As an essential foods brand, Kraft Heinz navigated 2020 from a unique position of operating within an in-demand category. APAC CMO Dhiren Amin speaks to WARC’s Gabey Goh for WARC Marketer’s Toolkit 2021 about emerging consumer trends, why not all brands need to have a social purpose and the fundamental challenge facing marketers in e-commerce.
How have the developments of the year impacted the organisation? What lessons have been learnt in navigating through such turbulent times?
The first learning is a humbling one, around your responsibility towards people. And you divide that into people who work for you and people whom you work for. So, people who work for you or your organization and as a leader your immediate responsibility is to ensure that that's taken care of. That's priority number one. When I say taken care of, I mean from a safety standpoint and very early reactions to this are about that.
The second is people who you work for which is consumers. Here for us, we are an essential foods company right, Kraft Heinz is in any part of the world selling essential food. So in Indonesia we sell soy sauce, in China we sell infant products, in the US, we sell ketchup and mac and cheese and things that you will eat at home.
- It’s a good time for brands to be invested in long-term business-driving social causes that both make a difference to people’s lives and have a direct impact on business.
- The biggest challenge in e-commerce is building brands on e-commerce. How many brands have been built on e-commerce, outside of the e-commerce retailers? Amazon is not an e-commerce brand, Amazon is a retail space.
- Growing through innovation that fundamentally drives preference for our brands and our categories is even more important today than before.
When this happened, people started eating more at home. So, firstly from a company standpoint, it was good for us, it's been, obviously if you read the financial reports has been good. But more importantly, you then have a responsibility to ensure that the product exists.
And that in itself is a challenge because you have to protect your people. And then you serve the people who are dependent on you for cooking at home. Having to live through that as not just a marketing leader but an organization leader is an interesting challenge.
What key consumer trends have you observed emerging in the region?
So, there are a lot of trends that came out of COVID-19 but you can cluster consumers into three or four parts. First are the consumers who immediately become very prudent as their income is directly affected. Then there are the cautiously optimistic people whose income is not directly affected but they fear that it will be, and they know that this is a time where they need to tighten their belts. The third is people who don't feel like there's going to be a change to their income and feel like they can survive this, and they are typically high-income earners. But they are also taking advantage of the situation as deals are better and some brands are promoting more.
Then there’s the more millennial generation who lives like there's nothing happening. And for all of these people there has to be a different strategy for any brand.
So, for the guys who are more prudent, how do you ensure they don't cut you from their buying basket for people who are cautiously optimistic, how do you ensure that they see value in continuing to purchase you. You essentially try and ensure that they buy you and buy more of you. For the people who are well off, how do you ensure that they buy more of you and so how do you sweeten the deal for them.
That's one, then second, there is obviously a need for health. People call it health, but they are talking about immunity, so they want to ensure that they do not fall sick in the simplest way. And some people want to ensure that they remain healthy through these times where they are staying at home more. People are either looking for immunity or, I would say, ensuring activity or energy. And it's likely to continue even after COVID goes away. That has a direct impact on the expectation for brands, as consumers will start looking at brands, even ones that are not expected to deliver that value, to do so. So how do you do that?
The third thing is, it’s a good time for brands to be invested in business-driving social causes that actually make a difference to people’s lives, are not one-off efforts and are causes that have a direct impact on business.
For example, in Indonesia, we make a soy sauce and our social cause of gender equality is even more important today than before. Because the wife is in a situation where she's working from home, her family is working from home and she has to cook all the meals. So, the ABC Soy’s purpose of driving gender equality through cooking is even more relevant during COVID times.
It’s important to recognise that business-driving social causes are important, but to not push them blatantly. Brands need to talk about it in a manner that is relevant and makes a difference to people's lives, because I think people now are keener to understand where brands stand on social causes.
Would you say that the pandemic has accelerated this widespread shift from brand purpose to brand activism?
I'm not sure I would use the word activism. The concept also pre-assumes that every brand should be an activist, or every brand should do something that is different for the world. I’ve always believed that you don't always need a purpose. Sometimes it's okay to be relevant and different. If you're entering a new category and you’re the fifth player, and the other four are well established, sometimes the biggest job you have to do is to ensure that people understand why you're better than the other four. That has little to do with purpose and more to do with why your product is different.
Purpose is when you genuinely have the ability and the credibility to drive a purpose, and both are important. Because we expect this of brands, but if you convert it to people for a minute. You don't expect every other person to have a purpose in life. In reality, most people don't.
We're not only talking about purpose, we're talking about having a social purpose, which most people again don't have. And we don't hold people accountable for it every day, we don't look at our best friend and say, “Oh, you don't have a bigger purpose in life and what's your meaning of living?”, we don't treat people like that, but we treat brands like that. Because brands are a commercial entity and commercial entities are thought of as needing to give back to society – that is correct.
But the only time a commercial entity can give back to society is when the commercial entity is strong to begin with. And the route to that strength is not always through the role of social purpose. When you're financially strong enough, of course you should be giving back and should have a business-driving social purpose. Then it makes sense. I think all big brands, all established brands who are in the ear of the consumer, or at the heart of the consumer, who are in many households, have to do it. But not everyone has to do it.
Secondly, the concept of activism is about taking on an enemy, it is very rooted in protest and revolutions. The best brand purpose – whether you talk of Dove or any other brand that has a good social purpose – are the ones that stick, are purposeful and have longevity. They’re not one-offs.
Activism in its very definition is one off. I think business-building social purposes and a stronger articulation of it is the route for brands to follow. Because “business-building social purpose” mean two things, first that your social purpose is very linked to the business you're in and hence drives the business you're in, which secondly, allows for you to put money back into the purpose. And I think that's very important.
E-commerce adoption and growth has accelerated this year, putting marketplaces like Alibaba and Amazon at the forefront of both brand and consumer considerations. What are your thoughts on this evolving dynamic?
Is e-commerce big and growing rapidly? Yes. Has it been accelerated significantly because of COVID? Yes. Is it dramatically big in terms of business? No. Even in the most developed parts of the world today, including where e-commerce is at its most technologically advanced, which is in China.
In some categories it's 2-3%, in other categories it is 40% of sales, but, overall, I think online retail sales is about 15% – so it's important to put these statistics in front. Is it growing? Of course. Is it big? 15% is big. Is it the biggest? No. There's a large distance between big and biggest.
Secondly, the business of e-commerce is that it allows for easy access, but it is not easy to do. Everybody has to do it but it's not easy to do. The challenges around profitability, around managing your retail, your sales given the pool of the large retail giants pose a real challenge to brands. As brands, we have to embrace that and ensure that we stay ahead of the curve in our categories as e-commerce grows. But equally it's our job to protect the other channels.
The biggest challenge in e-commerce is building brands on e-commerce. How many brands do we remember have been built on e-commerce which are outside of the e commerce retailers? Amazon is not an e-commerce brand, Amazon is a retail space. Same with Alibaba same with Tmall – they are retail spaces. That's kind of like saying, we created Walmart. No, it's not.
But if you take out retail brands, it's tough to think of brands that became famous by being completely e-commerce – it doesn’t exist yet.
If you use the same parallel, that's not true of other channels. There have been brands that have been created that sell in other channels. Hence the biggest challenge on e-commerce is brand building.
It's the most important challenge for marketers. How do you build your brand for e-commerce and not be a brand within e-commerce? Because by being a brand within e-commerce, you're always going to be at the mercy of the channel, not the other way around.
What are your key areas of focus for the year ahead, given that for the most part, the outlook remains uncertain and potentially rocky?
It’s honestly innovation. Growing through innovation that fundamentally drives preference for our brands and our categories is even more important today than before. This is the first priority.
The second priority is to be able to serve our consumers who are cooking, cleaning and doing more at home, with the requisite tools that make that easier – because it’s not easy. Especially in this period where people are looking for more differentiation. It’s about ensuring that we make consumer’s lives easier and more delicious when they cook at home.
So, whether that comes in the form of innovation, communication or experiences, whatever that takes. I think these are the two big asks for accelerated innovation.