Food giants lure consumers with ‘stealth small brands’
Everything about Maker Overnight Oats — the name, the packaging, the founders’ story — screams food startup.
The oats come in glass jars. The flavors include mulberry & chia. On its website, the founders’ job titles are “Chief Rainmaker” and “Chief Troublemaker.”
But Maker is actually the creation of Quaker Oats Co., a unit of PepsiCo, and it’s part of a wave of new products from big food companies that look like they’re from small ones.
Golden Valley-based General Mills is the maker of a little-known brand of paleo-certified, grain-free granola products called Autumn’s Gold. Kellogg Co. created Joybol smoothie bowls. Nestlé USA created Wildscape, a line of frozen food entrees with ingredients such as freekeh, turmeric farro and the Korean pepper paste gochujang.
Food industry consultant Victor Martino calls them the “stealth small brands.” In a column for the website Just-Food, he described them as “intentionally designed to look like it comes from a startup.”
They represent a minuscule portion of the overall business of the food giants. But their very existence shows that the big-name companies are going to new lengths to compete with startups that are grabbing consumers with innovations in ingredients, packaging and stories.
Whether people buy these products will largely depend on how genuine their purpose seems, said Susan Viamari, vice president of IRI, a Chicago-based consumer research firm.
“Even if they aren’t truly local brands, they feel more specialized,” Viamari said.
In IRI’s most recent Pacesetters report, which analyzes the most successful new products annually, more than a quarter of the top-performing food launches last year were from companies earning less than $1 billion. That’s a steep increase from five years ago when small companies held a low double-digit share of the most successful launches, Viamari said.
“We are seeing a lot of (consumer) dollars shift from the traditional large brands to the small and very small brands. A huge factor is that authenticity,” she said. “There’s a lot more riding on a brand’s ability to address very personalized consumer needs … really just zeroing in on the things that matter to the individual consumer.’
Large food companies constantly launch new products. Many are offshoots of existing popular items, like General Mills’ Cheerios Oat Crunch. Others come through acquisition, like Epic Provisions, a small Texas company General Mills acquired in 2016.
This new method emulates the look and feel of a startup, often with no visible connection to the big brand behind it. And for the most part, it seems the big companies don’t want to talk about such efforts.
PepsiCo declined to answer questions for this article. Maker Overnight Oats is a part of its in-house incubator called the Hive, which creates new brands and builds others that it acquired.
In a news release this summer, PepsiCo described the Hive as a place where ideas developed by employees and outside experts get to market faster. “We will channel that experience in this team to act with the agility of a small company, but with access to the knowledge, scale and resources of PepsiCo,” Seth Kaufman, a PepsiCo president, said at the time.
Other packaged food companies have launched similar in-house innovation hubs to identify new trends and create corresponding food offerings.
Separately, many of these large companies have established venture capital units, like General Mills’ 301 Inc, which invests in outside, early stage companies that could be a potential acquisition in the future.
But the Autumn’s Gold business is different. The company developed the paleo-certified line and has developed limited distribution for it through Costco and Amazon. Autumn’s Gold isn’t on General Mills’ list of brands on its website. A small distribution and copyright notice under the ingredient list indicates the brand’s provenance.
The company declined an interview request about the brand. In a statement, it said, “At General Mills we bring new brands into our family through a variety of levers. … There isn’t one single strategy or approach that we take for every new idea or brand concept. … It’s important to have multiple types of innovation and always experiment to increase our odds of success and fuel sustainable growth.”
Other companies further obscure the connection between the parent company and the new brand.
Joybol smoothie bowls can’t be found on Kellogg’s brand webpage and Kellogg’s name can’t be found on Joybol’s website. Nestlé and Wildscape do not mention each other on their respective websites.
Kellogg declined to comment and Nestlé didn’t respond to multiple inquiries.
“Those are deep stealth brands,” Martino said. “Is it duping? Is it a lack of transparency? Some people say ‘yes.’ ”
Viamari is more sympathetic to the large companies.
“More so than trying to be covert about it, (companies) are just trying to have shoppers feel that connection with what makes them tick — whether it’s health-related, whether it’s natural, whether it’s sustainability, or maybe it’s giving back,” she said.
