LaCroix: The Essence of Effervescence

The Wall Street Journal: “The makers of LaCroix sparkling water go to great lengths to explain what isn’t used to create the beverage’s 20 flavors. There are no calories, no sugars, no artificial ingredients, no castoreum, no genetically modified organisms and no added phosphoric acid, according to the company. LaCroix nutritional labels contain only zeros. LaCroix is less forthcoming about what is actually inside its ubiquitous neon cans. The company says the flavors, such as peach-pear and pomme bayá, are derived from ‘natural essence oils’.”

“Essence is, essentially, the mystery behind a billion-dollar brand. As cases of LaCroix pile up to the ceiling of grocery stores across the U.S., die-hard fans admit they don’t have a clue what’s inside—and don’t care, either … Ask LaCroix executives for a definition of essence and you may receive something short of a clear response. ‘Essence is our picture word,’ LaCroix spokesman Rod Liddle said in a written response to questions.” He added: “Essence is—FEELINGS and Sensory Effects!”

“Essence isn’t defined in U.S. Food and Drug Administration regulations, an FDA spokeswoman said … Essence is created by heating at high temperatures the skin, rinds or broken down remnants of fruits or vegetables. Alcohol is sometimes added to the mixture. The vapors that rise off the stew are captured, condensed and eventually sold by the 55-gallon barrel … The LaCroix spokesman didn’t pour cold water on that interpretation, but wouldn’t provide cut-and-dried details of its manufacturing process.”

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Truth to Power: Tesla Flips The Switch

Quartz: “In 2016, Tesla sold two different versions of their Model S and X electric cars. One version had a 60 kilowatt per hour battery, and another a 75. The 75-kilowatt version cost $9,000 more. Prior to Irma’s landfall, Tesla announced that it would flip the proverbial switch, and allow the 60-kilowatt cars to become 75-kilowatt cars. This enabled the 60-kilowatt vehicles to go 230 miles per charge, rather than 200 … Tesla was able to upgrade the kilowattage in the cheaper version of the car because both models actually have the same 75-kilowatt battery. The company just chooses to limit the capacity in some cars so they can have two different price points.”

“The response to Tesla’s decision has been mixed. While some observers congratulated the company for proactively reacting to the impending storm, others were disturbed by the revelation that the company could so easily increase the capacity on their cars. If the battery could be more powerful without any extra cost to Tesla, ask critics, why deny this capability to certain drivers?”

“The answer: Limiting battery capacity actually makes Teslas more affordable. The extra $9,000 that Tesla gets from its less price-sensitive customers is what allows it to charge a lower price for the lesser version of the car, the one that more cost-conscious consumers might purchase (though of course anyone purchasing a $60,000 Tesla is not poor). Perverse as it may seem, having a version of the car that gets less mileage actually makes it more accessible.”

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Costco Knockoffs: It’s Cruel to Be KIND

The Wall Street Journal: “Kirkland Signature, Costco’s store brand, is challenging manufacturers hoping to earn or retain a coveted spot at the warehouse retailer. Since 1995, Costco has used its Kirkland products to attract shoppers, building a reputation for quality and low prices on milk, toilet paper, men’s shirts and golf balls bearing the unassuming red logo. About a quarter of Costco’s $118.7 billion in annual sales come from Kirkland Signature products, and the percentage is growing, company executives say.”

“Costco often introduces a new Kirkland product when its buyers or executives believe a brand isn’t selling at the lowest possible price.” For example: “Kind Bars sold for about $18 for a pack of 18 … When almond prices dropped in 2016 … Costco developed the Kirkland Signature Nut Bars, made by Leclerc Foods USA, which is owned by Leclerc Group, a Canadian manufacturer, and now sells a 30-pack for $17 in stores.”

“Kind Bars are still carried at Costco, though mostly new varieties, including fruit bars, mini nut bars and a peanut-free bar. ‘We look forward to continuing to grow with them,’ a Kind spokeswoman said.”

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Perennial Seller: Make Connections, Not News

The Wall Street Journal: In Perennial Seller, Ryan Holiday “emphasizes the value of low prices and word of mouth over press coverage. Raymond Chandler, he writes, became the ‘quintessential detective author’ because he encouraged his publishers to sell his books as pulp paperbacks, for 25 cents a copy. Suddenly his books went from selling a few thousand copies in bookstores to hundreds of thousands in gas stations, train stations and cigar stores. Humphrey Bogart as Philip Marlowe followed.”

“Likewise, the comedian Drew Carey’s long run on network television began with an invitation from Johnny Carson to appear on “The Tonight Show.” Validation by one person whose opinion is valued, Mr. Holiday argues, is worth all the press coverage in the world.”

“Iron Maiden has never relied on hit singles or frequent radio play, since its songs often run to 10 minutes, with solos from each of its three guitarists. Instead, the band has toured almost nonstop, building close connections with thousands of fans who now buy almost anything it puts out, from albums to beer to belt buckles. Its core of hard-core fans, Mr. Holiday writes, has allowed Iron Maiden to ‘endure through fads, technological shifts, and the fact that their music was never mainstream’.”

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Amazon’s Secret: 19 Phantom Brands

Quartz: “Amazon is selling products across a wide array of categories, using a host of brands that do not exist outside the confines of amazon.com and do not make it clear that they are Amazon-made products. Trawling through over 800 trademarks that Amazon has either been awarded or applied for through the US Patent and Trademark Office (USPTO), Quartz identified 19 brands that are owned by Amazon and sell products or have product pages on amazon.com.”

The Amazon brands include: Arabella (Lingerie); Beauty Bar (Cosmetics); Denali (Tools); Franklin & Freeman (Men’s shoes); Happy Belly (Fresh food); James & Erin (Women’s clothing); Lark & Ro (Women’s clothing); Mae (Underwear); Mama Bear (Baby products); Myhabit (Consumer goods); North Eleven(Women’s clothing); NuPro (Tech accessories); Pike Street (Linen); Scout + Ro (Kid’s clothing); Single Cow Burger (Frozen food); Small Parts (Spare parts); Smart is Beautiful (Clothing); Strathwood (Furniture).

“The only indication that any of these other brands might have an affiliation with Amazon is the fact that their company pages … say that their products are ‘exclusively for Prime members.’ It’s not clear that they’re exclusive because they are Amazon products, rather than products from companies that have struck deals with Amazon … It’s possible Amazon has other brands on its site that it hasn’t yet trademarked.”

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How Big is the ‘Store Brand’ Threat?

The Wall Street Journal: “Supermarkets’ ‘private label’ goods have historically been less important in the U.S. than in other mature markets … But now the big European discounters are expanding in the U.S.Lidl launched on June 15 with six stores in North Carolina, just a few days after its key rival, Aldi, unveiled a five-year, $5 billion U.S. expansion plan. These expansion efforts themselves don’t need to succeed. The threat alone will hasten the shift of U.S. grocery toward private label.”

“The more upscale team of Amazon and Whole Foods will speed the push into private label. The tech giant has been plowing resources into its AmazonBasics range; the Whole Foods equivalent, 365 Everyday Value, anchors the grocer’s new, compact store format, 365. Ever attuned to millennial trends, Silicon Valley has even thrown up an online retailer called Brandless that sells $3 health-conscious, private-label goods.”

“Some companies look less exposed than others. Those with big overseas operations, such as Nestlé, Unilever UL or Mondelez, or must-have brands, like Kraft Heinz, stand a better chance of seeing off the new competition than those with U.S.-centric portfolios or lots of third or fourth-placed brands. Bernstein thinks Campbell’s, Conagra, General Mills, Kellogg and Smucker’s are all at risk.”

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Brandless: When The Brand is No Brand

Quartz: “E-commerce company Brandless launched last week, but it is already billing itself as the ‘Procter and Gamble of millennials.’ The startup sells a variety of Brandless-branded foods and household goods, supplied by its proprietary partner manufacturers, and all priced at $3 … The company promises to keep prices low by eliminating the BrandTax, a phrase it requested a trademark for last November, and which it defines as the ‘hidden costs you pay for a national brand.’ Its simple white labeling was designed by a team of product and marketing experts and food scientists.”

According to CEO Tina Sharkey: “The Brandless movement is the ‘democratization of goodness.’ It’s that everyone ‘deserves better, and better shouldn’t cost more.’ The $3 price point is designed to make it ‘very freeing when you shop on brandless.com.’ Brandless wants people to ‘live more and brand less,’ to ‘tell their own stories,’ and to drop the ‘false narratives’ sold by Madison Avenue. ”

“In the meantime Brandless is crafting its own narrative. On its website, the company claims the average person pays a 40% or greater BrandTax markup on products ‘of comparable quality as ours.’ This seems likely true of Brandless organic extra virgin olive oil ($3 for 8.5 oz, or about 35 cents an ounce) but perhaps less so for its organic taco seasoning mix ($3 for a pair of 1 oz packets).”

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Tony Chocolonely: Slave-Free Chocolate Bars

Fast Company: “Since hitting U.S. shelves last fall, a new kind of chocolate bar company is trying a different tactic: Making ‘100% slave-free’ its central selling point. Amsterdam-based Tony’s Chocolonely features a wrapper with the brand’s name spelled out in large, cartoonish lettering. Inside, the chunky squares are divided unevenly to represent the inequality within the industry.”

“To meet that promise, company leader Henk Jan Beltman … had to rethink nearly everything about how traditional supply and production works. Rather than contract with international traders, the company deals directly with independent in-country farming cooperatives, which sometimes receive NGO support. All participants not only share practices to grow better crops, but agree to be monitored, ensuring instances of child labor are spotted and addressed.”

Tony’s Chocolonely “was originally started by a Dutch journalist named Teun ‘Tony’ van de Keuken who, after investigating how slave-based beans were mixed up and melted down with everything else, originally decided to make an absurdist documentary about the injustice in 2004. Van de Keuken bought and ate some off-the-shelf bars and then turned himself in to the police, citing his behavior as helping finance criminal operations. Theatric aside, he wasn’t convicted, so he launched a chocolate company to prove there was another way to ethically manufacture.” Says Beltman: “It’s the lonely battle of Tony to change the chocolate industry from the inside out.”

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Blind-Date Books: Novel Mysteries

The Wall Street Journal: “Booksellers across the country are enticing readers to take a chance on a surprise selected by store staff. To set up these ‘blind dates,’ the stores wrap the book to hide the cover and offer a few clues to give a sense of the hidden work’s genre and tone. ‘It’s been the most successful table we’ve ever put together,’ says Cari Quartuccio of the blind-date offerings at a location of Book Culture, where she is the store manager.”

“For customers, trusting the staff at their local store is part of the fun. The clues allow readers to select a gift for themselves. (And then, of course, immortalize unwrapping the mystery volume on Instagram.) At Book Culture, blind-date offerings are wrapped in brown paper and bear a note advising ‘Read me if you liked’ and a list of three books staff members think customers are likely to have read.”

“Book Culture’s Ms. Quartuccio says customers seldom are lukewarm about the notion of blind-date books. Fans often make repeat purchases, with some even buying stacks as gifts. Other customers are perplexed by the idea. Finally, she says, there are those ‘who get really upset when we won’t tell them the title of the book. Mystery isn’t for them, but they still want to take part in it’.”

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Hamburger Helpless: Packaged Goods Plight

The Wall Street Journal: “The plight of the packaged-goods companies is a classic business tale. An industry creates winning products, carves out strong market positions and enjoys reliable, sustained revenue—only to be too slow to adapt to changes that threaten those cash cows … Many big brands didn’t move fast enough to remove artificial ingredients and haven’t been able to shed the negative perception of processed food, said several food executives and others close to the industry.”

Meanwhile: “The web and social media gave smaller food companies a direct path to consumers’ hearts, minds and stomachs. They gained traction through blogs and Facebook with little marketing spending, selling food online via Amazon.com Inc. or their own websites long before they would have been able to get it in stores … Big brands can no longer control perceptions about food with television advertisements and shelf placement.”

“Kellogg Co., General Mills and others have directly invested in food startups through venture-capital funds that they say will give them insight as to how to respond better to evolving trends.”

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