can food companies learn from Theranos?

Blood in the retail water

Hi there,

When you’re in sales, it’s a good idea to make sure your incentives are aligned with your prospect’s.

Along these lines, one idea that stood out to me from John Carreyou’s expose Bad Blood was how fraudulent blood-testing startup Theranos (once valued at $9B; now worthless) sold itself to grocery chains.

Theranos CEO Elizabeth Holmes knew that Albertson’s, Walgreens, and other retailers wanted to hop on the wellness trend. In a struggling brick-and-mortar retail environment, CEOs viewed wellness as a route to reach more engaged shoppers.

So Holmes offered to draw them a map.

By framing a partnership with Theranos as a “wellness play,” as Safeway CEO Steve Burd put it in a 2012 earnings call, Holmes convinced retailers to jump in without even testing Theranos’s tech.

This is a bad story.

Theranos lied — but, the success of its sales pitch shows how thirsty retailers are for health and wellness.

And, how this thirst can open new opportunities for CPG startups and corporates.

Seeking a win-win-win

CPG brands can trade their healthy halo to retailers in exchange for increased exposure.

Meanwhile, shoppers want to be healthier — and they want to broadcast their own healthy habits online.

Imagine General Mills’ Yoplait sponsoring wellness activities in Safeway stores. This could a) help Yoplait compete against healthy Chobani, b) give shoppers a chance to indulge in some #humblebrag health selfies, and c) help Safeway compete with Whole Foods and attract health-conscious shoppers.

Between the CPG brand, the retailer, and the shopper, we can imagine a win-win-win.

New channels

We see potential for the wellness trend to foster CPG/retail partnerships in:

Apparel — For example, apparel chain Urban Outfitters has been trying to expand its presence in wellness. Enter supplement startup Hum Nutrition, which gained access to UO shelf space and recently hosted a pop-up in UO stores.

Department stores’ urge to harness the wellness trend pushes them to promote startups like Grokker (a fitness app that partnered with Bloomingdale’s) and Casper (currently launching a wellness-focused pop-up with Nordstrom).

Hospitality — Hotels, airports, and even airlines are increasingly trying to become more premium by offering wellness services — and they’re helping startups like Peloton (which partnered with Westin) and frozen foods startup Luvo (partnered with Delta) reach new audiences along the way.

Offices — This week, WeWork’s announcement that it will no longer pay for meat in employees’ meals highlights how much food gets eaten while at work — and how many employers try to promote healthy habits.

Now, is there room for an Impossible Foods or Beyond Meat to fill WeWork’s corporate protein gap?

We previously covered here how workplaces are growing as sales channels. But as workplaces try to encourage their employees to lead healthy lives, wellness-focused food brands could gain even more traction.

Mental wellness apps — Mental wellness apps such as Calm and Headspace have racked up hundreds of millions of dollars in funding and tens of millions of app downloads. As mental wellness goes mainstream, these apps could become valuable marketing partners.

Leading meditation app Headspace already launched a relaxation-focused marketing campaign with Twinings tea, and the strategy could suit food, beverage, and skincare brands.

If you’re a food brand, how can you use retailers’ thirst for wellness to grow? And if you’re a retailer, consider which up-and-coming health and wellness brands might make good partners.

Let’s all win-win-win.

Stay hungry,

Zoe
@Zoe_Leavitt