Natural Foods Merchandiser

Branding: The Vital Ingredient For Marketing Success

The food, beverage and supplements ingredients market is entering a phase of maturity typical of the most sophisticated, multifarious and competitive consumer markets. In such markets, a particular truth has long been apparent: Branding is king. Unheralded products may survive, but only the strongest brands prosper. In a raw materials industry that, in some quarters, still harbours a belief that a well-made, science-backed, cost-effective ingredient is enough to ensure success, branding is an idea that has been some time coming. The proliferation of branded ingredients is testimony to that fact.

Kemin Foods' Marketing Director Steve Hanson sums up the principle with the adage, "get noticed or get out." In an environment where consumers have less time, more choices and are empowered with more information than ever before, only well-defined products that promote their existence will survive. An added branding benefit is the relationships that branded ingredients foster between suppliers and manufacturers. Suppliers provide the research—and in some cases, the advertising—while manufacturers provide the ingredient platform and distribution.

Kathy McLeod, marketing director at Redondo Beach, Calif.-based Triarco Industries, sees branding as a means to ease consumer confusion. "Consumers want to know how to choose between 20 kinds of St. John's wort. They want to know how a mass-market brand differs from a health food brand. So companies have become more focused on conducting their own studies and research on proprietary branded ingredients and formulations." With this in mind, Triarco has launched a branded line of standardized herbal powders called Benchmark Botanicals, with the aim of establishing itself as the premium supplier of botanicals to complement its existing array of brand ingredients.

McLeod also highlighted the importance of a multifaceted brand presence: "We support our brands with studies, bioassays, patents and sales and marketing tools, and we develop account-specific programs that suit both our company and our business partners to assure success of the brands."

Successful brands are the quintessential win-win situation among suppliers, manufacturers and, ultimately, consumers.

"Great brands save consumers time," Hanson says. "Customers equate the best brand with the best product. Even if two products are exactly the same, people will tend to buy the brand they know. By leveraging this differentiation, a complementary ingredient brand can serve as a kind of tie-breaker between similar consumer product brands."

Kemin, based in Des Moines, Iowa, has been developing its flagship FloraGlo Lutein brand since 1995 and has achieved an enviable level of consumer and trade acceptance. All its future ingredients will be branded and backed with extensive marketing campaigns.

Branding can also help consumers sift through the jungle of health claims and multitude of products. "We've learned from consumer research that functional foods products must have a single, clear and understandable health benefit, says Tony DeLio, Archer Daniels Midland's vice president of marketing and external affairs. "Products that attempt to provide multiple product benefits are not credible to consumers."

Direct A Vision
Ingredients suppliers and product manufacturers must also respond to increasingly inquisitive and demanding consumers, according to DuPont Protein Technologies Director of Public Affairs Julie Tockman. DuPont, owner of such successful product brands as Teflon and Lycra, last year launched Solae, a soy protein ingredient, with such consumers in mind.

"More and more, consumers are investigating the ingredients that make up the foods, meats and beverages they buy," Tockman says. "Some take the time to research a company's overall philosophy, in addition to its track record. They do seem to respond to food manufacturers that can articulate the company vision—and when it comes to nutraceuticals, consumers certainly expect the companies behind health claims on packages be able to deliver on those promises."

A solid reputation and equally solid ingredient differentiation platform has allowed Prescott, Ariz.-based Inter-Cal Corp. to establish its Ester-C vitamin C brand in a multivitamin market often dominated by the big pharmaceutical players. By pursuing an aggressive consumer awareness campaign (80 percent of its $9.5 million marketing budget was directed at consumers in 2001), the company has developed a loyal clientele of more than 200 vitamin manufacturers as well as a handful of functional foods and pet foods manufacturers.

"A lot of product manufacturers put Ester C in their products because they know we advertise to the consumer and this creates value for them," says Ester C Brand Manager Phil Brown. "We can give the little guys the edge they need to survive because we offer their product brand recognition they might not have otherwise. And we pay for the advertising!"

Brown says another key factor in Ester C's success is the company's refusal to enter the consumer market. "We don't want to compete with our customers," he points out. "We are an ingredients manufacturer. That's what we do best."

Build Bridges To A Blockbuster
Steve Snyder, director of sales and marketing at Cargill Health and Food Technologies in Minneapolis, emphasizes harmonious relationships between ingredients suppliers and end-product manufacturers. "Branding of ingredients creates an opportunity for suppliers and consumer product manufacturers to form meaningful relationships [and co-operatively] create demand for a product," he says. "By promoting an ingredient's benefits, it adds to the brand promise of the consumer product. It creates another reason why consumers should believe this promise. A supplier is more willing to spend money to promote its ingredient if they know their partners are committed to them by putting the ingredient brand name on their label. In some cases, it is the ingredient the consumer recognizes, but often it is the consumer brand that is recognized primarily, and the ingredient brand is another point of support for that brand."

Cargill's soy ingredient AdvantaSoy, along with its Oliggo-Fiber inulin line of natural fibers, are two of its more successful brands. The company will soon launch new brands for its phytosterol and trehalose lines. "We feel it is important to brand our ingredients so that customers can identify the quality and benefits of our products with the brand name of the ingredient," Snyder says. "A well-planned ingredient brand strategy can help drive consumer sales, even if it does not include direct consumer advertising."

Of course, not all companies are willing to engage in mega-marketing campaigns, whether hesitating for financial or other reasons. According to Massimo Picari, M.D., vice president of strategic marketing and communications at sigma-tau HealthScience in Rome, whose umbrella brand, Biosint Carnitines, is a leader in L-carnitine ingredient supply, consumer approval can still be attained "in-house."

"Consumer marketing is important but so is the support of groups like health care professionals. Get them on board and you are halfway there. We have also tended to focus on producers rather than consumers. We don't have a public advertising program yet, but we're thinking about launching one."

ADM's DeLio has overseen the development of Novasoy (for supplements), Nutrisoy (for functional foods and beverages) and Natural Source d-Alpha vitamin E brands. Traditionally a heavy spender on direct consumer marketing, the Decatur, Ill.-based company's latest campaign features its branding partners' products for the first time. "Our customers gain brand ex-posure through a national advertising campaign that will reach more than 33 million targeted consumers an average of 5.6 times in the next year," DeLio says. "There is tremendous synergy—our customers can focus their marketing efforts on communicating the benefits of taste and convenience, and we can focus on delivering the health message."

Be The Next Intel
Like all diligent brand builders, ADM seeks to promote the health benefits of its branded ingredients in innovative ways. Nutrisoy sponsors the American Heart Association Heart Walk program and also targets health professionals. It employs a fitness and health expert as spokesperson for the NutriSoy brand. Other initiatives have proved popular with consumers. "This past year we toured throughout the U.S. to conduct free bone-density screenings and provide health information to women. In some locations, sales jumped by as much as 25 percent subsequent to our visits," DeLio relates.

"It takes time and a significant investment to start up these programs," he continues. "It's a chicken and egg thing—we need to create the consumer demand before our customers join the branding programs. That's difficult to do when the consumer cannot actually buy the product. Having an anchor brand partner is important."

For Business Manager Jack Chenault, of Degussa BioActives, based in Champaign, Ill., well-branded ingredients often carry the benefit of a price premium. "To have true value, the branded ingredient must have a 'value,'" he notes. "That value can take the form of, for example, quality or intellectual property. These ingredients usually demand a premium." Chenault believes branding is best aimed purely at the consumer in order to generate the Holy Grail for any product—consumer pull.

"An ingredient brand has no value to an end-product manufacturer if the consumer perceives no value from it," he says. Degussa's ingredients include Creapure, a creatine monohydrate, and Arthred, a low-molecular-weight amino acid compound.

Martek Biosciences, based in Columbia, Md., specializes in docosahexaenoic acid (DHA) and arachidonic acid (ARA) oils. A blend of the two, aimed at infants, goes under the brand name Formulaid, and Martek also markets DHA oil as the supplement ingredient Neuromins. "We have supported Neuromins through print advertising and participation in trade shows," says Marketing Manager Ethan Leonard, who believes branded ingredients will become increasingly prominent given the ever-growing emphasis on health.

"Sure, the end product is generally going to have greater recognition with the consumer," he says. "But then, Intel Pentium processors are an 'ingredient' that is as well known as the brand of PCs in which they are used. That's the objective—to have people making purchasing decisions based on what they know about ingredients."

Intel is, of course, the branded ingredient success story in any industry. It has garnered 90 percent of the computer processor market, earns 40 percent premiums on each unit it sells, and is one of the world's 10 most-recognized brands. Intel doesn't rest on its laurels either, and regularly spends in excess of $1.3 billion advertising its wares.

Intel's is a lofty perch all brands aspire to reach. As branding specialist Peter Wennstrom, chief consultant at Swedish-based Wennstrom Integrated, emphasizes, when it comes to branding, there is almost always only room for one winner in any particular market segment.

"If you use the power of ingredient branding in a correct way, you can actually eliminate competition," he says. "Ingredients suppliers must understand where they are in the value chain. If they believe they are delivering to producers and not consumers, then they are living in the wrong age. That was the industrial economy. We are living in the 'attention economy' now. If there is attention around your ingredient or your brand, you will make money."

There's that notion again: consumer pull. Attain it and your brand could become the brand. Wennstrom says, "The consumer doesn't care if there is a competitor, because they will know your brand is the best and meets their needs. You can actually own your own category, just like Intel does."

Wouldn't that be nice?

Shane Starling is a contributing writer for Functional Foods & Nutraceuticals.

Natural Foods Merchandiser volume XXIII/number 10/p. 78, 80, 86

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