By Jason Burke, Founder and CEO, The New Primal

I recently read an article that was exploring the possibility of Frito-Lay’s “Simply” line of products, which claims the use of natural ingredients, being picked up by Whole Foods Markets now that Amazon has taken over. Speculation of what the future holds for the upscale retailer runs rampant. Ultimately, only Amazon knows, and the consumer will eventually reward or punish Whole Foods if brands like Frito-Lay end up on store shelves.

Those who know me would not be surprised to learn that I was particularly fired up by a quote in the article from an analyst at asset management firm AllianceBernstein. In his opinion, “Smaller brands just can’t keep up with the spending and velocity required from Amazon anymore. We expect Whole Foods to carry more — and more big brands, too.” Huh? Is this guy on Frito-Lay’s payroll? And that’s only where I start to take exception.

“X-rays will prove to be a hoax.” “The horse is here to stay, but the automobile is only a novelty — a fad.” “A rocket will never be able to leave the Earth’s atmosphere.” These predictions — actually uttered — are only a handful of examples proving how wrong the “experts” can sometimes be. I’m going to offer AllianceBernstein (and every other Big Food company with executive heads buried in the sand) some insight from the trenches, free of charge.

If you haven’t seen the numbers, $18 billion of market share has changed hands from big CPG to smaller players since 2011. If the 0.5% annual market share erosion continues, another $50 billion in retail sales will shift to smaller brands by 2020 (IRI, How Healthy, Protein-Rich Foods are Nourishing Growth in the Consumer Packaged Goods Industry, April 2016). The icing on the cake, according to the Bureau of Labor Statistics, is that Millennial spending power is on track to reach $4 trillion by 2020! Campbell Soup Company CEO Denise Morrison has recently conceded, “We are well aware of the mounting distrust of Big Food. We understand that increasing numbers of consumers are seeking authentic, genuine food experiences and we know that they are skeptical of the ability of large, long-established food companies to deliver them.”

She’s not wrong, and I’d like to take it a step further. Five steps, actually — demonstrating why Big Food could be in big trouble:

1. Millennials favor unfeigned, transparent brands and distrust big brands.

As Denise Morrison so eloquently put it, “We are skeptical of the ability of large, long-established food companies to deliver on authenticity. We vote with our dollars for brands that we personally connect with, and that resonate with our value systems.”

2. Social media, the rise of food tribes, and the Amazon platform itself have accelerated brand life cycles.

Legacy brands continue to lose market share to upstarts at a rapid pace — a phenomenon underscored by market research firm reporting, such as IRI’s above.

3. The barriers to entry that once existed in food production and sales have largely dissipated.

Retailers are scrambling for ways to attract the next-generation consumer, and legacy brands aren’t innovating in a way that achieves this. Grocers small and large are diversifying their store shelves by reducing the number of declining legacy brands they carry in favor of on-trend solutions.

4. Product launches favor nimble, aggressive start-ups.

Big CPG no longer casts new products, but rather sits back while start-ups test new product concepts. And though the big guys will often play catch-up (or copy-cat), it is often too late as the brands that gained early traction have already been acquired…for very attractive valuations.

5. Upstarts are connecting with the needs of food tribes, resulting in category-disrupting points of differentiation that hit big CPG out of left field.

NO ONE in the yogurt business saw Chobani coming, and by the time the giants navigated the eight floors of middle management red tape at headquarters, Chobani had taken more than 30% of the entire multi-billion dollar yogurt market.

I’ll end with this. Jeff Bezos, CEO of Amazon, was once asked if he worried about larger competitors. His response was an unanticipated zinger to analysts: “Frankly, I’m more concerned about two guys in a garage.” Will Frito-Lay gain placement of their “Simply” Cheetos at Whole Foods? Time will tell (but really, who cares?). One thing I know for sure is that shifts in consumer food preferences are generational and irreversible. Can small brands that understand these shifting preferences keep up with Amazon’s velocity and spend? You bet your ass we can.

Jason BurkeJason Burke is the Founder and CEO of The New Primal. As a pioneer of grass-fed beef jerky snacks, The New Primal brings a fresh approach to an old favorite. The New Primal is a company built on honesty, transparency and integrity and hopes to inspire everyone who encounters the brand to make better food choices. You are what you eat. Choose wisely.®

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