CPG companies including Pure Leaf tea, Kellogg and Chobani are opening urban pop-up stores to test new products and showcase existing ones in unusual ways, according to The Wall Street Journal.
Several manufacturers feature unique treats made with their products at locations in New York. The teas featured at the Pure Leaf Tea House in SoHo include Hot Popcorn Tea and Iced Mint Mojito. At the Kellogg’s Cafe in Times Square, consumers can chow down on Corn Pops paired with lemon zest. At the Chobani Cafe in Tribeca, there are Greek yogurt-inspired salad dressings and drinks to enjoy.
The companies say they are not investing in these projects for sales in the traditional sense, but instead hope to create buzz for their brands. “In terms of return on investment, that’s not how we’re measuring it,” Pure Leaf’s Senior Marketing Director Laraine Miller told The Wall Street Journal.
As more and more consumers drift from the center of the grocery store to its perimeter, CPG brands are taking different opportunities to make a play for consumer interest. In recent years, CPG growth has slowed due to factors including deflation, the rise of e-commerce and the fragmentation of retail channels.
This marketing strategy seems to serve as a tactic to appeal to the sought-after millennial demographic. With much of brands' marketing recently driven by social media, CPG stores and specialty food and drinks have the potential to become Instagram and Snapchat-ready posts.
The Pure Leaf Tea House features a long bar with lots of greenery where the store's "mixologist" prepares specialty tea. The venue provides a sensory experience with soft lighting, comfortable seating and decor to tie in with the history of tea. To add to the buzz surrounding the store, celebrity chef Marcus Samuelsson served as mixologist earlier this week.
It remains to be seen whether these pop-up stores will be able to generate enough buzz to serve as effective sources of revenue or publicity for struggling CPG companies. As more and more customers look for healthy options, CPG companies could work to attract more customers through new products with nutritious ingredients, including plant-based proteins or added fruits and vegetables. New product launches are expensive, but their profit potential may be more cost effective than spending money on expensive retail locations in big cities.
However, this sort of strategy is more in Big Food's marketing playbook. Larger companies prefer to update existing products much more often than creating innovative ones. According to research from CircleUp, 61% of large CPGs' innovation goes toward making small changes to existing products, while 39% goes toward making new ones. These retail locations are taking advantage of recognizable products and putting them on display in ways slightly different than consumers may use them at home. In the food industry, some of the biggest CPGs spend up to six times more on marketing and advertising of older products than they do on innovation — as they may be doing paying rent in trendy big city storefronts.