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Understanding the Cultural Maturity of Contemporary Food Categories

As the globalization of U.S. food culture evolves, we are witnessing more and more food industry players come to us with an eye to sprucing up their portfolio of brands to keep up with the times. The near-term goal: get some sales lift for legacy brand portfolios with stagnant or declining sales volume.

To contemporize existing, often very old brands, brand managers have to know what "quality" actually means today in their brand's category. Our 20 years of experience tracking contemporary food culture reveals that virtually every major food category has undergone a shift in how consumers define quality within it, primarily due to the ongoing globalization of the U.S. food marketplace. Established product habits and flavors from the mid 20th century are being challenged and upended daily in restaurants and food retailers across the country.

The redefinition of quality in food culture, however, is not occurring at the same pace in all food categories. Some categories have responded quickly to this trend. Others lag or limp forward. Again and again, we find that food culture has shined its light more intensely on what we are calling "culturally mature" categories (wine, bread, cheese) and less so on "culturally immature" categories (cereal, milk, chicken).

When we talk of cultural maturity in a category, we mean something quite different from standard business notions of category maturity, which often center around longevity of development in the marketplace, degree of household penetration and/or long-term plateaued sales growth at very high volume.

So what do we mean?

We identify culturally mature food categories by the following criteria:

• Products exist in all Zones of Quality in the Culture of Food and distinct varietals exist
• Quality distinctions have been generated by experts/artisans in the category
• Quality distinctions are disseminated actively by experienced consumers and category media players
• Specialty retailers actively promote quality distinctions in the category

OK. So, why would marketers care about the relative cultural maturity of their category?

The concept of cultural maturity allows marketers to understand exactly what they're up against when they take an old legacy food brand and try to contemporize it along notions of quality:

What causes a category to mature culturally?

What drives cultural maturity at the category level? What makes it happen? If we had to pick two elements of food culture, it would be the powerful nexus of specialty retail and restaurant environments. The specialty food retailer and the upscale restaurant are indispensable players in this process of category maturation, because they bring new quality distinctions within reach of the masses and allow them to experiment at their own pace.

All the artisan producers in the world won't get a category to mature without the explicit cooperation of food retailers or restauranteurs who are willing to take the risk to drive a trend out into the marketplace.

The result of this process is that today one can find a whole host of food categories that are undergoing rapid cultural maturation, even though, not long ago in the U.S. marketplace, they were the epitome of the culturally immature category.

The Case of Beer: a rapidly maturing category

Let's look at the (pun intended) "case of beer":

In the 1950s, beer was a remarkably simple category in the U.S. marketplace. Depression-era consolidation of the brewing industry led to a handful of megabrands ruling the category after prohibition. These giants offered a base product designed to sell enormous volume to a mass consumer base with, by then, a very narrow view of quality in beer.

In the absence of a movement toward quality differentiation, the industry defined innovation around the packaging format (can instead of bottle, the cardboard case vs. multiple six-packs) and the introduction of "light" beer in the 1980s. Until the last 10 years, the quality continuum of beer was very simple: American mainstream lagers or imported beer. Imported cost more and was thought to be "premium." And very few people bought it.

In other words, for most of the 20th century, beer was not a category in which significant quality distinctions were made. The notion of varietals within the beer universe had been lost. The distinction between ale and lager itself became lost as trademarks became the only real quality markers for beer consumers. It was all about Instrumental Eating, not Savoring. The American beer marketplace did not even enter the Intellectual Eating (and Drinking) zone until the 1980s with the rapid evolution of craft beer operations in localities around the country.

Today, the beer marketplace has distinct offerings in all three Zones of Quality, offering a rich world of burgeoning varietal distinctions for consumers to explore (e.g., pilsner, bock, hefeweizen, pale ale, stout, etc.). Pioneers like Redhook and Samuel Adams drove the maturation of the category, but only through careful cooperation with restaurants and bars. They created the pathway for beers oriented to geeks to continually push out into the mainstream. Now, craft brews are growing at a significant clip. In fact, the highest growth in the U.S. beer market is now found in the craft beer segment (12%), though it is still dwarfed in volume by mainstream beers (Source: Adams Beer Handbook for 2006).

In a mature category like beer, the producers oriented to Savoring and Intellectual Eating save larger companies the effort of developing quality distinctions themselves. The challenge for the big brands oriented to Instrumental Eating is in taking advantage of emerging quality distinctions before face-off competitors do and scaling them up through their own brands. Those who are first to drive trends out into the marketplace will win higher price points and sustainable growth.

The core innovation challenge in mature categories is how to scale up emerging quality distinctions and still keep profit margins healthy.

In the beer category, we note Anheuser-Busch's recent announcement that it will launch Budweiser American Ale in October, the first craft beer launched under the Budweiser trademark. We plan to watch this experiment closely to see if a brand that has always been about Instrumental Eating occasions can ultimately serve up beer consumers will actually Savor.

This is the first in a series of Sparks set to explore different kinds of relative category evolution in food and beverage and their strategic implications for marketers and brand managers in the food industry.