Issue #21: Building a Brand Is Hard

It is really hard to build a CPG brand. I have never done it, but I have spent a lot of time working and supporting those who are. Still, I often feel like a Monday Morning Quarterback when I critique CPG brands due to my inexperience on that side of the table. This week, I feel no different, with all the controversy swirling around Better Brands, a VC-backed startup producing high protein, low-carb bread items (bagels, buns, etc.). The tl;dr on the controversy: their eComm site was mysteriously not working, employees are complaining anonymously to reporters, class action lawsuits about nutritional complaints, and more. There are clearly some issues going on there and for more first-party reporting details, I highly recommend checking out Andrea from Snaxshot and Ann from The Information reporting on it.

Still, having consumed many brands and seen trends, I feel like I have a perspective to share. Two things can be true: building a brand is hard AND you should not scale quickly. I have seen this happen to brands, not just in CPG but in software too, where you raise a lot of money early and then there is pressure to grow fast. That is not to say that I don’t think brands should raise VC. In the past, I started a fund and invested in startups, and I think that VC is very beneficial. However, VC money is like pouring a bottle of lighter fuel on a fire. Sometimes, like if you are trying to build a bonfire on the beach, it is really helpful. But other times, like when you are trying to build a little fire for smores, a bottle of lighter fuel is harmful. Anyways, my point with this analogy is that I think raising a lot of money, not raising a smaller amount which is the right for your time, can be very harmful and companies are better off raising less to grow more manageable. Brands need a strong foundation before scaling, which unfortunately seems like was lacking at Better Brands. Consumers not only want a good product but also they want the product that they were promised. If you give them a B product and tell them it is a B product, it will be more enticing than promising an A+ and delivering a C- product.

How do I know this product was lacking? I am going to let you in on my product review secret: Reddit (h/t to Professor Reilly who taught me that). Reddit is the best place to get the most honest product reviews and information, for CPG and even software. Here is a thread where people are reviewing Better Brand, providing detailed breakdowns, sharing images, and talking with others about their issues. This thread illustrates the product was not ready for the scale desired and lacked the quality customers desired.

Anyways, I don’t mean to harp on one brand too much. Building a brand is hard and I will always try to support those trying something new, albeit ensuring they try in good faith to meet customer expectations.

Here are a couple of parting thoughts on this controversy:

• Kendall Dickieson, a CPG social media guru, shares her thoughts and sums up the best philosophy on how to build a brand

• Scroll down to read how to properly use Reddit as a brand

• And finally a thought for those on how to differentiate from other CPG brands, sometimes it’s better to zag than zig:

How to Crush it On Reddit: The Sonos Playbook

Now that I have shared my underrated tip on Reddit, I figured it made sense to dive deeper. Plus, I read this awesome piece this week highlighting Sonos, the speaker company, and Keith Nieves, its Social Media Program Lead. Similarly to Better Bagels, Sonos has had some recent issues, with customers not liking the redesigned app and poor company performance causing layoffs. However, instead of letting Redditors control the narrative, Keith, and thereby Sonos, have been in control.

I highly recommend reading the full piece, it is very feel-good, but here are the tactical things Keith does that every brand should do:

• He Clearly Identifies He is from Sonos - Reddit communities are notoriously anti-sales and people posing as random people to push their brand is a big no-no

• He Actually uses Reddit (I think) - You can tell he understands the community and how to interact with others

• He Engages with The Community - Keith was sharing his favorite movie recommendations and regularly discusses non-Sonos items with the community

• He is Proactive

• He Solves Problems

• He is Communicative

• He is Authentic

• He Meets Regularly with Subreddit Mods

• He is Given Fully Autonomy on Strategy

And the list goes on. If you are a brand, I highly recommend setting up a Reddit strategy and being as communicative/open/transparent with customers as possible.

Delivery Apps Don’t Have to Share Data With Restaurants

In 2021, New York passed a customer data law forcing delivery apps to share detailed customer data, like Full Names, Email Addresses, Phone Numbers, and Addresses with the restaurants. Prior to that, restaurants only received First Name, Last Initial, and the details of the order. However, a judge ruled that this law is a violation to the delivery apps First Amendment rights. Legally, I don’t have much to share on the validity of this ruling (I am not a lawyer in any way). However, in terms of sustainability for restaurants, I think this lack of data sharing is concerning, but I also understand why the data sharing is concerning to the delivery apps. In a competitive market where customers are not that loyal to many brands and the cost of operating is very high, like NYC, data is what your entire business is built on. However, it is clear the delivery apps power is hurting a lot of small business restaurants and forcing them to go out of business since their margins are collapsing, albeit due to other factors too. Overall, I am not sure where to land on this issue, but I do think this data piece will be a contentious issue going forward. It will play a large role in the success of restaurants in the future, and there will definitely be an impact on retail depending on how this issue plays out.

Allbirds Launches on Uber Eats

I am a big wearer of Allbirds (the shoes are so comfortable) and have been for some time now. However, recently Allbirds has been struggling as it deals with growing pains and as it tries to transform itself from a startup to a large company. Still, some of that startup ethos shines through, in particular with this partnership with Uber Eats. Now, around 4 of its 31 United States retail locations, you will be able to order their products. If it goes well, I assume the pilot will be expanded to the full assortment of stores. This example is one of the first apparel brands I have seen to be available on Uber. If you are an apparel brand (or any untraditional delivery item) with a retail footprint, whether the retail is owned or not, I strongly believe you should try to get on the delivery apps. Customers want delivery and omnichannel purchase options. You never know where your orders are going to come from and these apps make it super seamless to fulfill these orders. Have you seen any apparel brands on delivery apps?

Nike Struggles With Teens

When I was a teenager, I would argue the apparel brand that resonated with boys my age was Nike, in particular Jordans. Everyone wanted a pair and to be associated with the brand. However, in this year’s Piper Sandler’s 48th semi-annual Taking Stock with Teens survey, a fantastic survey, Nike continues to lose ground. It lost four points of share in footwear overall and lost eight points among females. What is fast on the horizon? New Balance, Adidas, Birkenstock, and On Running. As covered in many issues of this newsletter, Nike is struggling and this survey is just further evidence of the issues. I am curious, however, if Jordan brand was separate from Nike in this survey how it would perform.

Let’s do a little experiment and I will share the results next week!

• Summary: Join the tryb is an eCommerce marketplace where you can try new products by ordering just one of an item that would typically need to be bought in large packs

• Founder(s): Louise Butera

• Amount raised & investors: No public funding yet (founded in June)

• Notable Clients: Laurels, Tache, Smackin Sunflower Seeds, Freestyle Snacks, and more!

• My take: Customers want value and might be nervous about investing in a large quantity from a brand, so this allows customers to try before they really invest in the brand. As an emerging brand, you need to get your product in the hands of as many people as possible.

Additional Links:

1. Wendy’s partners with McBroken.com, a website that tracks where the McFlurry machine is broken, to encourage people to buy frostys (read more here)

2. Toast is offering branded mobile apps, soon after DoorDash also launched this feature (read more here)

3. Waffle House is an indicator used by FEMA to determine how badly a natural disaster has affected an area (read more here)

4. Yelp releases October 2024 trend analysis and Dirty Sodas have taken over thanks to Momtok and their Hulu show (read more here)

   • My take: Watch out for Swig and other fast-casual soda chains to take off

5. Darden is trying to get faster service in its restaurants (read more here)

6. Some popups can be a little thought-provoking, like this Eczema one (read more here)

   • My take: Something about any press is good press

7. Character, a startup making home improvement/maintenance kits, launched in more than 1200 Walmart stores (read more here)

8. Feastables, Mr. Beast’s chocolate bar, partners with Hyper AR, to launch in-store navigation in Target to find Feastables in Target stores (see it in action here)

9. Fetch expands partnership with Alberson’s Media arm (read more here)

10. Honest Tea Founder’s Just Ice Tea reached $20M in sales in its second year (read more here)

11. Auger, an AI-powered supply chain tool, raised $100M to build a real-time inventory management insights platform (read more here)

12. Suaz, the tomato sauce startup, expands into Target and launches nationwide with Whole Foods (read more here)

13. Bokksu launches additional giftable advent calendars and collections (read more here)

14. Taco Bell launches Name your price tool (read more here)

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