Hanne Sondergaard, EVP and CMO at Arla Foods in Denmark, explains the concept has four points, which applies to millennials and Generation Z consumers.
Consumers are looking for clean label products; companies that are 100% transparent and authentic; companies that act ethically and sustainably; and products that feature new, interesting formats and experiences that suit their lifestyles.
DairyReporter spoke with Sondergaard on the concept, and how Arla’s strategy connects with such consumers.
“When we started the work around natural with Arla, which was about 10 years ago, natural was all about cleaning up products from artificial ingredients, stabilizers, the colorings, flavorings,” Sondergaard said.
“And a lot of the work we've been doing over the years has been about constantly cleaning up products. So for us, where we are now, we have around 98% of our products without any artificial ingredients.
“What we now see from consumers is that having no artificial ingredients in products is kind of a basic level of natural.”
Transparency is important
Sondergaard also stressed the importance of transparency in communicating what’s in products.
“You can see where the products come from, who the company is that brought them to market. What we see now is consumers are using Google, Facebook, WeChat, etc., to find out about the product, what's the real truth about the companies that are supplying them?
“Then we see consumers being more and more interested in sustainability. So they're looking for companies like us to help them make this a better planet for the future; they're looking for us to take responsibility.
“And they really need to have it in solutions that fit their lifestyle.”
Sondergaard said blockchain is a technology that can enable transparency.
“Technology can help us,” she said.
“And it will; I think transparency is also a mindset that says that in everything we do, we need to be prepared to share, we need to be prepared to be open, to show what's in our products, how are they manufactured, the welfare of our cows, I think people are interested in today than they've ever been.”
Looking for new products
Millennials and the Generation Z consumers are at the forefront of a move to more plant-based products, even if they are not switching to an entirely vegan diet. Sondergaard said Arla sees the same trends.
However, she said the plant-based trend is also about consumers looking for new things.
“I think that for us, it's about ‘how can we make our products relevant to today?’
“So for example, a fast-growing sector is eating out of home. A big part of what we're working on today is how can we make good tasting, high quality, nutritious products that you can eat on the go so you don't have to eat chocolate or whatever it is that's available, but you can get some of our more healthy protein in there.”
While in many convenience stores some of the less nutritious products are the cheapest, Sondergaard said pricing of nutritious products doesn’t have to be an issue.
“I think in this market it’s not necessarily a big barrier, we have already a significant drinks business for milk-based beverages in this sector. I think the key for us to get is the quality, taste and something that's filling.”
Staying within range
While consumers that shop at health food stores or upmarket grocery stores/supermarkets are more open to spending more and experimenting, how can companies reach the mass market with such innovative products that may cost a little more?
“Our plan when we work in this area is to be in the same price range. I think we can easily bring something to market that is value for money.
“I think the key is to find something that's nutritious, something that has a good taste, something you can eat on the go. You can find yogurt, but they're not filling enough.
“I think we all know this feeling of buying a yogurt and we're still hungry afterwards. With skyr we have managed to get a higher protein, more filling product. And price wise that’s something we can easily compete with.”
Sondergaard said the skyr product is available in a drinking format, and that the company is constantly working on new products, which then need to be communicated.
But are millennials and Gen Z consumers brand loyal, or do they prefer to shop for products regardless of brand?
“I think this generation, as we see it, like to explore, like to experience, they like to try out new things and I think as long as you keep delivering those opportunities for them to do so, then they are more flexible [and will show loyalty].
“But a big thing for them is what does the brand stand for? And, does this brand give them an experience that they're looking for.”
The farm message
Part of getting the brand to be more recognizable and communicate with consumers is Arla being a cooperative.
“I think an important part for us is we've underestimated the value of our ownership model.
“We've had a lot of work going on with our farmers for years, but we've not necessarily talked that much about it.
“Everything we do with them [farmers] is interesting for people. And this has been a big, big learning for us, over the last couple of years this is something that people are looking for. They're looking for understanding the full story about what's behind the products that they buy.”
Sondergaard said farmers have brought in a new digital system that enables them to capture data on a daily basis.
“And from that they'll get a big database. That whole data set up will now allow them to move forward, but also allow us to talk about what goes on on the farm, both on product packaging, and digitally, etc. And I think that's going to be a big step for us as we bring that to market.”