This is a fantastic small step (and hopefully many more to come) for the industry as it tries to become more “top of mind”  to a generation of kids that is being exposed to junk foods that are given optimal store shelf placement and products that include vibrant colors, themed characters, and promoted heavily in-and-out of store.  Hopefully other healthier food categories will take notice and make the necessary changes to be more relevant to school age kids.     

http://www.usatoday.com/money/industries/food/2010-08-29-baby-carrots-marketing_N.htm

http://smartblogs.com/restaurants/2010/08/09/how-to-set-up-shop-in-the-supermarket/

http://www.nytimes.com/2010/08/07/business/07muffin.html?pagewanted=1&_r=1&ref=business&src=mv

 http://seattletimes.nwsource.com/html/coffeecity/2012524921_starbucks_instant_coffee_sales.html

http://nrn.com/article/high-tech-dispensers-boost-beverage-sales

The Outlook for Branding a Commodity Food Product

The economic climate is (has) definitely changing the landscape and rules of marketing and branding.  As consumers seek out the best bargains their buying priorities have changed and shifted to value and return.  What price am I going to get for the product and what am I going to get out of it?  We’re seeing this in all categories but especially commodity driven food products such as bottled water, specialty coffee, and the dairy industries.

Let’s take for example the bottled water industry that has been heavily branded for years, which has seen declining prices over the past few years with increased competition.  Many can argue that consumers are losing their sense of creditability in a commodity product that is heavily branded with very broad pricing.  As pricing becomes broad in a commodity category it weakens trust in premium priced products as consumers ask themselves “why is Product A priced so much higher than Product B when it comes from virtually the same source”?  You walk into any grocery or convenience store and you’ll see a Pure Life (owned by Nestle or a private label) 16oz. branded water priced around .99 cents versus a Aquafina 16oz. branded water (Pepsi) priced at around $1.69.  Both of these products source their water from the same city municipal water supplies and thus offer no competitive advantage to purchasing one from the other.  So what is a consumer left to do in this economy?  You guessed it, purchase an economically priced commodity instead of the heavily advertised and marketed commodity product.  Volume for Aquafina and Dasani (Coke) have been off over the past few years while Arrowhead and other private label brands (Safeway, Costco, etc.) have seen volume and profits increase.

Would love to get your thoughts on this topic.  What do you think the long term outlook is for commodity branded products?  Will prices keep falling as consumers become savvier and not buy into the marketing of a premium priced branded commodity product?  And thus creating a price war that will eventually drive certain non-competitive brands out of the category?   Or are we just experiencing the effects of a temporary economic environment where consumers will trade back up to higher priced branded commodity products once the recession is over?   What can companies do to prevent or mitigate getting into a price war and instead continuing to reinforce the branded element of their product?