Giant companies are launching their own direct-to-consumer lookalikes. Will consumers buy in?
Consumer goods giants like P&G, Clorox and Reckitt are leveraging their resources to launch new products that mimic the indie brands snapping at their heels.
Earlier this month, a new vegan cheese brand opened up its waiting list.
Bold Cultr makes vegan cheese using an animal-free protein sourced from dairy tech startup Perfect Day, and its website is littered with the sorts of taglines you’d expect of a new direct-to-consumer brand: “We made the future. And it tastes delicious,” “Foodies, revolutionaries and scientists, united.”
But look a little further, and things are not quite as they seem. It’s not an indie digitally native brand at all — a few scrolls down on Bold Cultr’s "about" page reveals that this label is in fact the latest launch from Big Food giant General Mills.
It has been developed by G-Works, General Mills’ internal team of brand builders who have been tasked with finding fresh ways for the company to make money.
Bold Cultr is not the only example of a consumer packaged goods (CPG) giant trying to figure out how it can mirror the success of its younger, hipper direct-to-consumer competitors.
Procter & Gamble launched Insta-friendly cleaning brand NBD Clean in 2020. Through its venture and brand incubator arm, P&G Ventures, it has also acquired skincare brand Bodewell and developed and incubated the menopause wellness brand Kindra through a partnership with venture capital firm M13.
In 2019, Clorox launched Objective Wellness, a supplements brand it built from scratch, while in March of this year Colgate-Palmolive launched a distinctively Gen Z toothpaste brand, CO. by Colgate, complete with metallic pastel packaging and a commitment to donate $1 from each sale to a charity fighting online bullying. U.K. consumer goods giant Reckitt (the maker of Lysol and AirWick) has also been busy launching direct-to-consumer-lookalike brands. Over the past 12 months, it has launched Fight Vitamins, a kids’ sleep products brand called Little Yawn Collective, and Casa Home, which sells candles in packaging built for unboxing videos.
The idea of selling products directly to consumers via the internet is something the likes of Warby Parker, Glossier, Away (in the worlds of spectacles, beauty and suitcases, respectively) and countless other young businesses have been perfecting.
Big consumer brands have, until recently, largely left them to it. They already have the supply chain connections and retail distribution power their startup counterparts are working towards — and besides, Warby Parker’s $394 million 2020 revenue is still tiny compared to eyewear giant Luxottica’s $8.7 billion.
But fast-forward to 2021, when almost every product category has been "DTCified" in some way, that equation is now looking a bit different, says Orchid Bertelsen, chief operating officer at growth agency Common Thread Collective and former head of digital strategy and innovation at Nestlé.
“Anybody with an idea and a little money can start a brand [today],” she says, pointing to ecommerce-made-easy tools like Shopify. “These individual, smaller brands aren’t large enough on their own to be a significant threat, but together as a group they are nipping away at market share. Attention and money are all finite — if [consumers] are spending money with a digitally native brand, that’s money they’re not spending with traditional brands.”
The pandemic has provided another catalyst for change. With fewer customers shopping in store, it made sense to seize the e-commerce opportunity. Last year, PepsiCo launched two direct-to-consumer e-commerce sites — Snacks.com and PantryShop.com — while Kraft-Heinz launched Heinz to Home for its U.K. customers, which it says was built in just three weeks.
Corporate giants have the money — and the connections — to not only launch pretty much any product line they want, but also roll it out across stores nationwide from the get-go.
It makes them formidable competitors for scrappier online-only brands, but they are still learning when it comes to shifting their mindsets from focus groups and slow-and-steady approval processes.
“A lot of the really disruptive innovation in CPG is happening outside of large companies,” says Rakesh Narayana, the global director of new ventures at Reckitt. Unlike a large multinational which has been setting processes in place for perhaps over 100 years, upstart brands have the freedom to essentially reinvent the wheel in any given product category. Reckitt instead has to identify investment and acquisition opportunities in a more methodical way.
Narayana says that process starts with looking at the product categories Reckitt already dominates, and what the consumers in those categories might be looking for next. He uses AirWick as an example. When air fresheners first became a thing, people would buy them to cover up bathroom smells. Then people wanted their whole houses to smell nice, and so started buying reed diffusers and pot-pourri. Today, home fragrance has become something of a wellness product — cleansing the air and setting moods. It's why scented candle brands are so popular right now — and it explains why Reckitt launched CASA Home.
When it came to launching NBD Clean, P&G’s former innovation design manager Jessica Stoll says the biggest challenges weren’t so much around making the product — P&G is pretty experienced at developing cleaning products that actually work — but how to market it and give it personality.
“It was more about how well we could talk about [this product] to consumers,” says Stoll, adding that consumers today want brands to relate to them on issues beyond the product that's being sold to them, and that they are drawn to products that embody self-expression or have a clear cause, such as mental wellness or sustainability.
These aren't things the P&Gs of this world are used to talking about, and in true socially awkward fashion, P&G was roundly mocked when journalists found out it was trying to trademark terms like ‘NBD’, ‘FML’ and ‘WTF.’
“A nimble DTC brand can get away with different things, because they don’t have the eyes of the world on them. If a different company trademarked FML, I don’t think it would have been on the BBC,” Stoll reflects. “But big companies are realizing it is worth the risk, because the alternative is to fade into the background.”
To speed up the process of creating new brands, large corporates are giving their innovators as much freedom as possible. Reckitt’s venture arm has recently been spun out and renamed Access VC — and while it’s funded by its parent brand, Narayana says it operates independently.
Stoll says P&G spent 10 weeks developing NBD Clean in-house before launching online, while CO. by Colgate had a team of 12 employees working on the launch of its seven debut products for less than a year, according to Glossy.
“That’s the kind of rapid innovation that companies like P&G are trying to get by bringing in hands-on designers and teams,” Stoll says. “When you cut out design briefs with agencies, it makes it go faster.”
And because the look and feel of these new product ranges follows the same trends seen among other indie direct-to-consumer companies, consumers could be forgiven for not realizing who is behind it all.
However, Narayana argues that it’s not hard for a savvy customer to figure out where their product comes from. “If you look at the back of the packaging, you will find out,” he says. “The idea is not to hide that — all we’re doing is building brands the way authentic indie brands do it.”
The fact the internet never forgets may be one reason why CPG giants are keen to present these new brands as their own thing. “When you look at Gen Z and younger millennials, they want company values,” Bertelsen points out, noting that the stigma attached to Big Food brands for example will be hard, if not impossible, to shake off. “No matter how well these big companies do with their sustainability commitments and values, the problem is they have a history.”
Correction: A previous version of this article said that P&G Ventures acquired Kindra. This has been updated to reflect that Kindra was developed and incubated through a P&G Ventures partnership with venture capital firm M13.