The Lempert Report LIVE

Exploring the Food Industry: Delivery Wars, Waste Solutions, and the Ethics of Youth Marketing

October 02, 2023 Phil Lempert Episode 97
The Lempert Report LIVE
Exploring the Food Industry: Delivery Wars, Waste Solutions, and the Ethics of Youth Marketing
Show Notes Transcript Chapter Markers

Ready to get the lowdown on the food industry's biggest battles, innovative solutions to food waste, and the ethical implications of marketing to youth via social media? Buckle up! We're navigating the competitive landscape of food delivery giants - Instacart, DoorDash, and Uber Eats, and exploring how they're evolving to stay ahead. But it's not all corporate skirmishes; we're also shining a spotlight on Marty, a novel platform making big strides in combating food waste. Since its launch in September 2021, they've saved over 2.5 million pounds of food - and that’s just the beginning of their story.

We're not stopping there, though. We're peeling back the layers on food marketing and sustainable packaging, dissecting the ethical importance of transparency in brand claims. With examples from Whole Foods, the Impossible Burger, and more, it's a deep dive into what it truly means to be 'sustainable'. Then, we're pressing play on a conversation inspired by Sophia Paley's poignant article, Social Media: A Teenage Wasteland. We're giving the mic to the youth, discussing the realities of social media's impact, and wrestling with the ethics of advertising to young people. It's a bold conversation and it's high time we had it. So join us as we traverse these food industry landscapes, don your headphones, and prepare to be enlightened.

Phil:

Welcome to the Lempert Report LIVE. On today's episode, gearing up for the new war with Instacart. Morty takes on food waste, the scam offloads claims, the push to get on restaurant menus, how the pandemic changed food marketing forever on food and off phones. A look at social media's effect on teens and on the bullseye. We have to question whether Heinz has pushed too far with Taylor Swift. Let's get started. So, Sally. What we find is a war is brewing in a big way. We look at Instacart that on September 18th went through their IPO. Their IPO went out at $30 a share. Last time I looked a couple hours ago it was about $27.66 a share, and this morning a report came out that Instacart's first couple of quarters on the public markets could come with slower revenue growth and lower profit than it reported in the first half, according to private forecasts from analysts at the banks that underwrote Instacart's IPO. The low expectations could further dent Instacart's stock price, which has still been hovering around its IPO price. If the company can surpass forecast, analysts at Goldman Sachs and other banks expect Instacart to report between 7 and 8% revenue growth in the second half. Two people familiar with the matter said that's down from growth of 31% in the first half and 50% growth in profits. As we talked about at the time when Instacart went with their IPO lots of controversy because they got a big tax credit that we at the time said, well, maybe this is going to really change the numbers. At the same time that Instacart is floundering and I would use that word what we find is we find Uber Eats and DoorDash really picking up steam and trying to get to the grocery business. What Uber Eats has done. They followed Instacart's lead and they now offer SNAP recipients the ability to use their benefits to order groceries. So what do you think? Is Instacart really in trouble and have major competitors from DoorDash and Uber Eats now?

Sally:

Tisha, and there are a lot of different things to consider that these companies are offering Uber Eats for one, now opening up their services to people who are using food stamps to pay for their groceries, which is a great benefit for many people who some people have disabilities and can't get to the store or don't have transportation or have small children. There are a lot of different reasons that might keep someone from being able to actually go to the grocery store and shop in the store. So this is a great benefit for those shoppers. And then DoorDash what we're seeing from DoorDash is that they are offering some different benefits to retailers. They're not just working on the delivery part, but they're also assisting retailers in how to manage their in-stocks in their store, their product inventory. They're trying to help them with their overall sales in their store and not just online.

Phil:

Yeah, I think that Uber Eats is probably a good move to take food stamps and snap benefits, but the one I'm really watching is DoorDash because, I agree with you, I think DoorDash is in it for the long haul. They really want to build that relationship with retailers. They want to work hand-in-hand with retailers. What they've said is that they see grocers and retailers as being more and more innovative in terms of how the store doubles as both a traditional physical store that a customer goes to and also an e-commerce fulfillment hub, and they're partnering with them along the way to figure out how to make shopping more efficient. So I think DoorDash is the one for us to watch. So, Instacart, look over your shoulder. Doordash is coming. Martie is a new app and a new website started by two food entrepreneurs. Who really wants to make food waste front and foremost throughout the entire country? What I love about Martie and what they basically do is they operate the way a dollar store does or the way a grocery outlet does, where they buy from major companies and smaller companies. They've got over 2,500 different brands, including folks like Kellogg's and Quaker and Pepsi and the like, so they're buying the brand's surplus and overstock inventory and they give it to consumers at a deep discount. Now, the reason that they're doing this is a lot of these companies, when they have overstocks, they really send the stuff to the landfill, so it's all about waste, and I am really impressed with this company. They launched in September 2021. They say they've salvaged about 2.5 million pounds of food since that point. What I really like about their website, sally, is it's fun and it's engaging, and I think that this is going to become huge. The look of the website is fun. They have filters on for health and wellness and also similar to going into a dollar store. It's like an adventure. So, for example, the notifications that I got this morning 48 hour flash sale they've just dropped prices on over 100 items and, by the way, you save between 50 and 75%. So I happen to love Ely Coffee, so Ely Coffee is about 70% off the can that you would get in the supermarket. The over 200 new items just landed. And then what made me laugh is I get a free roll of who gives a crap toilet paper, exclusively for app shoppers. Get a free roll with your next order while supplies last. So I am just so impressed with these women who have created this company. I love their website. I really think the way they've designed it is they're gonna get people through the instant notifications and just through the website. You know, I mean doing this all the time. It becomes like a social media fun thing that, oh look, here's something I could buy now. What do you think?

Sally:

I agree, Phil. This is something that we really need. We are looking for ways to manage our food waste more than ever, and historically we didn't have the technology or the way to communicate quickly with people to let them know that there was food available and to find a home for food that was going to ultimately be wasted. Another part of this is that our consumers now are much more waste conscious, I believe, and they are interested more than ever in keeping foods out of the landfills and, with food inflation happening, they're also looking for a great deal, so they're much more willing to look at these surplus, these stores that sell surplus foods or, you know, in the case not in the case of Martie, but in the case of some that sell perishables, you know they're more interested in buying blemished fruits, ugly fruits and vegetables that we've talked about, because if they can get a discount and they can help the planet, then that makes people feel good about their shopping. And also, what's great about Martie is that they are trying to share the sustainability story of these companies, which we know consumers are very interested in knowing the story, knowing what a company is doing to help the planet, knowing what they are doing to create more accessibility for everyone to have food. So these stories we want to tell and Martie is doing that through their work.

Phil:

Absolutely, and you know I just pulled up their website and a six pack of Laura Barr Kid Chocolate Brownies normally 479, here it's 289, kettle Crinkle Cut Chips normally 379, a Buck 99, pellegrino six pack Lemon and Raspberry Sparkling Water there's only two units left 469, a daily deal, I mean. And unlike Amazon and most supermarket e-commerce site, this is fun. This is enjoyable. You know you look at this and it makes you want to buy versus just seeing product after product. So good for Martie and I hope they do. Well, they're in 34 states right now. They were a California, los Angeles company. Their warehouse is in Texas, but they're going to be expanding that and pretty soon in all 50 states. So check it out. It is Martie M-A-R-T-I-E dot com. Great job. So you know, as you're talking about sustainability stories on Martie, there's some new information that's coming out across the pond from the European Union, where they reached an agreement to ban generic environmental claims, including climate neutral, by 2026, and also what they're doing is getting rid of claims like biodegradable, natural or environmentally friendly, because they say they mislead consumers unless the company can prove without a shadow of a doubt that it's really biodegradable things like that and they're also going after something you and I've spoken a lot about, where you have a lot of these brands and companies that are now claiming to be carbon neutral because they're buying carbon offset, and that's very sketchy and it really doesn't mean that they're helping the environment. It just means that they're buying carbon credits in order to say that they're doing it. There's also a lot of lawsuits taking place. Right now, for example, there's a lawsuit against Starbucks line of refresher fruit drinks which don't contain the fruits that are on the name of the product that they have. Now that's an old story because when you think back, it was, I think, pepsi's slice, but I could be wrong and if any of our viewers can correct me, that would be great. But when Pepsi's slice first introduced, what they did is they had a variety of flavors and slice had, I think, 10% fruit juice in it, but the fruit juice in all the flavors was grape juice, because grape juice is the cheapest juice that's out there. So we're really seeing these organizations, we're seeing countries really get drilled down and make sure that consumers are not being misled, and we have to this rule in the EU. That was on September 19th. As I said, natural, biodegradable, neutral, echo. You're gonna have to prove these things in order to put it on your package, and I think that we all really win by that, because they also point out other ones that should be banned, like green. What does that mean? Nature's friend, energy efficient, biodegradable all these and the vote's gonna take place in November. I only hope that this goes through, and do you think that this is something that, even though the EU is taking the lead on it, that we should be doing here in the United States?

Sally:

Absolutely. I think it is very important, as you've said, Phil, that consumers know what these label claims mean and what they're getting for that, and we have seen in the past this labeling issue come up in all kinds of ways, and one example that comes to mind as I think about when Whole Foods was getting in trouble for a little while with some companies that were calling their animals farm raised or pasture raised or using those claims, but then people were finding out that that's not exactly what was going on on these farms, and so the shoppers need to know what the story is. They need to have a window into. If you are making sustainability claims, then share on your website with your customers what you're doing. They want to know the story, just as we were talking about with these brands that Martie is talking about and telling the sustainability story. Your shoppers want to know that, and also it's just our ethical responsibility to do what we can to help our planet and to be honest about what efforts we're making.

Phil:

Yeah, and also consumers are willing to pay extra for those products that do have a real value, whether it's for the environment or for our health, and most of the time they're getting ripped off. You bring a great example with cage-free and free range and so on, and to this day, to this day, I can talk to consumers who really believe that when they pick up eggs that say cage-free, that cost more than conventional eggs, that it's happy-go-lucky chickens running around and that's not what cage-free means. So consumers want and are demanding better, Better products, better company efforts towards the environment, willing to pay for it and just to rip them off, you know, just doesn't work. And talking about rip-offs, what we're seeing and it started with impossible foods where, when they introduced their plant-based burger, they decided to go to upscale restaurants before they went to supermarkets to get it on their menus Now we're seeing a whole bunch of new food and beverage startups that are working with restaurants to try to get on their menus, to have that credibility, so that consumers can feel better about a product even though they've never heard about the product. But when it's partnered with, whether it's a fancy restaurant or a fast-food restaurant, or in the case of here in Los Angeles with Erewhon. Airwan has this huge program where they partner with various brands in order to sell and make that Airwan halo over them, and the one that I think that is hysterical and very successful for Airwan is the Haley Bieber Smoothie, which is pink and it costs $20 for a smoothie. So do we think that this is going to be the next phase for all these startups that they're moving away from human influencers and now they're looking for restaurant and retail influencers?

Sally:

These collaborations can be great visibility for these brands, where they may not see a huge bump in their sales, but the visibility is there and that is a great thing for these brands. It makes me think of Phil in the rap music world, in the R&B music world, that many of these really famous artists are always doing collaborations with other artists, and one of the reasons they do that is to expand their visibility and their reach, and so it makes me think of that when I look at these products and how they are trying to find the right partner to get their product seen more. One of the ones that was really interesting to me reading about in this article Phil was not a food product was the Dove brand, which is participating with a partnership with Juice Press on smoothies that are inspired by their body scrubs. So there are a lot of different ways that brands that are not even a food can partner with a restaurant or, let's say, a retailer like Arawan and find a successful collaboration.

Phil:

And I love your analogy to the music business, which is one that I had not thought of. And when I really think about it, the way it used to be and you would know this far better than I is, you would have a band or an individual cover the music from somebody else, so somebody else would do a Beatles song, but they would be doing it themselves, but now, with these collaborations, where you have both artists actually working together, there's that spill-off. So I think that's a fabulous analogy and something that brands should keep in mind, because 2 plus 2 is not 4. 2 plus 2 is 5. That kind of thinking. So there's a great article in Fast Company about what the pandemic has taught us about food marketing, and this was written by Megan Teates, Executive Vice President with Affinity Group, which is a food service sales and marketing group, and basically, you know, she points out four must-haves One is that social media can be used to gauge consumer perceptions in real time. Two, globally inspired flavors are in high demand. Three, the definition of healthy continue to evolve. And four, it's about the experience. And what she points out on the experience is the dining out is fun, but carry out is fun too, with add-ons like margaritas to go or meal kits like Hello Fresh or Blue Apron, and I totally disagree, totally disagree. If you take a look at Blue Apron and not to rag on Blue Apron, but Blue Apron in 2017, when they did their IPO, the company's value was $1.89 billion. Just last week Ma rc Lore, brilliant guy in e-commerce, he created Jet sold it to Walmart for you know a fortune. They went on to Walmart, helped them figure it out. He's now on his own. He has a new company called Wonder. We've talked about that before. It's a startup in New Jersey where, basically, they deliver food to you, but in the trucks that they deliver food, there's actually a chef so that you know the basic food has already been prepared in their commissary, but the chef is doing the finishing touches on the truck outside of your house to make it that much better, that much fresher, and so on. Thank you, but here's the point that Mark Lohr just bought Lou April last week for $103 million Still a lot of money, but it's not $1.9 billion that they were valued at for their IPO. So I think that it's really important to understand that. Yes, the pandemic has shifted a lot of what we buy, how we buy it and so on, but still there's some basics there and we can't just fast forward to chat GPT to AI, to e-commerce, everything that we have to have some fundamentals there that are gonna be consistent.

Sally:

Yes, and in this article that you're referencing, Phil. For me, number one and number two are the big winners in this and in what we've learned from the pandemic, and that is I'll go as far as for the social media, to just pare it down to TikTok. Tiktok is where foodie content goes viral, and when we talk about globally inspired flavors being in high demand and how people want to know how to make these ethnic foods, it's on TikTok where they are showing you how to make these recipes in a simpler way, with less ingredients, with easier to find ingredients, and so these, to me, are the ones that are key for retailers to focus on and to pay attention to.

Phil:

Totally agree, totally agree. So, on Food Not Phones, and just to give you a recap Food Not Phones on September 19th, when we launched great success, we had a lot of influencers, a lot of people picking it up and posting on their own social media. Food Not Phones heard a lot of great stories about people putting down their phones. On September 19th coming up, our next Food Not Phones day is gonna be Thanksgiving, so check it out on FoodNotPhones. com. The countdown is there. Participate, be part of it. Thanksgiving is gonna be bigger and better than it was in September and we're gonna do it throughout the year. It's really important and this story that we're gonna talk about, Sophia Paley, who's a high school senior at Horace Mann School in New York City, wrote this on katiecouric. com and basically her title is Social Media a Teenage Wasteland. She's 16 years old, a terrific writer, if you would, and I love what she said. You know, and I'll quote some of the things, it's difficult for me to go an hour without checking my direct messages or scrolling past educational or cringe-worthy content, and then she goes on to say an old school phone call. Why bother when you can easily spill the latest gossip through a quick text on Snapchat in-person conversations. Now a text will do, I'm gonna. Group of teens is out for dinner together. They're just as likely to be gazing into their phones posting insta stories of their spicy tuna rolls as they are to be actually talking. So you know, being the mom of two teenagers, what do you think of Sophia's column here?

Sally:

Phil, I really appreciated this column that she's written and I think that it is important for us to listen to what more of our youth are saying about this. You know we can't just be. You know you kids in your rock and roll. You know we need to try and understand where they are coming from. This is part of their world. This is how they are growing up socializing. Particularly during the shutdown, we saw a lot of kids only had that way to connect with each other. So, while we know that there are some really harmful and dangerous things out there as far as the internet and social media go, you know that have to do with the rise in anxiety and depression, eating disorders. You know just overall self-image that kids are dealing with. We know that that's out here, but it is great to hear the youth talking about it and what they think of it, and I think you know she's making some good points here about. You know where are the limits that the adults are setting and you know, as we've talked about is what are the limits? As companies that are getting on these social media sites and advertising to youth, what are their limits, as far as you know? Are they acting ethically? Is this algorithm performing ethically to protect our children? These are all things that I believe we are trying to figure out and see how, you know, this is going to evolve as our kids grow into adults. But, you know, as for our food not phones movement this is an opportunity for us to have those conversations with our kids and to talk about. You know, we can find some balance in here. We can put them down and we can engage face to face and have human interaction and have our meals together and not have to look at our phones, and then we can have our time with our phones as well. But there must be some sort of balance.

Phil:

Absolutely, and it's a great read. Go to katiecouricmedia. com, read Sophia's article. There's just one other thing that I want to point out, and she points out just the same way you do, that we need a national discussion on this, involving teens, parents, tech companies and lawmakers, to address these issues and by not elevating the conversation around the way it can be misused, are we leading a generation of future leaders towards a teenage wasteland of isolation, anxiety and depression. That's what Food not Phones, is all about. So thanks, Sally, appreciate it. Now on the bullseye. There's no denying that pop culture plays a powerful role in shaping our purchasing decisions. Brands have long understood the value of leveraging celebrity partnerships, moments and movements to promote their products, but every now and then, a partnership emerges that's so unexpected yet perfectly pitched that it captures the collective imagination Enter Heinz, taylor Swift and Travis Kelce. For those who may be slightly out of the loop, which you know over the past week would have been very hard to do unless you were one of the few people who were overcome by the madness in DC and focused on what could have been the government shutdown. I'm gonna recap it for you. Taylor Swift, the internationally celebrated singer-songwriter who has broken all concert records with her era's tour has supposedly been romantically linked to Travis Kelce, the NFL standout tight end. Now, in a serendipitous twist of fate, Kelce plays for the Kansas City Chiefs. This is a team that is synonymous with Heinz Field, and it gets even better than that. In a master stroke of marketing genius, maybe Heinz Ketchup decided to take this golden opportunity head on, as game watchers noticed on September 24th that Taylor Swift was dipping a piece of chicken, dipping it in ketchup and what appeared to be ranch dressing. Now, this whole thing started when one fan tweeted a picture of Swift with the concoction, which now has over 40 million views. Heinz jumped quickly on the opportunity and came up with a campaign to capitalize. They took an existing product, which, frankly, most people have never heard of crunch, and put a new label on it ketchup and seemingly ranch. And they went on Twitter to announce that they're gonna be giving away 100 bottles in a contest. Just 100 bottles. They're not going on the market with it as of yet. No rules or information has been posted, just the announcement On Instagram. Heinz's posting has just over 13,000 likes. All it says is a new era for Heinz Get it era era's tour, lame, introducing ketchup and seemingly ranch Limited edition bottles coming soon. Well, what makes this promotion truly intriguing is its nuance. It's not just about slapping Taylor Swift's face on a bottle or utilizing Travis Kelce's athletic prowess which Heinz probably couldn't afford to do either of. Heinz has woven a narrative around the pairing of ketchup and ranch that's authentic and on-brand, and just maybe because of the power of Swift, they can actually sell crunch, which was introduced back in 2019, but has barely made a dent. In fact, this past weekend went to nine supermarkets here in Southern California and not one of them had crunch on its shells. Probably that's gonna change soon. It's worth noting that no official statement has been released to suggest that either Swift or Kelce directly endorses the product. Instead, heinz's marketing folks have made a huge impact and it's getting major PR on TV news, including on today, cbs News and NPR, in newspapers and, of course, on social media by moving swiftly swiftly sorry about that and getting their campaign up in less than 24 hours. Some, myself included, can argue about the ethics of leveraging Swift's personal relationships for corporate and brand gain, but you cannot deny the innovative way that Heinz has approached this. It's engaging, it's fun and it's memorable. I'm gonna go out on a limb here, but I'm imagining that the brains behind this effort was not some stodgy old 50-year-old marketing expert, but a 20-something who's probably a fan of Swift. If I'm right, reach out to me. I'd love to hear from you, Phil at supermarketgurucom, and guess what? We'll get you right here on the broadcast next week to tell your side of the story and, of course, reveal the rules and how fans can win one of the hundred bottles. Or are you gonna announce that there's so much buzz that you're just gonna replace the lagging crunch with ketchup and seemingly ranch? And, by the way, heinz is not alone. Their competitors have decided to jump in. The official KFC X account, commented our ranch queen, while Hidden Valley Ranch has since changed its Twitter name to seemingly ranch. Everyone seems to wanna get into the act. But at last night's game in East Rutherford, new Jersey, swift was there but to the brand's dismay, there was no shot of chicken ketchup or seemingly ranch. Yes, this is a cheap social media and marketing shot and yes, it worked. And yes, it's brilliant, as everyone behind Heinz is posting about it on social media. It's great free publicity, but let's remember, food still has to taste good and only time is gonna tell if Taylor and Travis will stand the test of time. Yes, their pairing has given Heinz a flavor victory, but it's anyone's guess just how long either pairing is gonna last. Thanks for joining us and we'll see you back here next week.

Sally:

Be sure to visit Supermarketguru. com for the latest marketing analysis issues and trends, and don't forget to join us back here next Monday at 2.30 pm Eastern for more.

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