June 23, 2023
Brands

CPGs Should be Leveraging Retail to Distribute Brand NFTs

When you think of your favorite brands, which ones come to mind? Chances are they’re owned and operated by one of the large and publicly traded consumer packaged goods (CPGs) companies...

CPGs Should be Leveraging Retail to Distribute Brand NFTs

When you think of your favorite brands, which ones come to mind? Chances are they’re owned and operated by one of the large and publicly traded consumer packaged goods (CPGs) companies. CPGs refer to products that are packaged and sold to consumers for personal or household use, such as food, beverages, personal care items, and cleaning products. Think Procter & Gamble, Nike, Nestlé, General Mills, Unilever, and PepsiCo. CPGs are typically described as products the average consumer uses daily and need to be replenished often.

Retailers, on the other hand, are the businesses that sell CPGs to the end consumer. The relationship between CPGs and retailers is characterized by a dynamic interdependence, as both rely on each other to succeed. Retailers rely on CPGs to provide the products that their consumers demand, while CPGs rely on retailers to provide a channel for distribution and access to consumers.

CPGs constantly work to differentiate their brands in these highly competitive environments. Just take a look at the (inter and intra) competition between the brands owned by Keurig Dr. Pepper and PepsiCo in the picture below.

Soda brands competing for shelf space.

This highly competitive environment for brands requires CPGs and retailers to work together to set prices, negotiate promotions, and create value for consumers through the creation and marketing of branded products.

If you are like me, and you believe NFTs can be used to create value and enhance brand experiences, then shouldn’t CPGs be taking advantage of the massive opportunity to engage customers through retail networks?

Are NFTs even right for CPGs?

So maybe you’ve heard something like this before, “brands can affect consumer behaviors using non-fungible tokens (NFTs) to enhance consumer activations, rewards, and loyalty initiatives”. If it’s that simple then why aren’t all brands launching NFT projects to acquire new consumers and drive record sales?

The truth is, many brands don’t have the ability to execute omnichannel marketing strategies and also distribute products to their consumers efficiently. That’s the hard part. Fortunately, CPGs and retailers already have this down to a science due to the highly competitive markets they exist in.

A report from the Web3 Intelligence Platform, Moonblock, looked at industries with the most NFT projects in 2022. It ranked Fashion 1st, Food and Beverage 3rd, and Consumer Goods and Retail 10th.

Taking a closer look at fashion, Nike, Adidas and other notable apparel companies accounted for some of the largest NFT activations over the last year. If you add in beauty and cosmetics, we can safely say that CPG brands are already the biggest players in the NFT space.

CPGs are well-suited to offer NFTs to consumers because they have:

  1. Wide Distribution Through Retailers — CPGs have a widespread distribution network through retailers, which allows for easy access to a large number of consumers. This distribution network provides CPGs with the ability to quickly reach a significant portion of the population with their NFT offerings.
  2. Strong consumer Loyalty — CPGs often have a strong consumer base with high levels of brand loyalty. By offering NFTs, CPGs can tap into this existing consumer loyalty, creating new revenue streams and providing an opportunity for consumers to engage with their brand in a unique and innovative way.
  3. Brand Recognition — CPGs have established brand recognition and reputation, which can increase the value of the NFTs they offer. Consumers are more likely to purchase NFTs from well-known and trusted brands, and CPGs can leverage their reputation to create a competitive advantage in the NFT market.
  4. Large Marketing and Advertising Budget s— CPG companies and retailers spent more on digital advertisements in the U.S. than any other industry in 2022. A sizable portion of the ad-spend budget could be diverted to Web3 strategies that could offset the costs of acquiring and retaining consumers.

Distributing NFTs to consumers

CPGs can work with end-to-end NFT solutions providers, like Gigantik, to seamlessly integrate NFTs into their existing brand promotions and marketing campaigns. Instead of launching a totally separate marketing campaign to appeal to a small Web3 audience, brands can interact with new and existing consumers by leveraging all of their marketing channels. NFTs are especially useful for omnichannel marketing because they’re interoperable across platforms.

Is the QR code being overlooked? 

Take the QR code as an example. NFTs can be sold or given away for free to consumers who use a mobile device to scan a QR code. The NFT redemption process can be designed to remove technical barriers commonly associated with blockchain technologies so that mainstream consumers can store NFTs without even knowing how they work.

Dr. Pepper’s Pepper Perks rewards program.

Many brands incorporate QR codes into their packaging in order to drive consumers to websites, mobile apps, or loyalty programs. QR codes are displayed on everything from programmatic TV to out-of-home (OOH) advertisements. I can’t think of a bigger opportunity for widespread NFT distribution than CPGs leveraging their retail networks to reach millions of consumers.

Let’s take cereal as an example.

Cheerios, a General Mills company, is the largest cereal brand in the world. According to Zippia.com, Americans eat 2.7 billion boxes of cereal per year. Cheerios alone sold more than 139.1 million boxes last year. Brands should capitalize on this massive opportunity to get NFTs into the hands of their actual consumers. Once the NFTs are distributed, brands could then start analyzing their consumers’ behaviors to build more nuanced understanding of who they are.

Cereal demonstrates most clearly how competition within the CPGs industry drives creativity and innovation all in the name of winning over consumers. Just take a look at how a promotion from a General Mills brand, Lucky Charms, compares to Fruity Pebbles, a Post cereal brand.

Fruity Pebbles and Lucky Charms Cereal Boxes.

The Fruity Pebbles, “Create Your Own Comic Story”, promotion is primarily an analog experience. consumers can interact with the brand by writing a story on the box. consumers would need to purchase additional boxes to find new comics to rewrite or else their ability to engage with the brand ends.

In contrast, Lucky Charms uses a QR code to promote an AR-enabled mobile game created in partnership with the Pokemon Go developer Niantic. The game features a scavenger hunt and encourages consumers to go on a real-world quest called the “Journey to the Magic Gems” to discover hidden charms at different locations. 

Low-hanging Fruity Pebbles.

Using a simple QR code, Fruity Pebbles could introduce a web component to their promotion with a digital version of this comic book series. This way consumers could explore the Fruity Pebbles brand and be introduced to additional Post products through the website. Post could also drive engagement across social media by giving away digital collectible NFTs to consumers for sharing comic stories. Digital collectibles could be introduced across Cocoa Pebbles, Marshmallow Fruity Pebbles, and Magic Fruity Pebbles flavors to introduce consumers to new options for instance.

A gem of an idea for Lucky Charms.

Even though Lucky Charms’ clever promotion to drive engagement and brand awareness is top-notch, I believe an NFT component could enhance this experience even more. The Charms could be turned into NFTs that unlock new games, achievements, or experiences for consumers. Enthusiastic Charms NFT collectors could be invited to join the Magic Makers club for early access to activities and new product launches. An exclusive role could be earned by collecting NFTs that allow engaged consumers to participate in the creation of new flavors, for instance.

NFTs could be used to unite previously siloed consumer segments and combine them into one unified system. In-store activations, digital advertisements, and mobile games can all be connected through NFT ownership.

As you can see, the infrastructure and the creativity necessary to execute successful NFT campaigns are already in place for most CPG brands. Both brands have strong engagement opportunities on the backside of their boxes, but Lucky Charms introduced a digital experience via QR code. The opportunities for Lucky Charms to continue to engage and delight its consumers far outweigh the single interaction offered by Fruity Pebbles.

NFTs can enhance partnerships between retailers and CPGs

CPGs have limited control over what happens to their products once the retailer receives them. If the brand and retailer aren’t aligned, there’s little CPGs can do to affect consumer buying decisions. This truth manifests itself through displays featuring brightly colored packaging, attention-grabbing fonts, addictive puzzle games, and more.

Retailers can create competition between name brands, generic brands, and private-label brands in several ways:

  1. Promotions and Discounts — Retailers can offer promotions and discounts to drive sales of specific brands, thus influencing consumer preferences and creating competition between brands. For example, a retailer may offer a discount on a name-brand CPG to drive sales and compete against the generic or private-label equivalent.
  2. Shelf Placement — Retailers have control over the physical placement of products in their stores, and they can use this to influence consumer purchasing decisions. Products that are placed at eye level, for example, are more likely to be purchased than those that are placed on lower shelves. Retailers can use this tactic to give preference to certain brands, either promoting name brands over generic or private-label alternatives or vice versa.
  3. In-Store Advertising — Retailers can use in-store advertising to promote specific brands, creating competition between brands and influencing consumer purchasing decisions. For example, a retailer may choose to advertise a name brand CPG prominently in-store, while not promoting the generic or private-label alternative.
  4. Private-Label Brands — Retailers can use their own private-label brands to compete against name brands and generic alternatives. Private-label brands are often priced lower than name brands, and they can be used to attract cost-conscious consumers and increase store loyalty.

It’s important to have healthy competition between name-brand CPGs, generic brands, and private-label brands to deliver choices to consumers. Private labels are a good example of how CPGs and retailers work together to provide products that meet the demands of all consumers, while still benefiting both parties.

Aldi private label cereal brands

Aldi, the retailer, has partnered with General Mills to manufacture private-label brands to reach a very specific customer segment. Private labels can be sold for less than brand-name products to appeal to cost-conscious consumers. A Fruit Loops brand loyalist may think that knockoff Toucan Sam is an abomination, but other customers are indifferent to the branding and specific taste profile.

NFTs could enhance the collaboration between brands and retailers by allowing more flexibility and experimentation. Perhaps the brand wants to introduce cost-conscious consumers to its premium products. Instead of purchasing in-store displays or redesigning the packaging, NFTs could deliver benefits or perks that make the premium option more valuable to the cost-conscious consumer

NFTs can also offer an additional lever for CPGs to affect consumer behaviors at the point of purchase and beyond. Bigger brands can tap into their digital IP or launch unique experiences to shape consumer behavior with or without the retailer’s participation or approval. NFTs could offer more control back to CPGs, and rebalance retail partnerships that have gone awry.

In conclusion

NFTs can offer more efficient marketing solutions to benefit CPGs, retailers, and the end-consumer. Overall, the wide distribution, strong consumer loyalty, and brand recognition of CPGs make them well-suited for offering NFTs to consumers. CPGs and retailers already deploy attractive packaging, pricing discounts, and promotions to persuade consumers into purchasing their products. The industry is also well-versed in delivering innovative promotions and marketing activations across large consumer segments. If you add on the fact that CPGs are products that must be purchased and replenished over the entire lifecycle of a customer, then you’ve got the perfect environment for an effective NFT strategy.

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Brandon Rowlett is a Product Marketing Manager at Gigantik. Through technology solutions and strategic consulting, Gigantik helps brands create meaningful web3 engagements that deliver shared value between them and their customers.

Follow Brandon Rowlett

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MediaRadar “CPG Advertisers Are in for Steady Spending in 2023” MediaRadar.com Jan. 5, 2023
Sensor Tower “CPG Ad Spend in the U.S. Reaches $4.3 Billion in 2022 To Date.” sensortower.com Oct. 2022
Zippia. “The 10 Largest Cereal Brands In The United States” Zippia.com. Aug. 24, 2022
Marketing Dive “Lucky Charms joins mobile gaming craze with AR gem hunt” marketingdive.com. Oct. 6, 2022

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