Thousands of ingredients now carry unique names, logos and advertising campaigns. But what are the keys to branding success? Science? Novelty? Outreach? Partnerships? Joysa Winter asks some of the leaders in the field what they think makes the difference
Corowise. MEG-3. Solae. Splenda. For some consumers, these names have become as well known in the past 10 years as the ingredient categories they represent: phytosterols, fish oils, soy proteins, sweeteners. What they have in common is that they all owe thanks to the unlikeliest of sources — a little computer chip called Intel.
"I peg the start of branding in the food-ingredients sector to 'Intel Inside' of the early '90s," says Mark Hughes, president of Omaha-based Anderson Partners, an advertising agency that specializes in branding in the food industry.
"'Intel Inside' got wide exposure in the mainstream media, of course, but people in the food business were exposed to the idea that you could have trade-branded identities for products that were part of other products. By the mid-'90s, the food industry had jumped on board. Some of the earliest to join the wave were sweeteners like NutraSweet and Splenda, and whole-wheat ingredients like ConAgra's UltraGrain."
Fast forward another 10 years, and there are now literally thousands of ingredients that sport unique names, logos and advertising campaigns. A majority of them are marketed only within the industry, but a growing number are also filtering into the consumer world.
"If I had to make a guess, I would say it's a 3-to-1 ratio," Hughes says. "Most brands target the trade channel, to create a position and identity that command a more premium price. It's the kind of branding that doesn't reach consumers at all."
But for those that do target consumers, the market is ripe and ready. Who will become the Intel of the fish-oil category? Or the Intel of soy proteins? That remains to be seen. In the meantime, both ingredients and product manufacturers are jockeying for position.
The benefits of branding
At its heart, building brands is about building reputations. An ingredient, backed by meaningful research and smartly promoted, can sell itself in the supply chain, and help product manufacturers sell their products in the consumer chain. The key, though, is having an ingredient that is genuinely unique.
"Unfortunately, there are now thousands of ingredients offered that are not unique; they are simply commodities with a funny name and logo attached!" says Eric Anderson, brand manager at PL Thomas. "A brand should be used to convey a product that is demonstrably different from other ingredients; for example, is it clinically proven, does it have a unique composition, is it patented, etc?
"We have seen the strongest growth in our unique brands; however, we have only chosen to brand unique, proprietary ingredients like 5-LOXIN and MenaQ7 natural vitamin K2. Much as NutraSweet successfully branded aspartame, good examples of branding in our industry include ingredients like Ester-C, Citrimax and Tonalin, which were introduced to communicate the inclusion of an ingredient in a dietary supplement product. A brand thus defines the unique ingredient, the consumer promise of intended benefit, and the knowledge that each product that contains the ingredient will deliver a consistent experience."
By distinguishing itself as unique, or even one of a kind, a branded ingredient can often command a higher price point. "Generally a branded ingredient connotes higher quality because there tends to be some IP or research support for the ingredient that would warrant setting it apart from other offerings," says John Alkire, president of AHD International. "But high-value branded ingredients must have several points of differentiation to command long-term success."
When to take the next step: co-branding
An ingredients manufacturer's willingness to invest in both science and marketing savvy is crucial to selling a brand in the supply chain. But convincing a product manufacturer to co-brand requires an even higher-level effort.
The benefits to manufacturers, however, are significant. Co-branding enables them to capitalize on costly scientific research that they would not have the resources to invest in, and in some cases, it even allows them to include health claims approved by the Food and Drug Administration in their packaging and promotions.
Product manufacturers have to be thoughtful, though, in weighing their branded-ingredient choices.
"Any end product or ingredient that provides relevant differentiation to its intended user can be successfully co-branded," says Cheryl Sturm, director of marketing for Embria Health Sciences of Iowa. "Ingredients that clearly communicate a desired benefit and?have a favourable price/value quotient have the greatest?chance of success. Both of Embria's branded ingredients, EpiCor and eXselen, have been successfully co-branded because they meet those requirements."
The company views EpiCor in particular as a 'superstar candidate' for co-branding because it is unlike any other ingredient in the marketplace. "It offers?manufacturers a way to differentiate?their brands, reposition existing products or create new ones all supported by strong scientific research in the highly desirable immune-health category," Sturm explains.
AHD International cautions, however, that novelty isn't enough.
"Being unique does not mean success will come easily," Alkire says. "It takes money and commitment from the top of an organisation to successfully promote the unique benefits of the ingredient and educate consumers so that they seek out products containing that ingredient."
At PL Thomas, consumer education remains the biggest challenge.
"When an ingredient is developed and clinically supported, millions are spent sponsoring human studies to provide substantiation," Anderson says. "In the face of this investment, commodity companies will offer imitation product based on price. Often these imitation products have no evidence of efficacy, certainly do not provide the same composition, and in many cases are adulterated or contain no actives! Thus a proprietary product must compete on quality, and on evidence of efficacy. Once the value proposition has been addressed, a strategy of creating consumer education and awareness must be undertaken."
It is up to the ingredients companies to participate in this process.
"An ingredient manufacturer has to support their ingredient brand," says Pam Stauffer, global marketing programmes and communications manager at Cargill Health and Nutrition. The company began branding some of its ingredients around 2003. "Supporting the brand with strategic and targeted marketing programmes is critical. Our CoroWise [phytosterols] brand is supported by an extensive health-care professional outreach programme with the intent to drive sales for our customers' products. In addition, we engage in targeted direct-to-consumer programmes."
The company views itself as a partner in the final-products' marketing campaigns and its CoroWise logo has made its way onto the packaging of a dozen products. It is also being included in broadcast ads.
"A recent example is Wyeth's Centrum Cardio TV advertising campaign, which states that the difference between Centrum and Centrum Cardio is the presence of CoroWise," Stauffer says.
Co-branding can provide mutual benefits to ingredients and product manufacturers, but there are other arrangements that the two parties sometimes make.
"Ingredients manufacturers sometimes pay the product manufacturer to include their logo," says Hughes, of the Anderson Partners ad agency. "It's actually very common. That's the 'Intel Inside' model — it's the reason HP or Gateway computers include the logo on their computers. Intel pays them, often in the form of co-op dollars or discount dollars. It happens in the ingredients world as well, although it's difficult to get manufacturers to talk about that."
Does branding really sell products?
The arguments in favour of branding are numerous, but the final word all comes down to the bottom line. Are the products selling? Are consumers paying attention?
According to the Natural Marketing Institute's Health & Wellness Trends Database, 30 per cent of consumers indicate that a specific branded ingredient prominently displayed on the front of a package for nutritional supplements or foods/beverages increases their likelihood of purchase.
While that 2007 figure represents a growth of 6.1 per cent over 2006, since 2003 there's actually been an overall decrease of one per cent, explains Nancy White, director of marketing for NMI.
That these numbers have fluctuated up — and now down — isn't surprising to Hughes. "Consumers who see an ingredient as a sales motivator tend to respond to the economy to some degree. When the economy is good, more people are willing to pay a presumed premium, and when the economy tightens, such benefits are the first to go. We see that right now in organics, with sales growth slowing considerably."
Matt Phillips, president and CEO of Cyvex Nutrition, is surprised the number isn't a bit higher, but expects it will steadily increase in the future. The California company sells nearly two dozen branded ingredients, and believes the time couldn't be better for new branding and co-branding initiatives.
"There are great opportunities right now," Phillips says. "The quality and adulteration issues with some products make companies more apt to use branded ingredients because they can trust the quality and the company making and selling these ingredients. I would definitely say branding will continue as a way to differentiate oneself in the marketplace."
Thus far in 2008, business has grown 40 per cent, and that, in the end, is all the convincing Cyvex needs. As Phillips explains: "The impact of branding has been substantial. We can attribute the bulk of our growth to our decision to brand our ingredients."