Kevin Ryan's: Culture Matters

Why 'Getting Back to Normal' Could Be Bad for Business
Rumors were floating last week that Amazon might be in the market to buy struggling movie theater chain AMC. While nothing has been confirmed beyond ‘unnamed sources say,’ analysts see some potential merit in the idea, especially in a post-COVID world. The theaters may represent a new distribution channel for Amazon programming, legitimize their own-produced movies for awards, and (most likely) serve as a perk for Prime members.  

Uber has offered to buy GrubHub, a deal that values the food delivery app at $6.9 billion. If the merger goes through (a big IF, as Elizbeth Warren and AOC talk of an oversight committee that would halt COVID-inspired acquisitions), Uber would control 55% of the food delivery business.   
Several companies (from Dominos, PepsiCo and General Mills) are cutting their third quarter television ad spend in the wake of the pandemic.  As contractual commitments and upfront ad spend lapse, many big companies have decided to pull their money—an estimated $1B to $1.5B. For some companies this is a way to save cash, but for many others it’s a chance to move their ad budget to other platforms, anticipating a significant drop in audience as sports and scripted programming struggle to return.

So What? Typically, my weeks involve helping companies with their innovation strategy—where can they grow, what are they missing, how can they deliver better products for consumers. However, for the past few months my days have been spent on Zoom calls leading corporate teams through activities meant to envision what their businesses looks like post-COVID. And I’ll be honest—it’s been a struggle. Not because the teams haven’t been engaged or the topic incorrectly scoped, but because its been hard to move teams past a simple premise: returning to normal.
Do you remember when all of this started, and many of us thought: a few weeks locked down, work from home, watch some Netflix and it will all blow over. Not having a modern point of reference, what did we know.  However, a few weeks became a month, then two, and slowly the confinement and anxiety became too much. ‘Getting back to normal’ has become a soothing late-night thought as we all lay in bed trying to wrestle with the overwhelming sense of uncertainty. We crave the simple things we took for granted just a few months ago: restaurants, sporting events, haircuts and ‘socially non-distant’ conversations with friends. Now, getting ‘back to normal’ is all we can think about.
Emotionally and personally, this makes sense; we can all be forgiven for wanting the social aspects of our lives back. Rationally and professionally, the desire to ‘get back to normal’ is a liability. The effects of the virus and the lockdown have upended industries—rattling supply chains, hobbling production and radically altering the CPG, retail and foodservice landscape for years to come. Any hopes of a sharp ‘V’ in economic recovery have transitioned to the much slower ‘swoosh’—pushing us into an precedented recession. Seeing the previous ‘normal’ as the only potential end goal, not only denies reality, but stops us from seeing potential opportunities.  
It’s tempting to get our teams working to re-build systems for a world that no longer exists. The scaffolding is still there, the teams are in place and it would be so easy to reengage the metrics and get back to business. However, stop and think a minute. Is the comforting inertia of ‘normal’ stopping you from seeing what’s next?  
One thing that I’ve started to do with clients in strategy sessions is to have them look at the post-COVID world as though they were a VC. By forcing them to temporarily remove their brand, their capital, and their current resources from the equation—essentially removing the ‘normal’—I’ve found that they gain a clearer POV on what’s possible.

STOP defaulting to ‘normal’ and START focusing on ‘next.’      
Snacking 2.0
Analysis last week from Bernstein, reported in Food Navigator, found that the growth of snack and nutritional bars “have turned sharply negative” during COVID.  The report found that performance nutrition(-20%), meal replacement (-17.9%) and weight management (-11%) and health and nutrition bars (-5.8%) were all negative. While cereal and snack bars started off well, they have also declined recently (e.g. Nature Valley bars had +32.5% growth in March but that growth has now turned negative). Bernstein analysis showed that Nature Valley, Quaker and Kind all gained share, potentially due to their ability to produce product faster and fill shelves compared to smaller competitors.

PepsiCo announced last week that they would be launching two direct to consumer offerings to sell their food and beverages. will offer consumers bundles of top selling PepsiCo produces (like Gatorade, SunChips and Quaker) in themed boxes (e.g. Rise & Shine, Workout & Recovery, etc.). offers many of the company’s iconic snack brands with free shipping on orders more than $15.

So What? You can read the history of late 20th century civilization in a snack bar. Granola, cereal and energy bars are cultural portmanteaus, microcosms of our beliefs all packed into a 4” rectangle.

Snack bars were a unique product of the 1970’s. From Pillsbury’s Space Food Sticks (1973) to Nature Valley Granola Bars (1975), snack bars reflected three forces pushing on late 20th century society:
  • Longer Commuting:  The mid-1970’s was the inflection point in commute times in the US. While we tend to think of the 1950’s and 1960’s as the decades when American’s escaped to the suburbs, it actually wasn’t until the 1970’s that the shift in population became so large as to overwhelm cities’ highway systems. Commute times ballooned enormously throughout the 1980’s and have never retreated:
  • Increase in Away from Home Eating: Along with longer commutes came more in-car eating and stops at restaurants on your way home. Again, while roadside dining and eating in your car existed in earlier decades, it was in the mid-1970’s that they really hit mainstream:  
  • Rise of Personalized Nutrition: Branded health food is over a hundred of years old, but most products tended to be family orientated (e.g. Kellogg’s Corn Flakes and vitamin-fortified meals). It wasn’t until the 1970’s that health became a ‘project’ taken on by a consumer, made possible by individually wrapped snacks customized to individual nutritional concerns. In addition to being easy to eat on a commute, the new snacks were mindful ways to watch your calories—the mid-1970’s was also an inflection point for obesity in the US:   
As these forces have intensified over the past 40 years, so has the popularity of modern snacks—specifically snack bars. Consumers needed easy to eat, self-contained solutions to their new nutritional concerns. However, in the last decade we’ve seen the shifting of these forces, and now the pandemic (like it has with so many things) has accelerated these:
  • Virtual Commuting: To relieve the horrendous commute times in major metropolitan areas, companies have been playing around with flexible working environments and schedules for years. However, COVID put these plans into overdrive.  Twitter announced last week that they will be allowing their staff to work from home (WFH) “forever.” The rest of the tech world is trending in a similar direction, as companies like JPMorgan, Zillow, Facebook, Amazon, Microsoft, and Capital One have all pushed their mandatory WFH dates out 6-12 months. Team-collaboration software company Slack said that they are already making real estate investments assuming 30-40% less desks. While not all companies are tech companies, non-tech companies may appreciate the real estate savings and celebrate the productivity gains seen as people work from home during the pandemic.  
  • Eating Comes Home: The pandemic is not going to last forever but may last long enough to permanently alter how and where consumers get their food. The latest studies find that 25%-50% of restaurants may not return post-pandemic. Convenience stores, which in the US are tied to a gas station 80% of the time, are also struggling as people drive less. Many independents are worried about their future and are switching to a grocery model to sustain themselves. Large venues that serve food, such as sporting events, concerts and theme parks, have delayed opening indefinitely.   
  • Quantified Health: The rise of wearables has made the idea of quantified health a topic for years. However, the mainstreaming of this trend has been elusive. With the pandemic we’ve seen a boom  in telemedicine, and now health apps are the new goldrush with investors throwing money at companies that can help consumers determine their status, talk to their doctor and upload their pulse oximeter readings through their phones. With all this data transferred to a digital state, it will be easier for consumers to be aware of minute anomalies in their health. Therefore, I predict a rise in hyperaware health consumers looking for help with their very personalized needs.    
What does this mean for snacks?
  1. The decline of bar:  I think we’ll see a form explosion in the next 3-5 years. The bar was great for astronauts and commuters, but if the on-the-go forcing function is removed, we’ll see more innovation in shapes and sizes conducive to at-home consumption.
  2. Packaging innovation and the home break room: Consider PepsiCo’s DTC effort as the beta version of a much more interesting future. With more people working and schooling from home, the volume of food consumed increases exponentially and the kitchen takes on a break room function. Snack companies aren’t selling to a mom anymore but the home’s buyer who will be setting up snack dispensers and refreshment stands. This is what PepsiCo is starting with their themed boxes. Companies that work with the ‘buyer’ and establish a niche in this space by understanding the new rhythm of the home will be the big winners.   
  3. Prescription Snacks: If you combine the growing comfort of telemedicine with programs like Coke’s Insiders Club or Freestyle, you get a future of bespoke snacks sent directly to consumers, customized to their nutritional needs. Not only could you charge a premium for this, but the data feedback loop would result in targeted advertising and potential consumer lock-in .
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COVID-19 and the Future of Sustainability
During recent strategy sessions with clients, the topic of sustainability has increasingly been raised. When all of this started, getting and keeping product on shelf was the biggest concern, and sustainability was put on the back burner. However, as the immediate business needs have been addressed, topics like sustainability have returned.
How has COVID-19 changed corporations’ thoughts on sustainability? Here are few things I’m seeing:

(Note: Last week, I participated in a webinar hosted by the Center for Food Integrity focused on this topic. If you’d like to view this webinar for free click here)

From Marketing Buzzword to Supply Chain Security: The pandemic highlighted the fragility of the food supply chain for many companies. An environmental disaster could devastate an industry even more that a virus. Therefore, talk about sustainability is turning from ‘how do we market this product as eco-friendly’ to ‘how do we secure the environment to help our bottom line?’
Deglobalization as Sustainability Stimulus: With apologies to Thomas Friedman, the world is no longer flat. Increasing trade tensions, health concerns over border security, and the desire to tighten supply chains, has started a process of deglobalization. Not only is the world not flat, it is increasingly balkanized. As companies re-open, re-examine and (often) re-domesticate their supply chains, they are being more mindful of the sustainability implications of their choices.
Economic Decarbonization: The pandemic has dealt a harsh blow to coal plants and petroleum refining and lifted the future of renewable energy. Post-COVID recovery will likely be tied to green infrastructure projects (see the planned UK and Chinese efforts). Companies that are looking for post-COVID growth are figuring out how to tap into these efforts.   
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The Lighter Side
Restaurants around the world are opening back up but with new restrictions. Some of which has resulted in interesting situations.

The Inn at Little Washington, a Virginia-based, Michelin starred restaurant, realized that social distancing would result in customers eating in sparsely populated dining rooms. To remedy this, The Inn landed on a unique (creepy?) solution: mannequins
Thailand-based Maison Saigon saw the same problem and came up with a much more adorable solution—stuffed panda bears:
Finally, Cafe Rothe in the German town of Schwerin, is enforcing social distancing by requiring customers to wear hats outfitted with pool noodles:
Are you ‘coronaspeaking?’. Here are just a few (of the many) new words and phrases that COVID has given us:

Doomscrolling/doomsurfing – obsessively accessing upsetting news online

Zumped (Zoom dumped) –‘dumped’ by a partner via videolink or otherwise online

Miley Cyrus (UK rhyming slang) – coronavirus

Hamsterkaufing (German) – stockpiling and/or hoarding

The COVID 19(lbs) (American) – extra body weight accrued during quarantine
Lastly, as the pandemic has confined people to their homes, apparently organizing their messy pantries, it has spawned a number of creative lifehacks. The latest viral video (coming from a UK blogger) is a unique way to close a cereal box (WARNING: profanity).
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