Stakes raised for health food marketers

Yves Veggie Cuisine is about to do something few health food manufacturers have the resources to consider. The Vancouver-based manufacturer of meatless hot dogs, veggie bacon and cheeseless cheddar-style slices, is about to launch its first mass media advertising campaign....

Yves Veggie Cuisine is about to do something few health food manufacturers have the resources to consider. The Vancouver-based manufacturer of meatless hot dogs, veggie bacon and cheeseless cheddar-style slices, is about to launch its first mass media advertising campaign.

While it may not have the ‘stop-the-presses’ value of yet another multi-million-dollar media merger, the announcement is significant because, in the Canadian health and natural foods market, the magnitude of Yves’ effort is virtually unprecedented.

Yves recently recruited Vancouver agency Rethink Communications to handle creative on a campaign to launch later this year that will include radio spots and out-of-home advertising. The company also plans to launch some TV spots early in 2002, says Roy Kingsmith, the company’s director of marketing.

While it is not a typical strategy for a company plying its trade in Canada’s natural and organic food sector, a development of this sort is not entirely unexpected, either.

Interest in health foods has never been higher and many manufacturers have been contemplating the pursuit of more sophisticated marketing efforts to help move their products off the shelves in what has become an increasingly dynamic sector.

According to the U.S.-based Nutritional Business Journal, Canadians spent $3.67 billion in 1999 on natural and organic foods, supplements, and personal care products. The North American market is valued at over $47 billion.

In other words, the stakes are growing for companies like Yves, which markets its lines in both Canada and the U.S.

‘Five years ago, our consumer base was driven primarily by vegans and vegetarians,’ says Kingsmith. ‘But the whole health market has just taken off. Our opportunity is to take our whole product line to mainstream consumers within the grocery channel.’

One of the major developments contributing to the growth of the sector, Kingsmith says, is the baby boom generation, many of whom are becoming more interested in eating right as they grow old and near their own ultimate conclusion.

As such, the target market for natural and organic products has moved well beyond the traditional 25- to 39-year-old health-conscious female. Kingsmith says interest among university and college students, as well as health-oriented males looking for products that are high in protein, is also increasing.

While Yves is taking its embrace of mainstream marketing techniques further than most, the company is not alone. Across the board, manufacturers of products from breakfast cereals to non-dairy frozen desserts have begun to look at ways to increase their share in the market, whether through new in-store advertising, promotions or product development.

Imagine Foods, the San Carlos, Calif.-based maker of Rice Dream non-dairy beverages, has extended its brand in recent years to include stuffed sandwich pockets, rice-based non-dairy puddings, plus a selection of soups and broths.

In May, the company will introduce a new line – some 17 SKUs – of frozen soy desserts, which it will support with advertising in publications such as Alive and Canada’s Food Guide to Healthy Eating, something the company has never tried before, says Andrea Gray-Grant, the company’s Canadian regional sales manager.

‘It’s really only in the last couple of years that we’ve started to make a concerted effort, or had to, because of the growing competition in the market,’ she says.

Part of the reason for this increased activity, says Arran Stephens, president and founder of Delta, B.C.-based Nature’s Path, a leading organic cereal maker, can be attributed to the fact that mainstream manufacturers have been encroaching on the turf of natural and organic food marketers.

The entry of these mainstream players, he says, has had a dual effect. On the down side, there is the very real threat of lost market share when, for example, Kellogg starts running radio and print ads in the U.S. for its Kashi cereal – a brand the cereal manufacturer purchased last year.

On the up side, there is surging consumer interest in the category as a whole as big players introduce the idea of organic cereals to consumers who might otherwise simply go on buying Cocoa Puffs.

So while it would be easy to say natural food manufacturers are increasing their marketing efforts out of a pure instinct for survival, it is equally true that with interest this high, it only makes sense to invest in communications.

‘This huge growth in the natural and organic food sector has attracted Wall Street,’ says Stephens. ‘There has been a tremendous number of mergers and acquisitions. In this process, the whole market has become much more sophisticated.’

As mainstream marketers have borrowed concepts from the natural food sector, he says, those in the natural sector have borrowed from the successes in the traditional grocery trade.

Not one to be left behind, Nature’s Path, too, has substantially increased its advertising budget.

The company is launching a branding campaign in several health-related publications including Better Health, Better Nutrition and Taste Of Life.

In addition, the company is about to announce a new cereal it has developed to compete head-to-head with Kellogg’s ground-breaking Vector meal replacement. Optimum Power Breakfast, made with flax, soy and blueberries will be featured in about 15 lifestyle health magazines including Alive and Vegetarian Times, Stephens says.

The company is also set to launch a new cereal targeting youngsters called Organic Peanutbutter Panda Puffs, as part of the company’s Envirokidz line. Launched last year, today the line represents 15% of the company’s sales.

The relatively new organic-cereals-for-kids sector saw the launch in July of yet another noteworthy brand when Braintree, Mass.-based New Organics released the Richard Scarry line of Organic Honey O’s, Organic Cocoa Crisps and Organic Fruity O’s, the packaging for which features characters created by the late American kids’ author.

Part of the reason behind the licensing deal, the company says, was to broaden distribution beyond health food stores.

And it appears that’s a good possibility.

Today, virtually every large grocery chain including A&P/Dominion and Loblaws have natural food sections, which offer a range of natural and organic products.

‘The whole health business continues to evolve and grow. There are a significant number of consumers looking for health-related products,’ says Bill Sheine, spokesperson for A&P/Dominion. ‘What’s interesting is that it’s not a particular segment. It’s young, old and in-between.’