Branded Ingredients

The other day I saw a Dunkin Donuts TV ad promoting their new “Milky Way” hot cocoa. I was shocked when my wife, who averages about 1.5 hot cocoas a year, said she wanted it. The perception that there was some sort of Milky Way component stirred into that hot cocoa must have stirred some deeply rooted fond memories of Halloween candy bars and chocolate goodness that she had stored somewhere in her psyche.

I realize that the Dunkin/Mars hookup is likely more of a licensing deal than one designed to actually place a candy bar in the cup – but there’s a correlation there that applies to the world of beverages and the occasional use of branded ingredients as a selling point for them.

Let’s get back to my wife for a second. To her, the thought of a Milky Way– its chocolate, or caramel, or nougat, or whatever else is actually in a Milky Way – somehow spiking that hot cocoa was appealing. It connected with her and actually made her consider changing her purchasing behavior – and also actually succeeded in getting her to surprise her husband, a process which, after three kids, is pretty hard to do.

This type of reaction – the purchase, that is, not the shock – is the goal of branded ingredients. It apparently worked in the case of my wife, but for most branded additives, these attempts fall way short of this reaction.
There are some interesting and innovative things going on with ingredients. Some of these ingredients are providing real benefits, being branded and added to beverages across multiple categories. There is also a breed of “in-house” branded ingredients that are created by marketers in an attempt to boost a product’s point of difference and tout “proprietary” technology behind their brand. Providing a real benefit is an important component to the success of branded ingredients but function is only part of the issue. Where most folks go wrong is in using branded ingredients that are unknown.
As marketers, we are always striving to create points-of-difference (POD) and communicate these on our primary display panels (PDP) and so that consumers will react quickly and favorably at point-of-sale (POS). In the land of traditional marketing this is known as the PODPDP-POS trifecta and it’s hung on the entryway to acronym hell. Some marketers decide to take their creative skills beyond the front of the label and onto the ingredient deck and although I admire the proactive approach, this is where the trouble usually starts. They conduct R&D, evaluate costs, make samples, and run tests, all in support of finding a reason to believe that adding this-or-that branded ingredient to the product, to the label, and to all the corresponding marketing material will make a difference to consumers. Unfortunately, this expectation is usually not met for one simple reason; no one knows what it is. Familiarity (i.e. Mars’ Milky Way) is good. Unfamiliarity raises questions. And before those questions are answered your consumer may already be looking at another brand.

So go back to the Milky Way example. Do you think my wife would have wanted that cocoa if Dunkin’ Donuts was touting a new concoction made with Mottolese Malt chocolate? Same ad. Same master brand. Obviously, an even better taste, but instead of an ingredient with 85 years of history (Milky Way) it has something unfamiliar. No Chance! Not even the hypnotic strength that the Dunkin’ brand has over residents here in Massachusetts could cover for that mysterious Mottolese ingredient!

Our theoretical Dunkin’ brand could probably survive a few missteps, but many of the younger companies that are using branded ingredients cannot. Here’s a basic rule: if a branded ingredient cannot live on its own off your package then it is not helping sell your product.

The gorilla-sized exception in the room is Splenda, which is plastered on countless brands. But Splenda worked because it had huge penetration, a national media campaign, a thriving standalone product and a real benefit (sweetness without calories). That combination made Splenda very successful and one of the few exceptions in branded ingredients. Like the Milky Way example, that blue Splenda symbol drove purchase intent. Most other branded ingredients are only supported with a violator on the label and a page on the company’s website, and they deliver the results that are to be expected from this arrangement.

Consumers have little tolerance for ambiguity in the ingredient column. I experienced this first hand on a label I worked on where we developed a “branded” word for our custom nutrient set. “CaCAZM” (ka-caz-zum) was a fun word to say and was the acronym of the nutrients used in the beverage. But the concept bombed in consumer testing. The “CaCAZM” name had no relevance to the consumers. We recognized it would be a distraction to build this in addition to the brand’s emotional and functional benefits and it was pulled before launch. In general, people expect creativity with graphics, label copy, packaging and flavor names but want the ingredients to be straight-forward, easy to pronounce and easy to recognize. Most attempts to create and brand ingredients in this area are more detrimental than useful.

Creating a relevant beverage brand is tough job. If a branded ingredient has proven functionally and possesses a high level of consumer awareness, then perhaps it could help. Otherwise, attempting to build a brand for your finished beverage, while also building a brand for one of your ingredients is just a bad idea. Most branded ingredients fall into this category. So don’t be shocked if it fails.

Whatever you’re branding, call it Trash. Very few things are as black and white as we would all like them to be, and the successful application of branded ingredients in beverages is no exception to that rule. The fact is to date, I have not seen anyone successfully leverage a branded ingredient to make a beverage have more market traction. There have been many minor attempts – like Citri-Max – but truthfully, few have been noteworthy enough to remember. As my snarky counterpart has pointed out, unless you spend megabucks on a media campaign bolstering the ingredient story, you won’t get much mileage out of the branded ingredients – and even if you do, you won’t for long. Perhaps the most memorable example is Nutrasweet (remember the red and white lollipop logo?). When the patent ran out, so did the marketing support, and we haven’t heard much of brand Nutrasweet since. We marketers aren’t in agreement on too many things, but one area where we stand united is that meaningful differentiation is at the heart of successful innovation. So why does a unique and presumably efficacious ingredient story not increase the relevance and therefore sales of beverages? Three fairly significant reasons:

1. Lack of “Branded Ingredient” Recognition and Credibility

Most of the branded ingredient stories I have seen have developed both the branded ingredient and a new product. In other words, the ingredient comes with no prior awareness, and therefore no prior credibility as a reliable source for benefit X. One such product I worked on was a collaborative effort with one of the premiere chemical companies in this country on a branded soy protein. They had an agenda of commercializing the soy protein in a multitude of products and we had an agenda of increasing the perceived efficacy of our product because of the branded soy protein. The challenge was which was a heated debate about why we didn’t want to put the name of the chemical company in addition to the branded soy – on our beverage. Mmmm. Procter and Gamble Smoothies. You get the idea.

If the branded ingredient existed as a standalone product with a specific relevant benefit, prior to its addition to a beverage, people would be more likely to both understand and believe that the beverage was superior due to the inclusion of the ingredient. However, when the launch of the brands is simultaneous, the ingredient is unlikely to add much relevance to the beverage, at least without the mega-marketing mentioned above.

2. Low Levels of Consumer Involvement

While we have witnessed this strategy deployed successfully in other categories, the critical difference is in consumer buying behaviors. For example, “Intel Inside” once added to the perceived power of a computer and presumably Intel commanded a premium for that power. However, computers are a high-price, high-risk category. Naturally, there is a greater degree of consumer involvement in the purchase process, and people are willing to do some homework, as well as willing to pay more to reduce their perceived risk.

Beverages, on the other hand, are a low-cost, low-risk category, which leads to lower consumer involvement in the purchase process. Unlike electronics and automobiles, consumers don’t normally spend a lot of time doing background research to find out what kind of a processor their beverage includes. In short, average Joes won’t spend 5-10 minutes figuring out if they are interested in trying a new beverage, including reading and disseminating the believability of its branded ingredient story.3. The Price Value Relationship

In recent years beverages like POM Wonderful have done an outstanding job upping the ante on consumer involvement in beverages. And as people are paying $3.99 for one single-serve beverage, their category involvement has necessarily risen. So perhaps products like POM have the potential to be more successful with branded ingredient partnerships due to the already higher levels of consumer involvement in the purchase process. But before rushing out to add a branded ingredient to your already pricey beverage, consider one last thing – does the consumer want the added ingredient, and are they willing to pay more for it. I’m fairly certain that if the floating globs in Orbitz had been DeBeers diamonds that it wouldn’t have changed the ultimate fate of the brand. Let’s face it, these so-called branded ingredients don’t come cheap, so if you are planning to pass the bill on to the consumer, the price to value relationship needs to be in line.

So are these obstacles insurmountable? Theoretically, they aren’t. I can imagine a scenario where a branded ingredient story could be quite compelling: In the sea of enhanced waters on the market, imagine an energy water with a logo emblazoned on the front that says “Powerpack by Red Bull.” Red Bull has outstanding awareness, and is specifically well known for being a credible source of real energy. Importantly Red Bull already commands a market premium. I think this type of ingredient story would enable a manufacturer to not only charge a premium, but in fact drive the sales of any energy brand in the sea of seemingly lookalike competitors. And while I think it’s a good example of what could work, I won’t go rushing to claim the idea in intellectual property court, because I can’t see Red Bull entertaining the desecration of their sacred bull anytime soon.

So for me this idea has been “trash” to date. However, if a SUPER PREMIUM beverage were to form an alliance with a well-known, credible ingredient partner that provides a relevant benefit that people are willing to pay more for, it could create sustainable competitive advantage.

However, it begins to sound like the insurance policy that Porky Pig bought from Daffy Duck – too many caveats for me – keep it in the trash.