CPG brands tip-toe into a new approach to differentiation

Two leading consumer packaged goods marketers made announcements this week about what they were taking out of their products.

Minnesota based General Mills announced yesterday that they are reducing the grams of sugar contained in cereals advertised to kids to single digits per serving. To be sure, the qualifications would make any corporate attorney proud (some of the "hard stuff" like Franken Berry and Boo Berry will continue to exceed this standard but they are not advertised brands). Even so, this step is consistent with others "The Mills" has taken in recent years to improve the healthiness of their products. In 2005 they guaranteed at least 8 grams of whole grain per serving in all of their Big G cereals. In 2008 the company fortified all its children's cereals with calcium and vitamin D.

General Mills is not the only player innovating this way in the cereal isle. Arch rival, Kellogg Co. reduced the level of sugar in three of its kid's cereals by 1-3 grams last year. Together these actions represent a pretty big shift for a category built by overtly tempting the juvenile sweet tooth via wacky cartoon characters.

The other significant announcement this week was from Nestle. Fast Company reported Nestle's plan to use only fair trade chocolate in KitKat bars manufactured in the U.K. (in essence removing from their product chocolate sourced from exploited growers). Okay, it's one candy bar brand made in one country but Nestle is not alone. Cadbury earlier announced plans to source fair trade chocolate from Ghana while Mars announced plans to go with 100% fair trade chocolate by 2020.

A cynic might argue that these companies are taking these baby steps to diffuse pressure for heightened governmental regulation. Cereal marketers are still certainly cringing from the experience of having to discontinue their "smart choices" program after it became widely known that sugar-laden products like Fruit Loops qualified. Fending-off regulators may be a partial motivation but I don't think that's the primary driver.

More and more consumers see messages pertaining to healthy, green, and even sustainability on the front of packages. The only way a message gets on the front of a package is because some very smart people believe it will sell more product. I expect the pace and degree of innovation on this front to increase because these differences are real (as opposed to manufactured hype like "blue flavor crystals") and they are becoming more and more meaningful to consumers. This trend can only go in one direction as more brands use it to compete. The more pronounced and tangible the innovation, the more powerful the differentiation. Imagine a day where the claims are so clear, universal and compelling that the lawyers won't need to be involved.