[00:00:05] Melissa Traverse: Hello, and thank you for joining. I am Melissa Traverse, Director of Community here at BevNET & Nosh, and I am excited to welcome you to the Nonbase Podcast, a podcast built to help CPG owners and operators navigate growth challenges and grow more profitable businesses. Be sure to check out nonbase.com, BevNET's platform built for the CPG community, where you can find this episode and so much more. Well, some of us are still catching up from being out at Expo West, and today we are taking the opportunity to unpack what we saw there. Every year, thousands of brands, buyers, investors, and innovators head to Anaheim to showcase what they believe will shape the future of food and beverage. But the question that always comes after the show is, which of these trends are real, and which ones will actually pave the way for the next big thing? To help sort all of that out, I am joined by Sherry Frey, VP of Total Wellness at Nielsen IQ. Sherry tracks the data behind the natural and functional food space, giving her a unique vantage point on how the ideas we see at Expo translate into real consumer behavior. Sherry, it's always so great to see you and to have you back here. And I'm so excited to talk through what we saw at Expo West. Yeah, it's great to be here.
[00:01:21] Sherry Frey: I can't believe we didn't see each other at Expo. Just joking.
[00:01:24] Melissa Traverse: There's no way we would have. Yeah, I know. I mean, you know, everyone says this. I feel like it gets bigger and bigger every year. And although, you know, I understand that it's a long week for the brands and everyone that goes, I feel like I could have used an extra day, actually.
[00:01:39] Sherry Frey: I feel like that, too. I definitely agree. Just one more day of just, you know, walking the show floor and just seeing it all, trying it all.
[00:01:47] Melissa Traverse: I'm curious, how do you usually plan out your expo? Do you compile a bunch of data, figure out which trends you're tracking to, and then make a point to hit certain booths?
[00:02:00] Sherry Frey: We have a team of folks, too, that we send out on the floor and say, hey, okay, here, we're thinking about this, we're looking for this, we want to see what interesting things you're seeing on protein or fiber or sweeteners. We send a whole team of folks out that help us collect, and then we're always You know, always saying, what's the craziest thing you've seen? What's the most interesting thing? What's the thing that you just think, wow, I can't wait to see this on a store shelf. So I've got a whole team of folks that helped me.
[00:02:29] Melissa Traverse: Well, I think one of the craziest things I saw was just how many products and formats you can cram protein into. And, you know, none of us were surprised. We were all expecting it. But I got to say, if protein can go anywhere else, I will be surprised. But I also feel like I didn't see as much fiber innovation as I thought I was going to. I heard this echoed by other folks. I did see brands maybe who did have the fiber before calling it out more in their booze and on the packaging alongside the protein. But what did you think about that?
[00:03:05] Sherry Frey: It's funny you say that. That's actually one of the things that I thought we were going to see more of as well coming into the show. We were kind of expecting we'd see a lot more call outs on fiber. Now, the reality is we did see a lot of and we continue to see kind of growth in the store around prebiotics and probiotics and postbiotics and vitamins and supplements and in food and beverage. So we know that there's kind of an overarching theme around digestive health that is growing. But, you know, it was interesting, especially kind of with many of the other conversations that are occurring around kind of some other macro trends that we didn't see more of a fiber conversation yet. Any idea why that is? Is protein just a clear selling proposition? There's a reality like when you're thinking about adding these ingredients to kind of where the consumer priority is today. You know, across all generations, we are seeing this interest in protein and we're seeing a lot of, you know, shift in terms of consumers understanding of the benefits of protein. And so that's just driven a lot of, I think, opportunity for the industry to bring in, you know, different protein sources for consumers, you know, across the whole store. I mean, it's interesting, right? We've seen everything from the snacks to protein vodka, to protein beer. So it really, you know, it's really, it's interesting too, because we're also seeing it in categories and products that are kind of indulgent. So kind of bringing in that functionality for consumers.
[00:04:34] Melissa Traverse: And now that you mentioned that, I haven't heard as much information surrounding how much fiber you should be getting, for example, per day, whereas I feel like I often see people talking about how much protein they should be getting, how much they are getting. So just sort of helping consumers quantify that number would make them more apt to buy a product because there's a number of grams of protein on the package.
[00:04:59] Sherry Frey: Yeah, and I think one of the things that we'll see in this conversation around protein and as it evolves into fiber is it's not even just as simple as the grams of fiber, right? It's also like the insoluble, soluble, right? The ratios. And so it's a little bit there in the conversation around protein in terms of like, is this a complete protein? But I think there's that additional nuance where you're absolutely right. We see there's a really small percentage of consumers who actually are getting the amount of fiber and most don't even know how much they should be And there's a little bit of a difference between men and women.
[00:05:31] Melissa Traverse: That is a very interesting nuance you just pointed out in fiber insoluble versus soluble. And I certainly saw so many different variations of protein. So there's the bone broth, gelatin, collagen. whey and milk protein, meat-based protein, plant-based protein. I saw a lot of hemp, pea, soy, nuts. Do you think that consumers are just looking at the total number, no matter what the source? Do you think some people are questioning if there's one format that's more effective than the other?
[00:06:06] Sherry Frey: Yeah, so we're definitely seeing, you know, by and large, most consumers are saying, I don't think I'm getting enough protein and trying to add more protein into their diet. We are definitely seeing there is a segment of consumers who are really saying, like, is this a complete protein and looking for more inherently, you know, like protein sources. And in fact, you know, Melissa, while we were at Expo, the American Meat Institute was having their annual conference. And, you know, they're seeing a huge growth because consumers are really coming back to kind of the OG protein as well. So we're definitely seeing consumers looking for more protein and a set of consumers that's specifically looking at the types of sources.
[00:06:46] Melissa Traverse: For brands who are trying to decide what kind of protein to incorporate into their products, aside from brand proposition and formulation challenges, what signals should they watch to kind of understand which direction the market is moving in terms of protein sources?
[00:07:04] Sherry Frey: I do think as this conversation evolves around protein and you see kind of an increased kind of consumer getting under the covers and exploring this a little bit more, I do believe you will increasingly see the conversation around complete proteins and is this, you know, like what's the availability of this protein? And so I think that's going to be something for the industry is just as they're thinking about formulating to be kind of watching as they're thinking about who their target consumer is.
[00:07:31] Melissa Traverse: Do you know if there are certain demographics of consumers that are more attuned to the effectiveness of the protein that they're getting versus others? Like, is it athletes that are more interested in how the protein is working for them?
[00:07:45] Sherry Frey: So, you know, it's interesting you ask that. The short answer is generally yes, we do tend to see that, you know, folks that are, they're even understanding within their protein powders, right? They're paying attention to kind of the ratios, etc. But increasingly, you know, we're finding that, again, there's people that are looking to bring more protein in their diet overall. So especially, you know, women has been an area just overall where we're seeing a focus, you know, on protein. And with that is adding that additional level of just kind of knowledge about the types of protein that they're looking for.
[00:08:20] Melissa Traverse: Absolutely. That's something certainly that I've noticed that targeting women, especially in the 35 to 55 age range, that isn't necessarily something that's been talked about right there. That's a huge component of consumers. And then, of course, people who are on GLP-1s, there really are so many more consumers who are being messaged about protein.
[00:08:42] Sherry Frey: Absolutely, and the GLP-1s were interesting. I don't know if you felt like you saw that on the show floor, but there were also just messages around satiety, messages around blood sugar. You can definitely see there's a little bit of this kind of halo conversation with what brands were talking about on package, meeting the needs of a GLP-1 consumer, but also meeting the needs of those that are kind of being influenced by the larger conversation.
[00:09:09] Melissa Traverse: Absolutely. I almost feel like last year I saw more products specifically messaging to GLP-1 users, whereas this year I feel like the language was a little bit more coded, like you say, with things like satiety, the amount of fiber and protein, that kind of thing.
[00:09:31] Sherry Frey: Yeah, absolutely. I felt like that too, which I think is the, you know, it's a smart move for the industry because one of the things we've seen is While there has been an increase of people that are on GLP-1s, and it's definitely been destigmatized where people are more comfortable being on it, it doesn't necessarily say that they want to have a product that's specifically saying this is for GLP-1. They're really looking for those kind of macro principles that benefit GLP-1 consumers, but also consumers who are looking for, again, satiety, blood sugar management, et cetera.
[00:10:01] Melissa Traverse: Yeah, and with the Wigovi pill just recently being made available to consumers, this is certainly a component of the U.S. consumer that is only going to grow.
[00:10:14] Sherry Frey: You know, Melissa, some of the things that we have seen, if you just looked at type 2 diabetes and obesity and overweight, the addressable market in the U.S. is half of American adults, which is just kind of mind-blowing, right? And then you think about some of these other indications and research that's being done with these drugs around, I mean, sleep apnea is one that's already been approved, but some of the cardiovascular health improvements, some of the cognitive research that's being done, the reality is there's just a really high potential in terms of an addressable market. Although I will say, we do watch this and we do see that people are cycling as well. and kind of changing of their priorities beyond just weight loss and diabetes in terms of what they're choosing them for.
[00:11:04] Melissa Traverse: You know, I also noticed more messaging around regenerative agriculture, supply chain transparency, farmers launching brands. Would you say that from the data that you've seen, consumers are actually seeking out these claims? Or is this sort of more of a retailer brand driven narrative?
[00:11:23] Sherry Frey: So, you know, I will tell you, we did some research in the fall around regenerative agriculture. And I was so interested to see that we had about 40% of consumers that said they were familiar with regenerative agriculture. And not only that, but they were tying the benefits to soil health, to biodiversity. They were actually, you know, really truly understanding what it meant, kind of making that linkage. It's an area we've seen continue to grow. Now, part of the growth for sure is we're seeing more brands that are launching in the market, that are talking about regenerative agriculture, certifications as well, like regenerative organic certified. All of those are growing in terms of kind of products, but also we're seeing it in terms of like consumer penetration, you know, more consumers are actually seeing these products and trying these products. And so I would actually say, I think that this is, you know, we've always kind of, as we've watched this, we've always been curious because in some ways you do see, you know, real detail on what brands are doing around regeneration. And then you know, in some places you see kind of ambiguous things, like we support farmers who farm regeneratively. And you kind of think, well, okay, what, what does that mean necessarily? And so the whole like, definition, I think will become increasingly important. But I believe, you know, and I love that you saw that as well on the show, Flora, this idea of kind of farmer sourced And, you know, I would say even Providence, you know, like, where did this come from? I think we'll increasingly continue to see that be an area of importance from a consumer standpoint. And I think even now, as you think about kind of the global conversation that we're in, right, in terms of kind of trade and whatnot, this idea of supporting local communities and local farmers, I think will continue to really resonate with consumers. One point that we found, we shared at Climate Day, there's been a lot of question just on, okay, do the consumers really still care about things around sustainability, the environment, conscious buying? we actually did find that that continued, those attributes continued to outpace the total store last year, even more so the year before. And I think that was reassuring, you know, as you kind of think about, you know, many of where the natural product industry, you know, these brands kind of their ethos and where they came from, you know, what they really, you know, the impact they're trying to make. I think that's an important element because, you know, we actually did see in the last year, a lot of folks stopped talking about sustainability. Climate kind of became a word that had a lightning rod. And we saw the government from a policy standpoint pull back. So the big question was, if these things are happening, does the consumer still care? And the answer was yes, it's still outperforming. The only area, interestingly, that we didn't see outperform the total store under this kind of umbrella was packaging. That one, which is funny because it's always the thing consumers say is most important to them, but yet we didn't see that one grow as much as the environmental and even animal welfare. That one just continues to be consistently important to consumers.
[00:14:53] Melissa Traverse: You know, it does make sense to me. I'm surprised, so pleasantly surprised, to hear that this is something that consumers can continue to care about and care more about. And I almost wonder if, because now more than ever, consumers feel like this kind of transparency and being able to track their supply chain means that the food that they're eating is safer.
[00:15:16] Sherry Frey: Yeah, I think that there's good and we're seeing like almost like a convergence of priorities and meaning, you know, and part of this is like, you know, what is the meaning? And also, I think the one thing we've seen in the kind of our consumer research around like, why do you buy this way? The biggest growth area we've seen is in this area where consumers are kind of saying, this is who I am. This is my identity in terms of how I define myself. So it's even a bit of a shift from saving the world or the planet, but it's more like a true identity driver in terms of the purchasing prioritization. What was the regenerative certification you mentioned earlier? So there's regenerative organic certified is one of the ones that we are tracking separately from regenerative agriculture overall.
[00:16:11] Melissa Traverse: Is there one certification that you're seeing as emerging to be more important to consumers than others?
[00:16:19] Sherry Frey: You know, we're always asked that, you know, in terms of like, what's the, what is the certification? And, you know, I think what we're finding is, you know, we continue to see growth across almost all certifications. So I think there is, from a consumer standpoint, just this bit of a guarantee that, you know, like they, someone's, this has been vetted. The one that I think we're finding most interesting, which is gonna probably surprise you, is just the continued growth of organic. So organic, when we think about certifications, that one's pretty well penetrated. It's pretty, you know, penetrated when I say that in terms of across consumers, but also across categories. But the fact that we're just continuing to see that grow, we think, you know, says a lot again to this, like where the consumer's mindset is in terms of what they're looking for and kind of the attributes that they're putting on this pretty well established credential.
[00:17:15] Melissa Traverse: We were just talking about this on Taste Radio, but the decision by the government in February to prioritize domestic supply of glyphosate, I certainly can see how that is driving more consumers to go for organic and regenerative organic.
[00:17:32] Sherry Frey: Yeah, I think that the that conversation and especially kind of how the conversation has moved a little bit from a policy and a government standpoint, I think it's just been one additional kind of element of where we're seeing consumers paying more attention to not just the food and the nutrients and not just the food and the ingredients, but really like how was this produced? How was this grown? And so that again, I think it's just it's a part of this bigger shift that we're seeing from a consumer standpoint in terms of their, in some cases, scrutiny of what they're eating.
[00:18:10] Melissa Traverse: One of my favorite things to look for and to hear from you about are flavor profiles and flavor trends. Global flavors were still strong, of course, especially in snacks and treats. I saw some other flavor profiles, like a lot of sour, a lot of tangy, a little bit of sweet and spicy, some matcha and ube. What did you see out there?
[00:18:34] Sherry Frey: You know what I love about our industry is that we're all about fusion and we're always kind of seeing and putting together the things that consumers love. And so, Swayze, I just love the term of that. But, you know, this idea of like sweet and heat together, like, so things like, you know, Chipotle chocolate and the sweet corn and spice and honey mango. I also, I don't know if you felt like, I love the continued reinvention that we're seeing a lot of, a lot of kind of nostalgic products. So, you know, cinnamon roll and birthday cake and fudge and cookie, but, you know, a lot of our kind of classic comfort foods, but continuing to be kind of re-imagined with things like adaptogens and, you know, botanicals and, you know, other sorts of indulgent things. I'm a sour lover, so I loved seeing all things sour and fermented. I think we just know consumers are looking for that vibrant, in some ways, acidic flavor, so the yuzu and sour cherry. The one I thought we were going to see more of, and maybe this is just my personal what I was looking for, with a little bit of soursop, but I was actually expecting to see more soursop. So that one might be something that we watch more in the future. And then I think the other piece, I loved it, the specially food show, right? When they were talking about the maxing, the sense maxing. I think that that flavor maxing is definitely something we are going to continue to see from a consumer standpoint. And so those were just some of the fun ones. I thought the, you know, we continue to see the Dubai chocolates and the Dubai, but like the Middle Eastern and kind of those flavors continuing to grow as well, which, you know, is exciting, the kind of globalization of our taste buds.
[00:20:25] Melissa Traverse: So exciting. And your point about nostalgia, I completely agree with that. I saw this brand called Wobble. They are a grass-fed gelatin brand, so very similar to Jell-O. Their samples were a piece of fruit encased in a little square of this Jell-O. Of course, it's grass-fed, no artificial flavors, super clean. But when I tried the sample, I immediately thought of this jello salad that my mom used to make for my birthday that I loved so much. And it really does. It just made me so happy to have something that I had as a little kid, but a much better version.
[00:21:04] Sherry Frey: That's really funny, you know, because we're in general, too, not beyond just the CPG space. We are definitely seeing this nostalgia, you know, back to, you know, vintage in the 90s. And so it makes a lot of sense, too, that the industry is kind of leaning into that because we just in general, we're seeing that in terms of consumer interest.
[00:21:26] Melissa Traverse: Here's an ingredient that was definitely before my time, so I don't really have nostalgia for it, but beef tallow. Every single person who's Roundup that I've seen mentions beef tallow. I think I saw it mostly in salty snacks. I think I counted five tortilla chip brands that fried their chips in beef tallow. Are traditional fats an established functional ingredient? Are they settling into a new baseline?
[00:21:55] Sherry Frey: Wow, you know, so this is interesting. We started last year about this time, we were looking at some data on beef tallow and we were intrigued, you know, but we were also seeing butter, you know, really growing and butter, by the way, is a really, I think, a fascinating one where you're watching something that's continued to kind of evolve itself and become more premium. So just even thinking about kind of some of the mainstays, This past year, and I felt like that at Expo too, there was a lot of snacks, tortilla chips in particular, that had beef tallow. I think this is one where there's a lot of interest right now, obviously because of a lot of the shifts around things around the Make America Healthy Again. The one question on this, and nobody necessarily is saying when they're choosing snacks, they're always looking for health. Oftentimes, we're looking for indulgence, we're looking for that treat, but I think there's a question around the longer term conversation around saturated fats and just fats in general. We're in a very, very interesting time right now, but it was pretty interesting to see all of those on the floor already.
[00:23:06] Melissa Traverse: I think, as always, the brands that will succeed with beef tallow are the ones that have a really tasty product like Masa, of course, Vodka Chips. They're just really delicious products and I feel like it was a great combination of ingredients. What about coconut oil? Do we like coconut oil? Are brands dropping off from using coconut oil? I still see avocado oil everywhere, but what about coconut oil?
[00:23:34] Sherry Frey: Actually, it's funny. We haven't looked at coconut oil in a while, so it's definitely not something that's going gangbusters in terms of growth, or we would have been watching it a little bit closer. We definitely continue to see the avocado oil. The other piece is, you saw on the floor, there were more conversations around seed oils. and not having seed oils in the products. And I think you saw some certifications as well around that. I think that's increasingly a conversation that we'll see consumers having. And it's interesting too, because in some cases, we're seeing the consumers that are buying the beef tallow Chips are also the ones that are looking for no seed oil. There's a bit of a confluence of consumer behaviors that is happening right now around these fats.
[00:24:25] Melissa Traverse: Another set of ingredients that I was looking for were probiotics and prebiotics, of course. I feel like I didn't see as many new beverage brands incorporating those into their formulation. I feel like protein and actually a little bit of creatine, too, took the place of some of those things. What are you seeing with probiotics and prebiotics? How are consumers responding to those?
[00:24:52] Sherry Frey: We continue to see just even across the store, probiotics, prebiotics, even postbiotics growth. I would say the one interesting thing that we've been watching is more of this shift. We know digestive health is important for consumers and we've seen historically the growth in the vitamins and supplement space. we've been seeing some shifting over to food. So kind of a little bit of like, you know, consumers prioritizing this in terms of a need state, but getting it from other places beyond just the traditional supplements. And that is something I think, Melissa, more and more we're recognizing that the consumers the consumer's not thinking about our categories, right? They're thinking about what do I need to solve? And so this kind of shifting across the store or behavioral sorts of things, A, we think it's interesting because it actually indicates there could be some really interesting cross, you know, you know, Intel inside sorts of things of using some of those well known probiotics in the in the vitamins and supplements space kind of bringing in, you know, in cross promotion, you know, collaborations, etc. Just some interesting kind of opportunities from not just, you know, probiotics and prebiotics and digestive health, but just in general, this idea that consumers are, I I think they're really seeing this convergence of food and supplementation and they're fluid. They're kind of like, hey, I'm just trying to solve the need and it might look like this one day and that one day in terms of kind of me bouncing between the different aisles of the store.
[00:26:28] Melissa Traverse: I think one of the largest crossovers from the supplement aisle to the grocery aisle that I noticed was creatine. I want to hear what you think about that. But also, is there anything else migrating from the supplements over to grocery?
[00:26:45] Sherry Frey: I think the two like the biggies that I creatine, I mean, historically been collagen, right? And by the way, collagen continues to be as something that we're seeing, you know, grow, food, beverage, VMS, PET, you know, it continues to be there. Magnesium, as well, I think is another, you know, where we, you know, we're just seeing consumers and I, I think what's happening here is this prioritization around kind of beyond performance. They're looking for things around sleep. They're looking for things around cognitive function. We know younger consumers just in general, they're open to functional ingredients in any kind of form, whether it's food or drinks or gummies or bars. And I think part of what we're seeing is there's just improved technologies to bring those things like creatine and magnesium into other formats across the store.
[00:27:45] Melissa Traverse: You know, I think I noticed more magnesium glycinate specifically than other formats and glycinate is known to help with sleep, but also with digestion. So I thought that was interesting. another ingredient or maybe even differentiator that I saw was A2 milk. And I saw this in things, there was a brand called Lisette Sheep's Milk Yogurt Dressing that was so delicious. By the way, Laurel's Coffee, Alex Ice Cream, What's Upon a Farm, all using A2 dairy. Do you see A2 as a kind of a niche functional attribute or do you think this is something that could almost follow the path of lactose-free and become more mainstream?
[00:28:25] Sherry Frey: And let me kind of set the stage that there's just a renewed interest around dairy from a consumer standpoint. So, you know, we're seeing that with ultra-filtered dairy. We're seeing that just kind of with dairy overall. So dairy is definitely having a moment, again, for a variety of the reasons that, you know, we've talked about in terms of, you know, consumers prioritizing convenient proteins. And so, you know, A2 and A2A2, like the, you know, a lot of what we're seeing in terms of like the consumer I'm you know, really meeting the needs of the consumer, both with the product as well as the availability. And so, will this continue to grow, I think, you know, is the first question. And we do believe it will. We think that this is kind of an area where it's still pretty niche and emerging, but there's a high level of consumer interest. And I think you're also seeing the types of products, you know, that are coming in. In general, we see about a 30% price premium on those products versus the category, so it does give you that opportunity for differentiation.
[00:29:46] Melissa Traverse: I'm also curious about whether or not A2 is competing with grass-fed and pasture-raised callouts when it comes to dairy.
[00:29:58] Sherry Frey: That's a great question. You know, we have not we've not looked at that. I think that's something as we continue to see more growth of availability of products, we'll be able to kind of understand like substitution and switching. But right now, in many cases, I would say, you know, some of the A2 products that we've looked at, it looks incremental, like it, you know, it looks almost like bringing a, you know, a consumer back into the space. But It's something I think that's a great thought to be watching in terms of the consumer evolution and kind of where we're thinking about these attributes compared to each other.
[00:30:36] Melissa Traverse: I'm suddenly feeling so optimistic about the state of food and what we have in front of us. It really does seem like consumers are prioritizing some really sensible things about food where they can, where it fits into their lifestyle and their budgets. We talked a little bit about GLP-1's smaller portions, higher protein, blood sugar support. What's the latest data that you're seeing that helps us understand how GLP-1 users are shopping differently across food and beverage?
[00:31:08] Sherry Frey: We've been tracking GLP-1 consumers since back in 2023 is really when we started in deep detail. And we've seen these consumers change over time. You know, and part of that is as new consumers have come on on board, but also like there's the prescriptions, but there's also been the compounded pharmacies. So things like him's and hers, you know, making it access to consumers. The big takeaways are consumers do change their behavior. And I think from a natural product industry standpoint, one of the, I think the biggest opportunities, we see that they, again, kind of like an identity shift, they tend to start buying more organic. they tend to buy more clean label products. So no artificial colors and flavors, and not just in their food and beverage, but also in their beauty products and their personal care. So there's definitely what we call an intentionality. It's almost like they shift a bit in terms of kind of really paying attention. But to that end, in terms of really paying attention, what I didn't see as much, and I think we're going to see in the future, is more of a conversation around nutrient density. So if you think about protein, and you think about fiber, like really, it's this kind of combo of how you've got these beneficial, and then you've got these nutrients, things we're trying not to have as much in. I think you'll see more, we'll hear more about nutrient density. And that in particular, the GLP-1 consumers will be driving that. They will be a driver, sorry, not the driver, but a driver, because they're really paying attention that every bite counts. I also would say, a lot of people say, GLP-1 people, they do drink more water, they're looking for hydration, they're looking for protein and especially convenient protein. Oftentimes, they're looking for things that they can take on the go because they're not always planning because they're not hungry, they don't have the food noise. There are things like you would even think like coffee. They're looking for energy, they're looking for things around brain health. And so from a consumer standpoint, they eat more produce, they eat more meat, they're paying attention, but they do still eat indulgent foods too. So I think that there was a lot of fear early on that, oh, the GLP-1 consumers, they do shift their stacking, but it doesn't mean that they're not buying indulgent, but they're kind of, again, looking for every bite counts. And so as we've kind of tracked this consumer, we've kind of heard this theme of, if I'm gonna have a cookie, I'm gonna have the best cookie. And so I think, again, we'll kind of continue to see that drive some changes of kind of product innovation, as well as how I think we're talking to consumers in the store.
[00:33:54] Melissa Traverse: Your point about nutrient density being something to watch makes a lot of sense. And it also kind of helps me understand why it does make sense that protein was one of the first things maybe that we were paying attention to, because that really is so easy to understand and to track. Whereas nutrient density, I mean, I don't know if I could figure out exactly how to track that. So it does make sense that we're starting with some of the easier macros.
[00:34:22] Sherry Frey: Yeah, yeah. We did some work recently where we were actually, you know, and there's a calculation. I mean, it really is a calculation. And, you know, the question is, I think, is that will the industry start to kind of lean into, you know, a definition that communicates more clearly to consumers beyond just very specific, you know, macronutrients?
[00:34:43] Melissa Traverse: Well, you just mentioned how folks who are on GLP-1s are making it a priority to choose higher quality items and certainly that coincides with the new non-ultra processed food verified program that certification launched. a little bit earlier this year. And certainly that coincides with some other initiatives like Kroger with their food health rating system to help really quantify how healthy a product is. And again, we just keep talking about processed foods and ultra processed foods with the Maha movement and, you know, some other things that are going on. Are you seeing the non ultra processed food conversation changing how consumers interpret ingredient lists?
[00:35:30] Sherry Frey: Oh, yeah. We, you know, like, I think we're at a moment in time where consumers, you know, because of, you know, much of the conversation around policy and from a government standpoint, and just that, you know, the reality is that we really are, you know, many consumers are struggling with the cost of health, the cost of healthcare in particular. So there's a greater attention being paid to like, what can I do? day in and day out for my health from a protective, preventative, longevity sort of standpoint. And then I think the other thing, Melissa, that's really driving this is there's technology that's enabling consumers. So in the past, would I have flipped over the product and read the entire ingredient stack? No, probably not. But now it's just as simple as they're using a technology and that's kind of saying, oh, not only is this good or bad or what's the rating, but here's why. And so the level of consumer understanding around specific ingredients that they believe they want or believe that they don't want, we're just at a point that we've never been before in terms of that just higher level of awareness. And so you do I would also say, you know, when it comes to ultra processed foods, you know, there is a little bit of, there's confusion, you know, there's even from a governmental standpoint, like, how are we going to define this? And so, again, I think that consumers just looking for information that can help and support whatever their belief system is around the processing of food.
[00:37:05] Melissa Traverse: Your point about there being more technology to help people understand is so right on. There's an app called the Yuka app that tracks nutritional ingredients and profiles. And I was talking to the founder of a clean waffle brand, and she has a super clean brand. And she told me that she got dinged on that app because of baking soda. So it's, you know, it's also interesting to see how some of the deficiencies in technology or how the decisions of the people who may put these systems together really do impact brands significantly.
[00:37:43] Sherry Frey: I think it's a real challenge, Melissa. You know, that's not the first example that we've heard of brands that have said, you know, I've even tried to get a hold of Yuca. Like, you know, we have this ingredient and said, we have to have it, right? Like, this is, you know, we wouldn't be able to have the taste if we didn't have this ingredient and to kind of no avail in terms of that. And I think one of the challenges is, you know, we're hearing more and more from brands who are saying, hey, when I go in and I'm meeting with the retailer X or Y, they're, you know, they're using the Yuca app. to scan. And so we're seeing, you know, brands that are innovating, you know, for the, that kind of decision that's, you know, you may not necessarily agree with. And so I think, you know, as we, as we kind of think further about like how attributes and ingredients are going to increasingly become important, it's also going to be fascinating to watch like what the, what the, who's the arbiter of truth, you know, of, of everything from ultra process to specific types of ingredients. You know, all of it, I think will be interesting to watch continue to evolve.
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[00:39:12] Melissa Traverse: I want to drill down into the ultra-processed and non-ultra-processed foods a little bit more with things like natural flavors and gums. So the non-ultra-processed verified program does not allow natural flavors in gums. While there are some brands like Spindrift, who was the first beverage brand to have that certification, although Spindrift specifically doesn't have them because that's their mission and their brand proposition, there are so many beverages who do use natural flavors because of, obviously, the way it makes the beverage taste. Are you seeing consumers be very, very strict about things like natural flavors and gums, or is that still a small percentage of consumers in this country?
[00:39:59] Sherry Frey: So the flavor, you know, increasingly, especially with the conversation around artificial, you know, we've seen more just consumer kind of awareness and interest in things around, you know, how did this get this color? How did this get its flavor? Again, that just, you know, is overarchingly the, you know, your question around the natural, you know, in terms of consumers being concerned about that. No, not necessarily around the natural flavors and ingredients, but the gums is increasingly kind of being something where consumers, again, maybe not necessarily understanding the science, of the necessity of that in the product and just kind of questioning that increasingly. So I don't know if that answered your question, but in terms of kind of where the consumer is today, I think they're, overarchingly, it's been more around the artificial. And in fact, one thing we saw, Melissa, that in this, if this doesn't illustrate the moment of time we're in right now, last year, when the FDA banned red dye three, We saw an immediate drop in consumers buying Red Dye 3, Red Dye 40, like it just was like boom. We've never really seen such a reactionary consumer. So we also know we're in this state of consumers paying attention, just in more intense ways. Now, I will tell you that didn't happen at the convenience store. We didn't actually see the impulse products. It didn't count. It was really more the grocery store. And we've kind of continued to see that trend down, but it was just really interesting to see the level of reaction from a consumer standpoint, which can wreak challenges on our industry as well when something kind of comes out of the blue or becomes something that becomes a lightning bolt and is in a lot of products.
[00:41:50] Melissa Traverse: Your comment about grocery stores versus convenience stores is a really interesting one that I'm not sure I considered. How do you look at those two kinds of retailers to predict what the trends will be?
[00:42:05] Sherry Frey: Oh, I love that one. And I'll tell you, you know, there's a probably a third piece that we're really looking at. And that is the online aspect versus the traditional brick and mortar, then versus the C store. And one thing I will tell you that I think people are so surprised when I share this insight. better for is growing the fastest in C stores like C stores are really like if you and you think about, you know, your your local C store, the convenience store that you go to, we've just seen really fantastic evolution of the convenience store of offering more healthy products, more healthy things that are on the go, even changing their their prepared meals to be more healthful. So just in general, there's just some really interesting things happening in the convenience store channel. In fact, we did an analysis where we looked at C-stores versus drugstores, which you would kind of think that they'd be healthier in terms of what they were carrying. And we actually found C-stores were better in terms of kind of what they were indexing from a health standpoint. So we do watch the kind of the C-store versus the traditional brick and mortar. And that comment I made about the red dye three, I think really illustrates, you know, like if I'm making maybe a planful purchase, and it might be something, by the way, that I'm doing on technology, I'm going to be different than if it's just an impulse and I'm just going to grab this and maybe I'm going to eat it in a car. It's just for me. So maybe for my family versus me, there might be a nuance or a difference there. The third that I was mentioning, though, the online element, That's been the space where we're really watching the closest because a lot of things emerge out of direct-to-consumer, TikTok shop, Amazon. This is again, and I think it's a really exciting time for brands because you have the ability to go to market faster than you ever had and kind of in ways that are non-traditional that allows you to kind of get directly to your consumer sooner. And that really is where we then see a lot of the wellness trends and health trends kind of emerging there first and then coming through into the other channels.
[00:44:18] Melissa Traverse: I heard so many brands talking about TikTok shop. So can you tell us what do you see emerging from the digital space?
[00:44:25] Sherry Frey: Yeah, so you know, we, so TikTok shop, we started tracking that in like September of 2023. And Melissa, I have to tell you, it really is a great place for commerce, but also for discovery. And so, you know, we see brands are doing a really good job of both. Some of them are really, you know, like just getting the discovery. Some of them, by the way, I will say, another thing we talk to brands often is, are you being discovered but not making that transition to purchase either at a retailer or a TikTok shop, right? Because there is a lot of, you know, that does happen. So you don't get that conversion that you're really trying for. The biggest categories on TikTok shop, the number one, like far and away of everything is vitamins and supplements. So just kind of taking that into like account in terms of thinking about, okay, there's a high level of consumers who are comfortable buying supplements, you know, on vitamins and supplements on TikTok shop. illustrates, I think, where there's a growth opportunity. So some of the faster growing areas that we're seeing in terms of food and beverages, snacks, you know, functional beverages, even kind of, you know, diet and nutrition, sorts of specific things. We're seeing a lot of those grow. TikTok also, you know, I will tell you, we have so many retailers who will say, can't you go to help us get ahead of when the cucumber trend or what, you know, what are these, these viral trends that, that happen? And, and they really do, you know, some of them just kind of happen. Um, you know, they've happened very organically and, and just blow up. Um, so that, you know, that's a little of what we're seeing on, uh, on Tik TOK shop in terms of kind of the categories. Um, I would say the one piece for brands as they're kind of watching themselves on TikTok shop in particular, really watching if you're getting the repeat, because we do tend to see a lot of you know, about 70% of our purchases on social media platforms is impulse. And so it's really important that are they did they try it and then they are they coming back. So really watching those metrics in particular, on some of those social, social commerce channels.
[00:46:35] Melissa Traverse: That's a great point and certainly making sure that all of the social messaging that you're doing can help consumers understand where to buy it on a regular basis. Alright, last question for you. You said that when you and your team go into Expo, you know, you all go in and make a list of the craziest, most interesting things that you saw. What was the craziest slash most interesting thing or things that you saw at the show?
[00:47:01] Sherry Frey: So I don't know if this is the craziest, but our team was just talking about like matcha everywhere, right? Like we just felt like it was matcha, matcha in new forms. The one I actually am most excited, I have a sample and I'm most excited actually to have for breakfast this week is sesame seed butter, which I know we've seen this a little bit, but I just think new forms of things that are kind of taking traditional ingredients, but kind of putting them in new forms. That one for me, I think, is just one that I'm kind of excited because it was it was one of those we were like, huh? Yeah, this is interesting. There was also, I would say, the cottage cheese. Like it is not even close to over. And so seeing cottage cheese in all of these new forms was a lot of fun as well.
[00:47:50] Melissa Traverse: One of my favorite products that was new to me from the show was Cotto. It was the cottage cheese dip and they had a ranch that they were serving on pizza that I mean, if I can feel good about that, then that's certainly a win. Shari Fry, VP of Total Wellness at Nielsen IQ. It is always such a pleasure to have you on the Non-Based Podcast. I feel like I always learn so much, and it's really just such fascinating information. Thank you so much for joining me today on the Non-Based Podcast, and for everybody else out there, thanks for tuning in, and we will see you next time. That concludes another episode of the Nambase podcast. If you enjoyed the show, please leave us a review and follow us on your listening platform of choice. You can also watch and listen to past episodes on nambase.com. And don't forget to join our Nambase Slack at slack.BevNET.com for company updates, industry networking, and community discussions. See you next time.
