The Rise of Curation in CPG
Making the Case for the Business Model of Good Taste
Consumers encounter more than 30,000 new products each year and every two minutes a new product is launched into the U.S. marketplace, according to data from Nielsen. As brands continue to proliferate, individuals have more choice than ever before and it’s becoming increasingly difficult to disaggregate signal from noise.
“Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.” – Barry Schwartz, The Paradox of Choice: Why More Is Less
At the same time, the market for consumable products—products put in or on our bodies (from food to skincare)—has ever been more challenging to understand or define. What should I eat? What ingredients should I avoid? How do you define natural & organic, sustainable, or clean beauty? These questions and parameters continue to be muddled by ever-changing trends in diet, lifestyle and wellness.
“As a culture we seem to have arrived at a place where whatever native wisdom we may once have possessed about eating has been replaced by confusion and anxiety. Somehow this most elemental of activities—figuring out what to eat—has come to require a remarkable amount of expert help.” – Michael Pollan, The Omnivore’s Dilemma
When paralyzed by the sea of options, the best we can do is choose what matters most to us—or, better yet, find people or marketplaces to do the curating for us. As the number of products grows, so does the demand for credible curators. Consumers are willing to pay a trusted source with good taste to help sort through the increasing number of products at our fingertips.
Marketplaces as Curators
We have all felt frustration after entering a store or jumping on an online platform in search of a product—only to realize that our work has just begun. For example, a search query for “snack bars” on Amazon returns more than 2,000 results. The pain point of overwhelming self-selection in the consumer packaged goods (CPG) market has created opportunities for marketplaces to take a more managed approach that (1) offers consumers exceptional quality, transparency, and discovery, and (2) provides greater convenience and saves consumers time.
There are a handful of wellness-focused, purpose-driven marketplaces that are tapping into this idea. These marketplaces carefully curate their product offerings and act as a trusted resource for individuals. Instead of spending time and energy sifting through endless options, we now have access to services that do the hard work for us.
Good Eggs: Offers “absurdly fresh” grocery delivery and the marketplace features high-quality standards – including 100% supply chain transparency, local goods (70% produced within 250 miles), and prohibits a list of ~80 product ingredients.
Grove Collaborative: Makes it easier to find healthier, more sustainable home essentials. Grove delivers eco-friendly household goods, pet, and beauty products. The “Grove Standard” includes strict criteria for ingredient transparency, ethical supply chains, sustainable materials, and non-toxic formulas.
Foxtrot Market: Is redefining neighborhood corner stores for the modern consumer. The marketplace offers a curated selection of locally-sourced goods and niche products and features a hybrid brick-and-mortar/e-commerce model—all in-store items are available for one-hour local delivery via the Foxtrot app.
Thrive Market: Charges a membership fee for access to its curated product selection of non-GMO food & beverage, household, and beauty products that can be filtered by 70+ dietary and lifestyle needs and values.
Credo Beauty: A clean beauty marketplace that has clear product standards across measures of sustainability, ethics, transparency, safety and sourcing. Credo maintains a “dirty list”, which contains 2,700+ ingredients that are prohibited on its marketplace.
The demand is certainly there: After a successful launch in the San Francisco Bay Area, Good Eggs is expanding its services in southern California. Grove Collaborative is increasing its product offerings with its recent foray into clean skincare. The pandemic has propelled Thrive Market’s already rapidly growing business and has pushed total members to nearly one million. Foxtrot plans to double its store count by year-end 2021.
What does this look like for an individual company or brand?
I think the concept of individual brands and producers as credible curators of healthier consumer products is also interesting.
Consumer distrust of big corporations across the food, beverage and personal care landscape has grown, following decades of health trends moving in the wrong direction. As a case in point, over half of consumers believe that large food companies will put their own interests ahead of public interests. Against this backdrop, I see room for authentic, health-focused consumer companies to emerge as trusted leaders—curating a multi-branded portfolio of healthy living products.
A budding example is Jason Karp’s HumanCo. The private holding company makes long-term investments and builds brands in health-conscious consumables. In contrast to other multi-branded CPG companies, which tend to offer products across both ends of the health spectrum, all of HumanCo’s investments and internal product launches meet its strict guardrails for ingredient formulations, transparency, and sustainability. The company’s current portfolio includes organic, plant-based ice cream brand, Coconut Bliss, vegan cream cheese brand Monty’s, and an internally incubated organic frozen food brand Snow Days. Also worth note, Karp co-created the organic chocolate and grain-free cracker company Hu, which was acquired by Mondelez in January 2021.
Similar to the managed marketplaces listed above, HumanCo is curating a portfolio of trusted, healthier alternatives. I believe this strategy—the business model of good taste—can be an incredible way to build a loyal customer base. It draws people in with the promise of product offerings vetted across measures of health, quality, and transparency, and keeps them coming back by building trust and a sense of community around purpose and shared values (e.g. health and wellness, environmental sustainability).
Data Reinforce the Need & Desire for Health-Focused Curation
U.S. health trends are moving in the wrong direction: Despite significant educational and technological advancements in health science, the U.S. ranked 29th in the OECD’s latest data on life expectancy at birth and down from a rank of 12th in 1960. We placed below Costa Rica which has less than one-third of our per capita income.
Consumers are overwhelmed by the mass of health information: 40% of Americans agree that “there is so much information on health out there, I don’t know where to turn”, according to Mintel.
Demand for cleaner, more transparent consumer products is rising: 41% of Americans actively seek clean label products with regularity, nearly half of which are Millennials. As a result, clean label products are growing 6x relative to conventional. 78% of consumers reported trusting a brand more if it offers product transparency and the percentage was even higher among Millennial mothers at 83%.
Looking Ahead…
In a world of superabundant information, knowing what to pay attention to is often the hardest part. It’s becoming increasingly difficult to disaggregate what’s real and what’s fabricated when it comes to health and consumables. Marketplaces and brands that provide intentional curation—by offering better product quality and simplicity and reducing friction for healthier alternatives—will be rewarded with consumer trust and loyalty.
Looking forward, I anticipate more companies to emerge in this segment and adopt the business model of good taste. The demand for healthier consumer products is clear and the opportunity for companies to rebuild trust is ripe.