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SEPTEMBER 2016MARKET INSIGHTS

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BIG DATA’S Social Savvy

ADDRESS AUDIENCE NEEDSMinnesota-based catering and restaurant group Powers Ventures used to offer gluten-free options on its Canadian Honker menu as “more of an afterthought.” However, when the company hired digital solutions agency BrandHoot as an analytics consultant, it discovered that gluten-free options ranked among the top 10 most popular pages on the Canadian Honker website. The insight served as a wakeup call for the company to leverage its data to improve and enhance the customer experience. BrandHoot uses a combination of Google Analytics and its proprietary tool, FanCoach, to help its customers better understand their audiences and identify untapped opportunities. The FanCoach tool provides Facebook marketing insights detailing how well social posts perform and how brand messaging can be tweaked to maximize reach and engagement. Canadian Honker participated in a beta test of the FanCoach tool and, through the experience, was able to optimize its menu to better reflect customer preferences for vegetarian choices.1

RAVE REVIEWSWith more than 800 locations across the United States and tens of thousands of Yelp reviews, Darden Concepts’ Olive Garden brand chose an enterprise business analytics solution from Stratifyd to help consolidate its social media reviews and extrapolate relevant insights.2 Based on “a series of analytics capabilities utilizing bigrams, Natural Language Processing, and advanced probability sciences,” the Signals analytics platform independently “learns” from raw data and visually translates it for an end user through an intuitive user interface.3 Olive Garden leverages Signals to identify its strengths and weaknesses, as well as adjust services, advertising, and marketing messages. The restaurant chain will also be able to determine where negative comments appear geographically and conduct competitive data analytics searches.4

There is no debate about the value of big data. Yet in order to fully realize

its value, companies must have a plan on how to collect, manage, and utilize

thousands of disparate pieces of data. For companies making the leap, social

media has emerged as a rich and powerful source of insights.

ANALYTICS

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KEEPING FRESH Food Convenient

C-STORE CHALLENGEThe effort to make fresh fruit and produce convenient, however, involves significant

coordination across the supply chain. More than 77 percent of NACS members state that they sell fresh produce, driving the sales of fresh fruits and vegetables in c-stores by 14.4 percent in 2015—more than five times the overall 2.7 percent growth rate of US produce sales, according to Nielsen. The distribution of fresh foods to the 154,000-plus c-store locations in the United States depends on a particular chain’s resources and business model and is complicated by the fact that many chains have grown through a hybrid model of acquisitions and new store development, making it extremely difficult to implement a one-size-fits-all approach across all stores within a company. For independent operators and smalls chains, wholesale convenience distributors (like McLane Company Inc.) provide critical access to fresh items with the reassurance of consistent delivery.7

FULL-SERVICE FRESHMcLane Company Inc., a leading supply chain services company providing grocery and foodservice supply chain solutions, recently announced the rollout of McLane Kitchen’s Fresh Produce + supply chain solution. Fresh Produce + is a new, nationwide turnkey solution that provides high-quality products, operational best practices, merchandising units, suggested retail pricing recommendations, and top-tier customer service to help c-store operators establish their locations as destinations for fresh produce. The solution is compatible with McLane’s Premium Ordering Management Suite and smart handheld technology, which allows fresh produce and cut fruit to be ordered by SKU, regardless of store size or location. Because pricing plays a key role in creating solutions that work for every retail customer, Fresh Produce + offers markup options associated with varying levels of product guarantee.8

With nearly 48 percent of Americans stating that convenience stores (c-stores)

are a source of fresh foods, and approximately 59 percent saying that the

channel offers food they feel comfortable eating, c-stores have responded.5

According to a 2015 National Association of Convenience Stores (NACS)

retailer sentiment survey, 50 percent of c-stores have increased their fresh fruit

offerings, while 30 percent are offering more cut vegetable and fruit products to

satisfy their customers.6

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ON-THE-GO Organic

ORGANIC OPTIONSGrown, a South Miami restaurant owned by former NBA player Ray Allen and his wife Shannon, is among the first organic fast food restaurants in the United States and the first on the East Coast to offer a drive-through option. To create the menu, the Allens partnered with Todd Kiley, executive chef of Rainforest Café. Fish is wild, not farmed; juice is freshly pressed in front of customers; and salads and soups are made on-site from scratch. In addition to organic choices, gluten-free menu items are also available, with prices ranging from $4 to $18. And for added convenience, Grown offers carryout

services and provides grab-and-go items seven days a week, for breakfast, lunch, and dinner.10,11

CERTIFIED STANDOUTWhen former food buyer and Costco executive Erica Welton noticed a gap in the marketplace for quick, on-the-go organic meals, she left Costco to launch The Organic Coup. Welton’s desire to build customer trust in the brand’s promise of organic food also led her to get the chain certified by the USDA, a first for the fast food category. Applying the Costco philosophy of doing one thing exceptionally well, the restaurant’s specialty menu item is its spicy fried chicken, an organic concoction that is air-chilled and fried in coconut oil. Organic Coup’s first restaurant opened in Pleasanton, California, in late 2015, with plans to open 25 more stores on the West Coast, and eventually in key markets like Las Vegas, New York City, Austin, and Chicago.12

In response to millennials’ growing interest in organic food options, well-

established fast food restaurant brands are adding more natural choices

to menus. Hardee’s and Carl’s Jr. are expanding options beyond natural

turkey burgers and hamburgers to include chicken sandwiches without

artificial preservatives or additives. McDonald’s is testing its popular Chicken

McNuggets without artificial flavors, colors, or preservatives, as well as fresh

(not frozen) hamburgers in its Portland and Dallas markets.9 New entrants

are taking it a step further, launching completely organic menus as a way to

differentiate and capture share within the challenging fast food category.

FOODSERVICE

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FUN, FRESH Design

COLLECTIVE STATEMENTCamden Town Brewery, a London craft brewery owned by AB InBev, recently overhauled the design of its bottles, cans, boxes, and tap badges. With bold background colors, strong typography, and a prominent, distinctive callout of the Camden name, the new design aims to create more consistency across the entire product line while retaining the brand’s playful and irreverent voice. The new design will also appear on the brewery’s new website and in its upcoming mass media campaign. Branding agency Studio Juice helped design the new packaging, stating, “On their own, these beers scream from the tap rooms and bottle shops, but as a collection they come together to celebrate their irreverent fun nature and continued success.” The packaging refresh began rolling out in June 2016.13

NEW YEAR, NEW LOOKEarlier this year, McDonald’s restaurants in the United States began rolling out new packaging for its carryout bags, sandwich boxes, and beverage cups, as part of a global redesign. The first major packaging redesign for the fast food giant since 2013, the simple, fresh new design aims to provide a consistent brand experience for customers in-store, at the drive-through, at kiosks, and on the McDonald’s mobile app. The new design also uses a “modern, clean” font to attract millennials and, in a nod to mobile-first thinking, features QR codes with access to nutritional information. The new packaging was unveiled in a McDCouture Fashion Show, where the entire collection of couture clothing was designed from McDonald’s packaging. Already present in 15,000 US stores, the new packaging will roll out to McDonald’s 36,000 global restaurants throughout 2016.14

From well-established to niche brands, new and exciting package designs are

making their way to consumers. Driven primarily by a desire to stand out on

store shelves, brands are also updating their look and feel to reflect a more

playful positioning that appeals to a younger audience.

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CONTENT WITH CONTEXTAlthough paid subscription services have been the largest and fastest growing revenue generator for service providers, in a bold move, Spotify is now testing an advertising model that allows brands to sponsor its most popular curated playlists, some of which have millions of followers each.16 Previously, companies had the ability to create branded Spotify playlists, but acquiring followers was a challenge. Spotify’s sponsored playlist model allows brands instant access to millions of followers (excluding paid subscribers), with the added ability to reach specific demographics with highly targeted messaging that “matches” the music.

Examples of the contextually relevant approach include pairing a Power Workout station with a footwear brand, or a quick-service restaurant advertising its new breakfast menu items in the Morning Commute playlist. Only 25 playlists are currently open for sponsorship, though the number is expected to increase. Brands that sponsor playlists will receive marketing support from Spotify in the form of brand marketing, native promotion, and social media. Spotify will also offer in-playlist media packages that include native logo placement, first ad break ownership, and 100 percent display share of voice.17

A WIN FOR BOTH PARTIESThe new source of revenue should help Spotify navigate the increased competition in the category. Although Spotify arguably has the most brand recognition of streaming services, the company needs to boost revenue; globally, it brought in $2.2 billion in 2015, but losses were $194 million.18 And while Spotify has approximately 90 million subscribers, at least two-thirds choose the free product. Spotify recently tested the new sponsored playlist model with vehicle manufacturer Kia, which used the New Music Friday playlist to promote its Kia Sportage compact SUV. Spotify reported that, during the weeklong sponsorship, Kia’s click-through rate doubled the overall campaign benchmark.19,20

Streaming music is now a leading source of revenue for the music industry in

the United States, accounting for 34.3 percent of total industry dollars. Also,

2015 marked the first time that streaming music revenue exceeded $2 billion.

With combined access to more than 160 million users across the three biggest

providers, opportunities to monetize the media platform beyond the popular

paid subscription models are growing.15

MARKETING

NEW (REVENUE) Streams for Music

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C02 CONVERSION

New Jersey startup Liquid Light has developed a groundbreaking new process that captures carbon dioxide (considered to be a major contributor to global warming), adds water and electricity, and eventually converts it into industrial chemicals. The company is the first to develop a catalyst (a combination of water, sunlight, electricity, and other chemicals) to create other chemicals out of carbon dioxide. Liquid Light states that its technology can “produce a range of commercially important multi-carbon chemicals,” noting that the converted chemicals could potentially replace petroleum in consumer products like plastic bottles, carpets, and antifreeze.21 The company recently partnered with De Nora—leading global designer, manufacturer, and supplier of electrodes, coatings, and electrochemical solutions—to accelerate real-world applications of the technology.22

WASTE-D FUEL?Researchers at the University of California at Los Angeles (UCLA) have adopted a unique approach to developing a long-term, sustainable fuel source. Rather than pursuing greener alternatives, the team is focused on inventing the next generation of advanced biofuels. More specifically, the team hopes to produce renewable energy from human and animal manure. The rationale? Human and animal waste is available in abundance and, more importantly, is rich in protein—an organic compound that easily converts into energy. The research plan is to reengineer Bacillus subtilis, a soil bacteria, to more efficiently break down protein molecules and use it to produce products. To date, the team has successfully used the bacterial system to create alcohol biofuels and ammonia but eventually hopes to find ways to enhance the bacterial metabolism process in order to improve the energy density of its produced biofuels.23

As a result of companies focusing on initiatives with a clear environmental and

social mandate, technological innovations that create sustainable solutions

are booming. This rapid growth is being fueled by significant investments in

research and development and breakthroughs in sustainable technologies,

including some innovative new ways to deal with waste.

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RECYCLING

A CLEANER, Greener Planet

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www.havi.com

Credits1Michaels, L. (2016, March). Understanding Restaurant Analytics Helps Turn Data into Profits, Food Service News. Retrieved from http://www.foodservicenews.net 2Stratifyd.com (n.d.). The Fastest Path from Data to Revenue, Stratifyd. Retrieved from http://www.stratifyd.com 3Stratifyd.com (n.d.). High Powered Analytics, Stratifyd. Retrieved from http://www.stratifyd.com 4Freudenthal, E. (2016, July 1). Data Analytics on America’s Beloved Restaurant: The Olive Garden, TasteAnalytics. http://blog.tasteanalytics.com 5National Association of Convenience Stores. (2015, December). How Convenience Stores Work and Their Contributions to Communities (p. 5). NACS. Retrieved from http://www.nacsonline.com 6CStoreDecisions.com. (2016, May 25). McLane Co. Announces Rollout of Nationwide Supply Chain Solution, Convenience Store Decisions. Retrieved from http://www.cstoredecisions.com 7National Association of Convenience Stores. (2016, May). Convenience Store Distribution Options for Fresh Produce (pp. 3, 6). NACS. Retrieved from http://www.nacsonline.com 8CStoreDecisions.com. (2016, May 25). McLane Co. Announces Rollout of Nationwide Supply Chain Solution, Convenience Store Decisions. Retrieved from http://www.cstoredecisions.com 9Woodyard, C. (2016, June 22). Fast-Food Chains Going ‘Natural’ to Lure Millennials, USA Today. Retrieved from http://www.usatoday.com 10Peterson, H. (2016, February 22). Former NBA Star Ray Allen Is Opening a Fast-Food Restaurant That’s Unlike Anything on the East Coast, Business Insider. Retrieved from http://www.businessinsider.com 11Petrillo, L. (2016, June 30). Ray Allen’s Grown Offers Fresh, Fast Food, CBS Miami. Retrieved from http://miami.cbslocal.com 12Peterson, H. (2015, December 17). A Former Costco Executive is Opening a Fast-Food Chain That’s Unlike Anything That Exists in America, Business Insider. Retrieved from http://www.businessinsider.com

13Murray, F. (2016, June 16). Irreverent and Fun Packaging Refresh for Beers, The Drinks Report. Retrieved from http://www.thedrinksreport.com 14Convenience Store News. (2016, January 8). McDonald’s Rolling Out ‘Fun & Modern’ New Packaging, Convenience Store News. Retrieved from http://www.csnews.com 15Hassan, C. (2016, March 22). Streaming: The Music Industry’s Largest Revenue Generator, Digital Music News. Retrieved from http://www.digitalmusicnews.com16Hassan, C. (2016, March 22). Streaming: The Music Industry’s Largest Revenue Generator, Digital Music News. Retrieved from http://www.digitalmusicnews.com17Swant, M. (2016, May 26). Spotify Will Now Let Brands Sponsor the Most Popular Playlists, AdWeek. Retrieved from http://www.adweek.com18McIntyre, H. (2016, May 24). Spotify’s Revenues Hit $2 Billion in 2015, but Losses Grow as Well, Forbes. Retrieved from http://www.forbes.com19Swant, M. (2016, May 26). Spotify Will Now Let Brands Sponsor the Most Popular Playlists, AdWeek. Retrieved from http://www.adweek.com20Morrison, M. (2016, May 26). Spotify Opens Its Popular Playlists to Sponsors, AdAge. Retrieved from http://adage.com21Kavilanz, P. (2016, February 2). She’s Recycling Carbon Dioxide with Hopes of Reducing Oil Dependence, CNN. Retrieved from http://money.cnn.com22Liquid Light. (2016, February 10). De Nora Signs Agreement with Liquid Light to Further Develop CO2-to-Chemicals Technology (Press Release), Liquid Light. Retrieved from http://llchemical.com23ScienceNewsJournal.com. (2016, March 4). Turning Human Waste into Next Generation Biofuel, Science News Journal. Retrieved from http://sciencenewsjournal.com

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