The Good Egg

marketingmanagement

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ExPERT INSIGHTS

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Good egg Hampton Creek Foods is on a mission to banish the ageold chicken-and-egg question from consumers’ minds, working to position its plant-based egg substitutes as No. 1 in the egg category

By ChristiNe BirkNer | SeNior STaff WriTer

 cbirkner@ama.org

L

aunching a new product in a niche category certainly can afford you more freedom, but things can get complicated when your product also is competing against one of the most fundamental and oft-used products out there.

That’s the challenge that Hampton Creek Foods is facing. The San Franciscobased startup has developed a plant-based egg substitute, but rather than just competing against the other vegan and egg-based substitutes, the company is pitting its product against eggs, in general, hoping to attract herbivores, omnivores and cholesterol watchers alike.

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Hampton Creek founder Josh Tetrick launched his company to offer consumers a cruelty-free, sustainable and cheaper alternative to eggs.

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Hatching a Plan

Food marketing experts say that changing consumers’ egg-buying habits will be difficult, as low-cholesterol and cage-free eggs have many of the same properties as Hampton Creek’s products, but the company is banking on a marketing strategy focused on social media and storytelling to win over buyers. Hampton Creek, which grew from its founder’s passion for animal welfare issues, also is using a celebrity backer to get noticed: philanthropist extraordinaire Bill Gates.

Hampton Creek Foods was launched by Josh Tetrick, a social philanthropist, himself. After college, Tetrick worked with Learn to Live, a children’s educational program in Cape Town, South Africa. While there, he snuck into the World Economic Forum and was inspired by Hewlett-Packard’s work to help women in southern India start small businesses. “It was the first time that I had been exposed to the idea that business could solve a problem,” he says. “I started looking at the food system and the segment of animal agriculture that’s crying out for the most innovation is, I think, the egg industry.”

Seventy-nine billion eggs are laid worldwide each year and in the United States, 33% of those eggs end up as ingredients in food products, Tetrick says. There’s a $6 billion market for egg ingredients globally, according to Fast Company, and global demand for eggs is expected to increase from 14 million tons in 2000 to 38 million tons by 2030 as developing nations become wealthier, NPR reported.

Tetrick founded Hampton Creek in December 2011 to offer consumers an alternative to traditional eggs, the production practices for which have faced significant criticism from animal welfare activists and consumers of organic foodstuffs. “Our acknowledgement is that the food system, like energy and health care, is a broken system,” Tetrick says. While he didn’t conduct any formal marketing research, he started the company with the belief that consumers would be interested in a cruelty-free, sustainable and cheaper alternative to eggs. He reached out to a food science expert, Johan Boot, formerly a director of R&D at Unilever and now Hampton Creek’s vice president of R&D, to ensure that the idea was viable.

Next, Tetrick and Boot secured funding from Silicon Valley venture capital firms Khosla Ventures and the Founders Fund, which invested $3 million and $1 million, respectively, in Hampton Creek last year. Microsoft founder Bill Gates has publicly endorsed the company and included it in “The Future of Food,” a mini-documentary showcased on his website, the Gates Notes, that highlights companies that are revolutionizing food production.

Hampton Creek’s 23 employees include experts in the plant and food science and culinary industries, including Joshua Klein, senior scientist of protein research, who spent six years working to develop a gene therapy for HIV in a project funded by the Bill and Melinda Gates Foundation, and Jacqueline Fera, vice president of sales, who has more than 30 years of

Photos by Brooke Bryand

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“We don’t want to be a little bit better than the egg.

We want to be 10,000 times better. We want it to be 100% less expensive. We want it to last 10 times as long. We want to make it so far beyond an egg that you’d have to be drunk to use an egg.”

Josh Tetrick, Hampton Creek Foods experience in sales for Unilever and Heinz. The company’s director of culinary innovation, Chris Jones, was the executive chef at Moto restaurant in Chicago and a contestant on Bravo’s Top Chef reality cooking show.

That roster of talent speaks volumes about the company’s potential to succeed, says Geoff Lewis, principal at San Francisco-based Founders Fund, who led his firm’s investment in Hampton Creek. “One question we think about at Founders Fund on the culture front at startups is, ‘Why will the 20th person join this company?’ For the first few employees, the answer is easy. Those are leadership roles with significant equity.

For the latter employees, the company is somewhat de-risked, so it’s more like any other job. But for those employees in the middle, around the 20th, there is still a lot of risk but not necessarily a ton of financial upside, so the only reason to join is because of a fervent belief in the company’s mission. Hampton Creek Foods has a tremendously compelling mission and that’s translated into a culture as strong as we’ve seen at any early-stage startup we’ve invested in.”

Hampton Creek Foods’ competitor set is limited, at this point. Natural food companies including Milwaukie, Ore.-based Bob’s Red Mill and Seattle-based Ener-G Foods Inc. offer egg replacement powders, and PETA suggests using tofu, applesauce, potato starch, flax seed mixed with water, or baking powder and oil mixed with water as egg substitutes in baked goods.

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To set its products apart, Hampton Creek’s food scientists and biochemists test thousands of plants and proteins to find the right combination that will mimic the texture and flavor of eggs. Beyond Eggs, the company’s egg substitute powder, is made of legumes, grains, ground peas and starches, and is mixed with water for baking. “When a consumer eats a muffin with an egg in it or has mayonnaise with egg in it … their interest is to have a muffin that’s really moist, to have a cookie that binds and holds together. We can do some of those things via plants that are less expensive and more sustainable,” Tetrick says, and the formula for Beyond Eggs is constantly evolving. “Beyond Eggs works, but we never want it to be set,” he says. “We don’t want to be a little bit better than the egg. We want to be 10,000 times better. We want it to be 100% less expensive. We want it to last 10 times as long. We want to make it so far beyond an egg that you’d have to be drunk to use an egg.”

Spreading its Wings

While developing its product portfolio, the Hampton Creek team sketched out a marketing plan. In both its B-to-B and B-to-C messaging, the company touts Beyond Eggs and its mayo substitute, Just Mayo, as cheaper, disease-free, cholesterol-free and more sustainable alternatives to the real thing.

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Left: Jake, Hampton Creek’s mascot, often is featured on the company’s social media pages. Center: The company’s San Francisco headquarters is equal parts lab, product library and office space. Right: An inspirational quote is displayed prominently on Hampton Creek’s chalkboard wall.

On the B-to-B side, the company reaches out to food service companies and communicates Beyond Eggs’ value for use in salad dressings and sauces, with its lower cost as a central value proposition: The egg substitute costs 18% less than a carton of eggs, depending on the price of eggs in each market, the company says.

Hampton Creek also created fact sheets to help B-to-B clients communicate the products’ value propositions to four consumer types: The “Hipster Millennial,” men and women born between 1979 and 2001, whose main concerns are sustainability and price; the “Health Nanny,” middle-aged women (“For her, the value proposition is that there’s no cholesterol,” Tetrick says); “Ms. Vegan Pants” (“The value proposition is that it’s animal-free and it tastes like mayo from her childhood, before she was a vegan,” he says); and “The Regular Dude,” middle-aged men (“He just wants it to taste really good and be cheap”). Hampton Creek also uses these fact sheets as guidelines in its B-to-C marketing. Just Mayo, priced at $3.99 a jar, is available in Northern California Whole Foods stores, and Hampton Creek is aiming to have Beyond Eggs and Just Mayo for sale online by this fall.

The goal is to appeal to everyone who buys eggs, Tetrick says.

“We don’t ever want to come across as a vegan food company. … I want our stuff to be on the shelves at the Piggly Wiggly in Birmingham, Ala., not just sold to ‘Ms. Vegan Pants.’ ” “We think about how to differentiate ourselves from a Kraft or a Kellogg,” he says, “and the way we think about it is through telling stories. For example, there have been a lot of moms who contact us whose kids have egg allergies. There’s a deprivation and sadness in their e-mails, and then we’ll get pictures from them of their little kids smiling with our [packaging] sticker,” Tetrick says.

“We’re collecting stories from those moms, we’re collecting stories from people who are interested in the environmental impact of this, we’re collecting stories from people like my dad, who don’t care about the environment or egg allergies, or animal welfare, but they just want good, cheap food.”

Some experts are skeptical of this approach. Diane Holtaway, associate director of client services at the Rutgers Food Innovation Center at Rutgers, The State University of New Jersey, in Bridgeton, N.J., who has assisted food startups with branding and product development and worked on branding initiatives for Campbell Soup Co., says that Hampton Creek should stick to the vegan audience rather than trying to be everything to everyone.

“They should focus on vegan because there’s a strong audience for that. I’d hate to hang my hat on price. Eggs aren’t an expensive food. If I’m 50 years old and I’ve been buying eggs my entire life, what’s the value [of Beyond Eggs]?”

Adds Anita Nelson, president of IN Food Marketing, a Minneapolis-based food marketing agency whose clients include General Mills and Pillsbury: “They have to be really clear about their value proposition and what the key benefit is. There’s the sustainability aspect, the vegan aspect and the no-cholesterol aspect. They should do some marketing research up front and find out which is going to be the most compelling to consumers, where the bigger piece of the pie is, and lead with that message.”

Hampton Creek has invested in some research, but rather than putting the money or effort into copy testing at this stage, the company is seeking to get a sense of consumer preferences for product flavors and attributes through taste testing and focus groups at the University of California, Davis and other colleges in San Francisco, as well as at the San Francisco offices of Yelp. The participants sample Just Mayo and cookies and muffins made with Beyond Eggs, and offer suggestions for improvement.

The company also is working to build brand awareness through sampling programs. Visitors to Hampton Creek’s website are prompted to sign up for free samples of Beyond Eggs, and the company has mailed 5,000 samples so far, totaling a marketing investment of around $300 for the sampling effort, Tetrick says.

Sampling programs will be important for Beyond Eggs and Just Mayo to succeed in the marketplace, says Nancy Childs, professor of food marketing and Peck fellow at the Haub School

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Hampton Creek keeps a “mayo library,” storing prototypes of the company’s Just Mayo egg-free mayonnaise to see how long the product keeps.

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of Business at St. Joseph’s University in Philadelphia. “Taste is most important, no matter what the premise is, whether it’s the healthiest food or it’s vegan, or it’ll help you lose 20 pounds. It will be critical for them to give a lot of taste messages in their marketing. Products like this need a lot of taste affirmation because people don’t automatically expect them to taste good.”

Beyond attempting to spread the word that its products can pass muster with consumers’ palates, Hampton Creek is working to appeal to consumers’ interest in animal welfare and the environment by garnering media attention for the way that traditional eggs are produced and positioning its products as an altruistic alternative. In interviews and articles that have appeared on CNN Headline News and NPR’s All Things Considered, and in The New York Times, the Huffington Post, Fast Company, Bloomberg Businessweek, Reader’s Digest, Popular Science, Gawker and TechCrunch, Tetrick tells a version of this story: “About 1.8 trillion eggs are laid every single year around the world and 99% of them … are laid by hens in battery-caged facilities. These are places that, if most sane human beings walked in them, they’d want to vomit. The animal welfare issues are pretty horrible. Nine or 10 female birds live inside each cage on a space the size of an iPad for two years. They can barely flap their wings and they never get out. They’re fed all of this soy and corn that requires land and fertilizer, which requires oil, which is hyper-inefficient. … We take the animal out of the equation. We look at it and think, There’s got to be a better way to do this.”

To get media channels interested in telling this story, Hampton Creek runs a well-targeted press outreach program.

“We send targeted e-mails that are personal, that sound like the opposite of spam, to reporters. We’ll look at articles they’ve written in the past and reference an article they’ve written,” Tetrick says. “Inviting reporters here has been really good for us.

Also, setting the pitches within a broader context, like, ‘This is a story about the future of food,’ is helpful.”

The Bill Gates endorsement also has helped attract media attention, Tetrick says. “He’s interested in making sure the world is fed good, healthy, cheap proteins. It’s been huge for us, in driving media attention, and in being a ‘validator’ for companies we talk to.”

The Gates affiliation is touted on Hampton Creek’s social media pages, which play a prominent role in the company’s marketing strategy. Hampton Creek has nearly 120,000 likes on Facebook and more than 5,000 Twitter followers, and its pages include links to media articles, videos around the lab, and photos of employees at work and play (including a company salsa dancing lesson and Hampton Creek scientists hanging out in the park), as well as shots of Hampton Creek’s official mascot dog, Jake.

The company also monitors social media to find skeptics or detractors who might be good targets for more information or for product samples. For instance, when a Fast Company reporter posted a skeptical tweet about Beyond Eggs, Tetrick reached out to him and had him sample the product, which resulted in an article in Fast Company called “You Can’t Tell That This New, Cheap Egg Substitute is Made From Plants.”

Not the Lone Rooster

Hampton Creek might have a leg up on generic or massproduced eggs with its claim to fame on the sustainability front, but there are other, more accessible options on the market for sustainability-minded consumers, Holtaway says. “For people who don’t care about vegan, they’re going to go to their local farmer’s market and get their eggs. … [Beyond Eggs] is a very interesting, innovative product, but they have to keep their eyes on their competition.”

But Tetrick is confident that his quest to be “10,000 times better” than the real deal will ring true with consumers who are made aware of current egg production practices and have the chance to sample Hampton Creek’s plant-based alternative. “One of the top three reasons we’re going to win is that we’re telling compelling, emotional, authentic stories, stories about people who are using our product, stories that cross the bridge from being a typical food company into something different,” he says. “I don’t want people to buy this because they’re trying to avoid something.

I want people to buy it because they’re expressing something.

The more we can frame that in every channel in which we communicate, the more successful we’re going to be.” m

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