The Changing Landscape of Consumer Packaged Goods
Learn about the major trends, biggest investments, and key players in Consumer Packaged Goods, courtesy of CB Insights
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Below is a transcript of our webinar, "The Changing Landscape of Consumer Packaged Goods," led by Research Analyst, Nikhil Krishnan
QUESTION & ANSWER
Are you seeing CPG companies investing in internet of things startups?
So like I first showed before with the Business Social Graphs, most big corporates are investing much more in direct-to-brands or in distribution. So there's a lot less investment in the Internet of Things space specifically.
Are these trends also happening in emerging markets?
This data was definitely more focused on trends that are happening in the US, though these trends definitely apply in other markets. CPG markets outside the US are so different and complex in their own way that we can have an entire webinar just dedicated to that. But that being said, some of the interesting trends are how companies are appealing to a more mobile-focused generation. So ecommerce companies are going mobile-only and CPG brands having to adapt to a much smaller screen real estate. There's also an emerging middle class which spends more in food and groceries and how to target and segment those customers and solve their pain points. There's also a whole issue of brand perception. So in lot of emerging markets, people in upper class buy Western products as a show of status. So brand perception and customer segmentation again is a huge focus.
How can CPG corporates use new sets of data and what are some startups that are working on CPG data?
So some of the data sets that might be interesting to CPG corporates could be companies like Estimote or Swirl Networks which analyze customer foot traffic and behavior in-store. I talked about some companies that use location data to better understand customer behavior, but there are also companies like Second Measure which recently came out of Y-Combinator that analyzes consumer purchases from credit card transactions. We've also done a lot of research on the Industrial Internet of Things, which includes companies that are getting data from different points in the supply chain. So you can find that research on our blog. We've also done a webinar on that. But those are just some of the data sources that will probably be interesting to CPG companies.
Are new marketing solutions forcing CPG companies to spend more or less on advertising?
Ad marketing expenditure is different for all these companies. Some of them were increasing, some of them are staying stagnant, PNG actually decreased their ad spend. I'd say that at least for the near future, we're still transitioning between physical ads and the web. That means that companies are probably going to have to mount campaigns both in the physical world and also the web. That could increase expenditure in the short term, but in the long term we might have more granular data on consumers and we can better target them that way, especially at the points of sale. They might be able to curb expenditure in the long run and make it more efficient.
What are the impact of bots on CPG categories?
Bots seems to be the cool new thing in tech right now, but how bots actually play out is still sort of up in the air. But one thing CPG companies should think about is how bots are going to interact with customers. For example right now bots are entirely input based. I have to tell a bot everything and the bot carries it out. But in the future, a bot might ping me asking me if I need to restock on snacks. Knowing what data is going into the bot that fuels decision making and sort of what bot interactions look like are definitely things to keep in mind for the future.
Are companies setting up CVC units as a means of generating returning for strategy and how are they assessing company performance?
In general, it looks like CVC is in the CPG space are investing as a means of distributing more of their products, better understanding their customers, or finding CPG brands that could be potential acquisitions in the future. How they choose to assess company performance most likely differs from company to company. In most of the interviews that I've read, people who are starting these CVC funds at CPG corporates are more focused on being strategic investors of the company so that there's a mutually beneficial relationship. I think it's probably more rare in the space to see someone invest money and then take a back seat.
This webinar dives into some of the trends that are changing the consumer packaged goods (CPG) industry, how some of the key players are approaching this space, and things in the near future that could reshape CPG. We'll start with a look at the different industry trends in CPG and how both small and large players are reacting to them. First, it's important to outline exactly what we mean by CPG just so that we're clear. We define CPG as personal care products, cleaning supplies, pet care products, baby products, beverages, canned and frozen foods, snacks, candies, and dairy products. To break down the analysis, we're first going to start with some of the general funding and exit trends happening with companies in private markets. Then we'll take a look at how some of the larger corporates are involved with CPG startups, followed by what some of their trends are that have led to the explosion of small CPG companies. We'll talk a bit about changes in marketing which obviously play a huge role in consumer goods and how that's changing in part because ecommerce and product distribution is changing, which we'll also talk about. Then we’ll will wrap up by outlining the value of direct to consumer products and some questions.
Funding trends, active geographies, and top investors
To break down the analysis, we're first going to start with some of the general funding and exit trends that are happening with companies in private markets. Let's start by talking about CPG in private markets. This data from the CB Insights database shows you that funding trends to CPG companies have picked up significantly since 2011. More than $3.3 billion in equity financing was invested in 2015 across 400 deals. So that's the second year in a row where deal activity has hit 400. And while there has been a dip in funding in 2016, deals have remained relatively the same.
Where corporates are investing and partnering
When you look at a quarterly view, there's been relatively stable deal flow since Q1 of 2015. However, funding did drop below $500 million in Q1 '16, with very few large deals occurring in the quarter. In the quarters leading up to it, we saw multiple financings more than $70 million a piece into Dollar Shave Club, Suja Life, and The Honest Company, but we only saw a handful of deals above 10 million this quarter.
Next up, let's talk about geography: similar to tech, California has done by far the most deals in the private CPG companies.
Out of the most well-funded, still-private companies (below, left), Agropur Cooperative, Harry's, and The Honest Company round up the top three. Out of the 10 companies on this list, 5 are involved in the beverage base, and 7 of the 10 companies have raised over $100 million.
Exits (below, right) have gone up since 2011, which saw less than 50 acquisitions compared to the more than 160 that happened in 2015. 2016 has so far seen a slowdown but it could easily pick up through the rest of the year.
Corporates played a major role when it comes to the CPG landscape. While they are the most active in acquisitions, we'll take a look at some of the other ways that they operate in this space. While corporates are active acquirers, they're actually barely active when it comes to private company investment, and they were actually involved in less than 5% of CPG financings between 2011 and 2014.
And even though 2014 and 2015 and the first quarter of 2016 have seen an uptick, a part of it is because other types of non-CPG corporates like Google Ventures and Comcast have started investing in the space.
We used the CB Insights Business Social Graph to take a look at where some of the biggest CPG corporations are active in private markets. The majority of brand names are involved in the acquisitions of smaller brands. Of these corporates, 60% of acquisitions happened in the food and beverage space, while nearly a quarter of it was in personal care products. When it comes to equity investments, about 25% of
Companies are creating entirely new distribution channels for CPG
deal share from these corporates went to early-stage startups which we define as Seed and Series A, while mid-stage startups took about 23% of deals which we define as B and C. And late stage startups, which we call companies that are past Series D received 17% of deals.
On the other hand, it's not always friendly. So sometimes startups, if they're competing directly with the larger corporates, can also find themselves in the crosshairs of lawsuits too.
While other corporates are picking up their activities with CPG startups, Unilever has actually been involved in private markets for a while. Here’s a quick case study on them using CB Insights data. Their corporate venture arm has been around since 2002 and has done 20 deals since 2011 alone. Prior to 2012, the company was more focused on heart sciences, chemistry, and healthcare investments, but recently the company has focused more in investing in
So what are some of the factors that are leading to this growth? Aside from general manufacturing and supply chain improvements, some more recent developments that are startup-specific are the rise of CPG-focused accelerators which give small brands access to mentors, manufacturers, and networking relationships to get their brand in front of people.
undercut their competition, while others use it to capture more from the margins. And this development in direct to consumer has made this space more attractive for investors.
The parent corporation, Unilever itself, is more focused on acquisitions of products within a focus. The six acquisitions that the company has made in the last few years has helped to expand their product offerings in certain areas, such as the acquisition of Grom and Talent into the gelato space, and they also have made four acquisitions into the skin cream space. So when the company wants to move into an area, acquisitions of private companies are one way that it does that. What's interesting about Unilever is that while the parent company deals in more mature brands and the venture arm invests in growing companies, they've also recently launched Unilever Foundry as they move downstream to help provide resources to people that have ideas. Unilever is making it clear that it's interested in the smaller companies and they've positioned to be available at every stage of the company's lifecycle from idea to fully matured.
And even though those were some isolated examples with larger players, you can actually benchmark CPG expenditure into R&D compared to other industries. So while consumer isn't the absolute worst, it's still well below other industries that spend 3% and higher of their revenue in Research and Development and even as high as 13% in some cases.
And when we took a look at Pepsi's R&D spend over time, we see that in the last three years, they have actually upped their spend into R&D. But it's still a small expenditure compared to marketing and advertising.
Other CPG corporates like Unilever have had relatively flat expenditure in internal R&D and a generally wider gap between marketing and R&D. PNG is the largest advertising spender in the world with more than $8 billion a year in expenditure compared to $2 billion in internal R&D. And that's on about $76 billion in sales.
Coke has invested in several private companies across the spectrum including a renewable chemistry company, Avantium, which focuses on creating sustainable products through bio-based materials, a CPG company focused in Nigeria, and also a satellite company focused on providing internet throughout the world, which is One Web. And so these are just a couple of different examples that CPG corporates are taking with different strategies when it comes to private companies. Some do it to expand offerings into new demographics, some do it to bolster their R&D, and some do it as
moonshot bets. Private markets are starting to become a focus for these corporates as they look towards innovation as a way to bolster sales, especially as some of their other products might be slowing down. So Mehmood Khan, PepsiCo's chief science officer outlines the benefits that the company has already seen by investing more in innovation.
Some notable private market financings that we’ll look at here show the different strategies that CPG corporates can take when it comes to interacting with private companies. So L'Oreal acquired ColoRight into its research division with the company claiming a new scientific patent pending way to improve care coloring and coloring cosmetics. L'Oreal also acquired Urban Decay which is a cosmetics brand that has a really strong web presence, but also has a foothold in a socially conscious demographic. A big part of Urban Decay's brand is not testing its products on animals. ConAgra Foods bought a controlling stake in a Chinese potato processing company as it expands more into the area, and
But our buying behavior is changing and that's turned some of the old marketing truths upside down. A recent study by Bain found that among CPG companies that they work with, lowering the number of product offerings actually increased revenue by removing organizational complexity, focusing more energy and resources into product winners, and removing choice paralysis and confusion from shoppers.
What has caused the CPG startup explosion?
bit questionable in the eyes of some consumers and organizations. But that really just goes to show you that people are really focused on this and they care and it's one of Honest Company's main differentiators. Regardless, the company did $170 million in sales in 2014, and sells to both direct to consumers through their website, but also through a network of retailers like Target, Costco, and Whole Foods. The company is currently valued at $1.7 billion and is exploring M&A options or an IPO. A big factor of Honest's success was how smart and successful their marketing campaigns were as purchasing behavior shifted. So I'm going to talk a little bit about how marketing is changing for CPG companies.
Before marketing was very loosely targeted and strategies were much more dependent on physical store purchases. I took this snippet from a 1994 issue of the Harvard Business Review which talks about using line extensions as a low-cost and low-risk way to hit more customer segments and increase their control over limited shelf space. You've probably noticed this when you go to a supermarket and there are 50 different kinds
But one of the companies that I particularly want to focus on and has had some significant success is the Honest Company. For those of you that don't know it was started by Jessica Alba and Christopher Gavigan and it focuses on products that are family-safe and made with natural ingredients, things like cleaning products and diapers.
That's taking advantage of one of the trends we talked about earlier that people are willing to pay for, especially new mothers. The company is actually in the midst of a few lawsuits about chemicals in their formula which are a
Looking at how CPG marketing has changed along new channels
opportunities by appealing to specific ethnic demographics. So instead of using a one-size-fits-all approach, some smaller companies focus on the needs of a specific ethnicity and develop great brands around that base.
Also, many CPG brands are joining crowdfunding platforms like CircleUp or Indiegogo to more easily secure initial financing but also to gauge consumer demand. Targeted advertising through online mediums lets brands find consumers easier and then they also don't necessarily need the retail networks the same way that they did before. But also retailers now have higher odds of giving shelf space of craft goods because many of them appeal to consumers with a higher likelihood to spend more on niche tastes.
And as I mentioned before, health is becoming a bigger focus for consumers. But it's not just health in the sense of fitness, people also care more about the ingredients in their goods. People are willing to pay more for natural products and they focus on things like the number of preservatives in food than whether it's processed. And it's trends like this that push Kraft to change its iconic mac and cheese recipe to include less preservatives and replace them with more natural ingredients. Some startups see
Craft brands continue to increase; beer is one area that's seen this trend clearly. There were more than 2,500 registered craft breweries in 2014, compared to less than 500 in 2006. That means way more six-pack brands to choose from when at the grocery store nowadays. In fact, there actually just more choices for your goods in general. The rise of craft products has seen more companies develop and focus on their individual products, which are unbundling large corporate brands by creating direct competitors. We searched through the CB Insights' database and found a list of startups that are attacking different products under the larger PNG umbrella and that list continues to grow every day.
Those are some of the interesting shifts in consumer tastes and some of the opportunities that might exist for new CPG brands, which a lot of well-capitalized startups are taking advantage of and retailers are excited to sell. A few successful startups, like Juice Beauty and Fresh Pet, have banked on the organic trend. Dollar Shave Club makes it as convenient as possible to get razors by mailing it to your door. Walkering company has focused products for people with color.
A big reason for that is because Unilever recognizes that small CPG businesses are on the rise and so they are able to position themselves well as consumer taste changes. Small- and medium-sized CPG businesses are growing and they're taking market share away from large businesses who have seen a slowdown in sales growth. That's resulted in approximately $18 billion in sales shifting from larger to smaller players since 2009 according to BCG. On top of that, more new products than ever are being created in consumer goods, both in the food and drink market,
but also particularly in the non-food category as well.
companies that increase the reach of their products or introduce new data streams to help them target and segment customers. There are also companies like Bliss which focus on location data to make mobile ads better.
CPG Funding & Exit Trends In Private Markets
Several corporates that recently announced their own corporate venture arms like General Mills, Campbells, and 7/11. John Haugen, who manages the fund at General Mills, recognizes that some of the smaller brands are able to compete against the advantages that legacy CPG companies have tended to have. And that's thanks a lot to new tools, especially in the distribution area.
CPG BRANDS ALSO PARTNER WITH STARTUPS
reasons plus Birchbox's success, have caused an uptick in activity in the subscription commerce space since 2011 though it has seen some rocky recent quarters.
Subscriptions boxes are interesting because they have a predictable revenue source, they also have predictable demand which makes it easier to anticipate inventory needs. They skip retail networks entirely and go straight to consumers, and they have generally stickier customers since the boxes are typically a more niche interest and the customer doesn't need to decide every single time if they're going to be buying a good like they would in retail. Box companies like Bark Box, Umba box, and Foodzie all have publicly reported retention rates above 85%. And those
The last distribution area that we'll talk about are concierge services, which are virtual assistants or humans which do shopping on your behalf. Postmates is one of the bigger players in this category, having raised more than $137 million from some brand-name investors and apparently they're seeking $150 million more. These concierge services are important because they separate the buyer from the end consumer. And therefore who is actually making the purchasing decisions is different and who they should be marketing to is different. Not only are you not actually viewing
Another more nascent field in the CPG distribution is home automation. Jibo is a personal robot for the connected home; it's raised more than $55 million from institutional investors after a very successful Indiegogo campaign where it raised more than $3 million. The reason why these home automation bots are important is because soon they'll become a point of sale for your goods in your home. You can already order an Uber through Amazon's Alexa using voice. They actually recently announced that you can order flowers now too. But in the future, you might also say, "Jibo, please order me more detergent." So how the brand is
And that's especially the case in CPG, which has seen particularly more year over year e-commerce growth, above 40% compared to overall ecommerce which is just over 30%. Within CPG, laundry and detergent has seen the most e-commerce growth since last year, followed by toothpaste and snack bars.
Running parallel with CPG's growing success in ecommerce platforms, the number of private ecommerce companies which distribute consumer packaged goods has increased significantly and they raised more than $13 billion in 2015, particularly in non-US markets like China and India. But ecommerce is just one distribution point among many that CPG products will need to address in the future. This market map shows different potential places where CPG products could be sold, and I've populated it with companies by doing some keyword searches in our database. The next few slides dive into a few companies and spaces that are particularly interesting.
Subscription ecommerce are becoming quite popular, with Birchbox leading the way with its $10 a month box and offers different samples of cosmetics and personal care products. The company did about $170 million in sales, and about 50% of customers ended up buying a full-sized version of one of the samples in the box. The company has a focus on strong content marketing with millions of followers on their social media accounts that they actively engaged with. And now the company has expanded to men's boxes and they have their own brick and mortar stores.
Right now what people care about the most is a recommendation of a product from someone they know. And more and more people are finding different online resources as influential on their buying habits. Things like online content, reviewers, and rating systems. Because of that there's a huge content marketing push by many CPG brands who see online content not only as a good way to get in front of consumers closer to points of sale at their homes.
So like Adam Rothenberg from Box Group says, the new distribution models are taking advantage of the inefficiencies in the grocery space. And that's why they want to invest in strong brands. So Box Group has made a few investments in CPG companies including Lola, Aloha, and Harry's. Box Group isn't the only VC invested in the space. When you look at the number of VCs who've made at least one CPG investment each year, you can see that since 2011, the number of unique VC investors into the space has gone up considerably, reaching a peak of 88 in 2014, though it did slow down in 2015.
There have been other changes happening when it comes to CPG marketing. Many of the underlying reasons that those shifts are occurring are because of the growing role of e-commerce. And in general product distribution is changing a lot and it will change more in the future. It's important to note that ecommerce is still a relatively small part of the market with just over 7% of total retail sales but that number continues to grow.
And these corporates aren't just investing in CPG companies. They're also doing partnerships with different startups. Some of them are doing it as marketing plays, like Coke and Spotify. Others are more focused on increasing distribution channels like the partnership with on-demand alcohol company Drizly. PNG recently partnered with CPG crowdfunding platform CircleUp to find some of the more up-and-coming brands. And sometimes the startups actually create entire new products, like L'Oreal which partnered with a startup that created a UV Sensing Patch.
The sharing aspect of online content makes it a much lower customer acquisition cost, especially for smaller brands. People are more likely to trust things that their friends recommend, and a share is one type of endorsement. Video content has also seen more online reviewers and personalities. So people like Michelle Phan who have made a name for themselves by reviewing makeup and personal care products and showing how they're used. She's leveraged the trust that people have in her reviews to start her own cosmetics subscription box company, Ipsy.
of toothpastes under the same brand under one shelf.
So instead of marketing appealing to sensory stimuli, people now instead have shifted their focus to things like ratings, comparison shopping, and how the products are actually used. Because consumer evaluation has changed, marketing also has to change. It's not just about how we market, but who we market to. There's more on this in the next section, but the purchaser may not be the same end consumer anymore thanks to chat box, connoisseur services, and home automation. So we have to understand who we should be marketing to and also what they care about.
This is pretty much exactly what happens to me when I see 50 brands of toothpaste in the grocery store. And even though marketing strategy is shifting in physical retail stores, a big part of the shift is targeting consumers when they're online since more and more people are interacting on the web every single day. Digital ad sales are projected to be over $8 billion just from CPG alone in the US in 2019.
How we interact and choose to buy things has completely changed as we've moved online. Instead of shopping as a tactile experience where we touch, smell, and examine the goods that we buy, people are now more accustomed to doing research.
E-Commerce And Product Distribution
What advantages do companies have going direct-to-consumer?
The Value of Direct-To-Consumer
One of the reasons direct to consumer has flourished is because not only do we have more data today to segment customers into relevant demographics for our product, but there are more ways for them to frictionlessly buy products through their current behavior as they browse on web and mobile. Direct-to-consumer has several benefits: first off, they have full control over their brand's perception and image, plus it's easier to push other products under the same brand, especially if the customer is buying directly from the product website. Direct-to-consumer also avoids the retail networks and relationships that smaller brands may not necessarily have. Reducing the number of points between the customer and the product also smooths out the supply chain as a whole.
One of the big benefits of interacting directly with consumers is that you can develop better relationships with your customers and then you get feedback directly from them. Finally, from a margins perspective, direct-to-consumer allows you to capture more value from your brand.
Below is slide from a Charles River Ventures deck, which cites a Goldman graph, shows how removing the nodes from your distribution chain actually allows direct-to-consumer companies to capture more value from their brands. Some companies might use this to price down their products and
They utilize a subscription model which has the benefits of recurring revenue and sticky customers, as discussed earlier, but one of the things that is really interesting about Harry's is that they actually bought the factory in Germany to produce their blades and became more vertically integrated in their business and avoided dependencies on third parties. And finally they focused on a limited number of products in their core competencies instead of inundating customers with a lot of line extensions. All in all, Harry's is a great example of how a company is building its own new CPG brand by taking advantage of changing trends in the space.
Harry's is actually a great example of a company with VC investors that's built a strong new CPG brand by taking advantage of a lot of the shifts that we've talked about and is a good mini case study to wrap up with. The company started as a direct-to-consumer business and targeted a specific consumer: men who spend money on shaving products. It did this with targeted marketing, like a campaign they did at the end of November which they gave away their products and made special edition ones. They now still invest heavily in content marketing, including having their own men's lifestyle magazine.
This area has become particularly hot since Facebook recently announced Chatbox and virtual assistants for businesses in their recent update conference. Other companies like Google have also launched their own grocery delivery service. But when it comes to public companies, Amazon is the most aggressive about positioning itself to control as many points in CPG distribution as possible. Currently, the company is not only investing in home automation as discussed before with Alexa or the Echo, but the company has already released Dash buttons for instant ordering, on-demand delivery services, and the company is creating its own line of in-house products too. Right now Amazon
controls a small amount of grocery sales compared to some of the other more legacy retail players. However, grocery sales at those stores have slowed significantly, with some staying stagnant in their sales and others have actually seen negative growth. Actually, Fairway just filed for Chapter 11 bankruptcy.
Amazon already significantly controls more than a fifth of the online food and beverage market, and it's positioned well to sell other goods as ecommerce becomes more prevalent like we talked about a little bit before. Understanding Amazon's position in the future of ecommerce, many companies are taking advantage of the new avenues that the company is providing. So for example with the automatic Dash buttons discussed previously, some of the biggest companies in CPG are on a large portion of a total Dash buttons are sold. That's because brands understand that there's a lot of value to be had from targeting consumers in their own homes. We'll end by discussing the benefits of direct-to-consumer products and why more small companies are using this approach.
decided, the amount, etc, are still up in the air. But this is most likely going to become an important area for CPG brands to keep a watch for. So in this case, would you have to negotiate with say Amazon or Jibo to negotiate the placement of your brand? There are lots of questions that would have to be asked in the future.
More than 350 CPG deals have happened in California since 2011. That was more than the next three states combined. And only five states saw more than 50 deals into CPG and all of them were some of the more common major markets.
The top investors in the private CPG companies (below) are a mix of VCs, private equity investors, and food accelerators which have become a newer and important fixture in the market. One of the accelerators, Excel Foods, topped the list with investments into over 15 unique CPG companies; Highland Capital Partners was the next most active.
Corporate Involvement In CPG Startups
What's interesting to note is that most of the companies that are acquired didn't raise equity financing prior to acquisition. So even though there's a lot of fanfare that comes with large financings and exits, most of the M&A that happens are actually with much smaller companies that don't necessarily raise beforehand.
And driving that M&A trend are the corporates who are scooping up smaller craft brands to expand their offerings and reach new target audiences. The most active acquirer is the recently merged Anheuser-Busch who bought 15 private companies since 2011, almost all of them are smaller craft breweries. DS Services of America, a
beverage distributor which focuses on water, had acquired nearly 10 different smaller water brands since 2011. And while the majority of acquirers in the list are CPG companies, GBX Capital which is a holding company rounded up the bottom of the list.
they also acquired Blakes which is a frozen meals company that focuses more on the natural and organic meals. And that lets ConAgra make more pushes into the health-conscious demographic which we'll cover later.
While CPG will never dedicate as high of a percentage as say a tech company, it's still a pretty sharp disparity. And that's especially the case when you look at absolute numbers where consumer contributes to about 3% in overall dollars spent in research across the board, which is pretty tiny compared to how large the industry is.
This drives home the point that CPG corporates still have a long way to go in R&D expenditure, but many of them are actually seeing smaller private companies as a way to be more innovative.
The Rise Of Startups And Consumer Taste
CPG Marketing Shifts
That's why understanding these online influencer networks are really important. Platforms like Pinterest allow users to discover others who have similar tastes as them. Then they begin to trust the brands that their influencer networks suggest. Pinterest is one of the more popular platforms where influencers are created. There are lots of early-stage companies working across a variety of platforms like Vine, Snapchat, Instagram, and YouTube, which help connect brands with influencers that target demographics that they're interested in. We used CB Insights' data to highlight some of the early-stage companies in this space that have high mosaic scores, which is our algorithm for assessing company health.
the products that you're buying, but how product decisions are made fall onto the person that's actually doing the shopping. So for example, I can give the grocery list to an outsourced assistant and allow them full leeway on the brands that they choose, or the shopper will ask me a list of clarification questions about what I want and what things I'm looking for in the products. So at that point the product marketing and the brand perception actually falls into the hands of how the shopper is relaying information to me.