fact, founder and CEO Ben Weiss described the campaign as a "Bevolution," a cultural phenomenon sweeping across the beverage industry.

Brand strategies are heavily fixed on social media, as much of its audience is in the 18-to-35 age group, so millennials are a prime target market. Bai's annual growth rate is reportedly 150 percent, and the company is said to be adding more healthy and tasty drinks to the lineup, including coconut-flavored water, carbonated beverages, regular water and tea.

Even smaller companies are creating the CMO job. Nature's Bakery, a family-owned, bakery in Reno, Nev., essentially has given that title to vice president of marketing Andrew Strolin, who has been with the bakery five and half years.

"CMO’s need a strong drive and passion to deliver relevancy to consumers by means of products and messaging," Strolin says. "Staying abreast of the latest consumer trends, behaviors, innovations and retail activities are a constant endeavor. The world of technology and CPGs are quickly converging in consumers' lives – in their lifestyles, homes and where they shop. While our broad marketing objectives may be somewhat common, the mix of tactics, technologies and how we create a strategic marketing plan are becoming more competitive and diverse. It’s a constant mission to build lasting and authentic relationships with your consumer."

Recognizing that traditional products are evolving and lines are becoming "blurred," Strolin sees the emergence of grocerants (grocery store restaurants) as just as disruptive at retail as wearable health monitoring technology is for providing individuals with more accountability of health and fitness.

"Snacking occasions are increasing throughout the day, and in some cases replacing meals, while grocery shoppers often plan for varying dietary and nutritional needs and can instantly monitoring their personal health, which all have an immediate impact on their food choices," he says. "Companies have a much deeper relationship with the consumer today, and that relationship has full visibility on social media."

Consumers want more out of food, scrutinizing ingredient quality and comparing products more than ever, he says. "This year, we undertook a major architecture project to evolve the brand's story ('Every person's journey should be filled with good'), and it strongly resonates with consumers, as evidenced by significant growth."

Organic, free-from and simpler (clean) products are more mainstream, so the bakery's brand messaging has evolved beyond the product alone to incorporate extensive ingredient details, sourcing and business practice information, he says. "Reinventing products allows us to keep up with constantly reinvented consumer mindsets," Strolin points out.

Marketing projects influence product development and vice-versa. "It's imperative to have a strong bridge of communication between marketing and R&D," he says. "You can’t exist in silos and expect to succeed. My team continuously researches consumer trends and behavior, attends food shows to understand the latest innovations and offers insights to R&D to help support and influence their work as it relates to overall brand strategy. Our functions need to remain nimble yet thoughtful to stay ahead of the curve."

The marketing team at Nature's Bakery works with R&D as often as possible, Strolin emphasizes. "We collaborate with R&D to inform and influence their work, create light guardrails and an open forum for discussion. I make sure our team has its finger on the pulse of the consumer, the market, the competition and retailer activity."

Social media and the internet are redefining push marketing of many food products. "With the onset of the digital shelf, the entire landscape is shifting," he says. "We worry about the Amazons of the world, which give consumers much more control and buying power, right at their fingertips. Yet even today, getting the product into people’s mouths is still the best form of marketing, and great taste is the ultimate competitive advantage.

"As baked snacks continue to flood the already overcrowded category, innovation is both the solution and the challenge, he says. "Finding a balance and maintaining the authenticity of the brand, without sacrificing product taste, is what will allow us to succeed."

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