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This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C According to Indeed data, Sponsored jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply.
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Bath and body Work Stock heads down the drain the new CEO bluntly spelled out why and Big Food in the crosshairs of GLP1s and fickle consumer tastes, we ask hello Nova's chief growth officer to break down how data helps the sector navigate it all for Friday, November 21, it's Blue Markets Daily and I'm Ann Berry. More market details to come. But first for a peek inside how much AI adoption is working outside Big Tech? This latest earnings season has been a useful window. Market watchers have been eagerly tuning into corporate earnings calls to hear exactly what executives have to say about specific, measurable ways that investments in AI tools are paying off well. A Goldman Sachs research report out last week noted that different sectors have talked about this with widely different frequencies. While 3/4 of communications companies and 2/3 of financials mentioned how they're using AI for productivity in their earnings calls, only 40ish percent of consumer staples did so. So we wanted to dig in and talk to a consumer sector leader who is putting hard numbers around AI. And to do that we welcome to the show. Cherise Hughes, Chief Growth Officer of Kellanova. The food giant hit around $13 billion in sales for 2024, owns many brands that are in pantries all across American households, including Pringles, Pop Tarts, Kellogg's, Rice Krispies Treats, RX Bars, Eggo Special K and more. I feel like someone literally just opened up the cupboards in my kitchen. Well, Sharee has been behind Kelanova's push into using advanced analytics for greater consumer insights and into applying AI to marketing tasks that have historically been left exclusively to humans. Now there's a lot going on in the food sector. Mars is in the midst of buying New York Stock Exchange listed Kellanova. That's in a $36 billion acquisition agreed last year, just one of several food megadeals announced in an 18 month long wave of consolidation. The explosion of GLP1s on a different note, has profoundly impacted food preferences, and a general focus on wellness has changed how food makers try to reach consumers and persuade them of the trustworthiness their brands. So Stick with us for all this and more with Charisse Hughes. But first, Brew Markets Daily is sponsored by Public. Let's throw it over to our producer John TGIF. Are you excited? It's Friday.
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Absolutely. Friday. You mean 401k day? I used to think of it as simply payday, but now that I'm older I send some of that money straight into my retirement account.
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Well, for a limited time, public users can earn an uncapped 1% match on all IRA transfers and rollovers on top of a 1% match in your annual IRA contributions. That's a 1% match. Plus, with a self directed IRA on public users can access thousands of stocks, ETFs and bonds to align their investing style with their retirement goals. Users can even trade options in their ira, a feature many brokerages don't offer to get started at public.com brewmarkets that's public.com BrewMarkets paid for by Public Investing.
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Full disclosures in podcast Description and now.
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My conversation with Charisse Hughes. We're thrilled to have joining brewmarkets today. Shareese Ford Hughes, Senior Vice President and Chief Growth Officer of of Kellanova Charisse, thank you for joining from Miami and I just want to set the stage for our listeners and give a little bit of context for how you and I met which was in 2021 and at the time you were the Global Chief Marketing Officer for Kellogg Company, well known food brand and I remember when you got promoted to a title that I found really, really fascinating, which was Chief Brand and Advanced Analytics Officer and I rem at the time. Remember this was before AI became the word du jour. I remember thinking at the time wow, this is a consumer products business that seems to get it and seems to get data and is willing to say to a senior talent, go focus on this. Talk to us about how you have been using advanced analytics and data now for some time in the world of branding which many of us associate with more sort of creative, perhaps non scientific context.
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Yeah, so I joined the Kellogg Company from Pandora Jewelry and I was there. You know it's highly retail oriented business but also franchise driven. The business also was just diversifying into E commerce if you can believe that. But the the crux of the matter however is is just that the company had so much data and insights and I really wanted to mine that data to help drive a business transformation, a consumer transformation because they had lost some relevance and ultimately broader impact in terms of performance. And so joining the Kellogg Company I thought to myself wow, this space of food is Very different and challenging because, you know, there's almost like a silo between retailers and brands in terms of understanding business. And so I wanted to bring that level of robustness data and analytic, analytical rigor, as well as insight and thinking to brand.
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I'd love to understand Shareese, bring some specificity to our audience. And here's, here's why I'm going to ask you to tell us a couple of stories bringing that data to life. Because AI is thrown around at the moment in such broad terms. And one of the things that you're hearing in the market, which we actually talked about on the show this week, is you're starting to see investors saying, show me the hard data that proves that AI is worthwhile. So give us one or two specific stories of how AI changed an action or changed a plan for a brand that you led.
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Yeah, I mean, how about I start by telling you that we have been on this journey of trying to bring data to our creative and so what do we do? I don't know if you've ever seen this pie chart which essentially says that 50% of effectiveness, marketing effectiveness is driven by creative. So then how can I as a marketer get sharper on my creative? You know, if you think about the number of people who touch creative, that, that already is highly instinctual and also subjective. So I wanted to get sharper, closer. So I partnered with a company called VidMob who essentially has helped us score our creative. And what does that mean? That means looking at our creative and making sure not just looking at our creative, but leveraging our creat creative within an AI platform and helping us understand all of the different metrics and different dimensions that are critical to land in platform and be successful. So we've done something like 20,000 different creative decisions that we have now been able to automate the length of the creative the, you know, do I need to show a person eating how important is the human connection? How important is. And at what stage do I need to feature the product? What is the call to action? All these different dimensions that we've now leveraged to tell a very, very compelling story, which is that number one, our AI can score creative within an 83% accuracy. Number two, it's boosting our profit ROI by 11%. Number three, which I think is probably the most compelling and everybody's seeking, as we think about AI, is that what used to take 100 hours and many, many marketers is now taking 10. So it is driving that efficiency, it's driving that effectiveness. Now One thing I do want to say here is this is about creative and I love creative and I think it's the first place that marketers start. But there is also a way to bring some data and insight. But this is with not without human judgment. Because at the end of the day what's worrying I think for many of us is how do we ensure that we don't become a sea of sameness and that our brands and our brands differentiation continues to remain at the forefront.
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How are you using data and analytics Shareese, when it comes to working with your retail partners? Because if you look at the grocery stores, at least outside in it's notoriously difficult to try to get great data on different SKUs and the distribution channels.
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One of the things that was most exciting to me when I joined the Kellogg then now Kelanova company is that we had a wealth of first party data and we don't have first party data for the sake of just having data. But we're leveraging that data to understand our consumers and so that we can have a much more robust and meaningful conversation with our retailers. One of the things that we have spent quite a bit of time doing is starting to engage in this space of clean rooms and clean rooms, if you're not familiar, is a privacy safe environment where we can bring together different types of data from different, you know, sources and get a more robust and more complete picture of our consumer. And so that's what we've done and we've done that leveraging circana data, which is checkout purchase data. So that gets us really sharp in understanding what our consumers are buying and from where then we can go back to our retailers. One of the things we recently, one of the use cases that we recently just deployed was in the UK looking at how we re engage our, our Special K consumers. You know, yes, Special K, it's a great cereal brand I grew up on. It still is a great cereal. Yeah, it's a great cereal brand, it's still beloved. But what we've been facing and what we see consumers facing is their, their, their value challenged, they're seeking better value and that value is not just about price. So we've got to understand who are those value seeking consumers and who are those consumers that are seeing, seeking that benefit and that consumer benefit and is willing to pay more. And so with Special K in the UK we have a great example of how we segmented that audience and really serving up the messaging in a way that would resonate with those consumers differently and then leveraging that to drive business roi. And we've seen some pretty impressive results there as well. 9% lifts with our price sensitive consumers and a 36% lift with those who are less price sensitive and willing to trade up because they're seeking that better for you benefit.
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We'll take a quick break. More of my conversation with Charisse Hughes in a moment. And now a word from our sponsor, Surf Air Mobility. Surf Air Mobility is looking to drive one of the next big shifts in air travel.
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Learn more about Surfair's mission and technology at surfair.com Morning Brew that's surfair.com Morning.
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Brew this is a paid advertisement for Surf Air Mobility, Inc.
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And now back to my conversation with Charisse Hughes. So let me ask you about a different source of data shareese and how its collection might be impacted. You know, when I think about direct to consumer, I think about E Commerce and some of the partners that you've worked with over the years who are distributing, whether it's Pringles, Very Delicious, one of my favorite chip brands or others. Some stores now are moving both physical stores with an E Commerce presence and D&D2C brands are now moving to partner with the likes of ChatGPT. And someone like me can go onto the app and say I want to buy a cereal or I want to buy Special K and I can literally do a one click checkout through ChatGPT to do that. Talk to me about what that means in terms of where my purchasing data is going to sit. Are you going to lose insight into my spending patterns because OpenAI is going to take it instead?
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There is a high likelihood that I would lose transparency, but I think what this clean room environment allows and assuming that These browsers, these agentic browsers are interested, or agentic commerce companies are interested in engaging with brands, which I would assume that they will figure out a monetization model. They will want to provide more information and insight into how people are shopping. I think it's going to be to their advantage ultimately. But it does mean that data becomes a lot more expensive and understanding our consumers becomes even more challenging and fragmented. Frankly, you know, one of the things I was doing just a bit more research on, you know, where are they sourcing data from and where are they sourcing the insights to even recommend these, these, you know, our products? And it's from so many different sources, whether it be the Reddits of the world or, you know, sites, e commerce sites, brand pages to some extent, but also through expert media. So it just means that brands have to be in many more places. It means that we will, it will be a much more fragmented consumer experience.
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So what does that mean for brand loyalty? Does my loyalty turn now to ChatGPT and I become loyal to its curation capabilities or do I remain loyal to the product that I'm being sold through it?
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Consumers will be loyal to brands. I actually was just reading about the Edelman Trust barometer which said that consumers have 60% greater faith in brands than government and media media. So you have to think that chat, GPT and some of these other browsers are viewed as media. There was recently a CNBC poll that said there's less excitement about AI than there is about the Internet. And so around a 72 to 31% gap between those two which says that there's a trust factor there. So I think that the expectation and where people will be leaning more towards brands because that's who they trust today. And I think that will only be strengthened and enriched.
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Let's talk about a different form of curator Shareese, the opposite of the AI driven one and that is the influencer and social media as a way of providing a gateway to try out different brands.
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Yeah, I think that this is one that is really required for brands to continue to connect with their consumers. I mean, creators are, they aren't just influencers, they are, I think like cultural translators. So they're really helping to bridge this connection and community that is so important. One of the things that we did with Celeste Barber, which I think was just brilliant and I really believe in this method as a way to engage with, with people, is this idea of myth busting. And you know, cereal has had sort of a storied development cycle.
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Right.
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It's been around for many, many years and there's, it's gone in and out of favor based upon certain perceptions and myths about whether it's, you know, too sugary or is, you know, does it have the right set of nutrients, is it right for your children, et cetera, et cetera. And so what we wanted to do was bring this idea of humor but also myth bus in a way that's truly credible. And the way to do that is through an influencer. So it, you know, it's, it's not just leaning on any influencer, it's someone who is all about keeping it real. And that's what Celeste Barber brings to the table.
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Talk about, if you don't mind, how you're thinking about where the food industry goes from here given the rise of GLP1s and the next wave coming, which is, you know, dosage and pills, for.
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Example, 100% and it's a holistic well being wave. So users are going to be craving not just nutrient dense foods that can help to address their muscle mass loss, but also their lack of protein and fiber potentially, but also still craving that indulgent experience. And so for us, I think about it as we have got to be innovating across the spectrum. So you know, whether it be protecting our distribution for sure have being really smart about our promotions but having the right foods and foods that are full of versus absent. I mean we spent the last, you know, what would you say, 10 years thinking about how it can be gluten free, sugar free and all of these frees. Well now consumers and folks are looking for foods that are coming to the table with a wealth of nutrients, protein, et cetera, et cetera. So we've got to be innovating across the spectrum to make sure that we're in the conversation. We've got to have clean labels and really leaning into those better for you credentials.
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I want to ask you one last, it's quite a cheeky question, but this is I think so in a way in your wheelhouse. I'd love to get your perspective on brands that seem to, despite having so much information in front of them, have just gotten it wrong. And I'll give you an example. Cracker Barrel, you know that logo change that caused uproar and so give me your perspective on that. Here is a restaurant chain that should have had real insight right into their consumers. How did they get that so wrong in that moment? Or did they? Was it just a case that a small but very loud part of their consumer base overrode what may have been a decision that anyone objectively would have made if they were a marketing lead.
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I think it's a little bit of both. I think that if you look at the execution of the Evolved logo, I think it became almost like nothing. Like I didn't perceive anything when I looked at the new logo, which is just a barrel. So they walk completely away from what was the identity of what the brand was. And I think that that move was too significant and too fast. And if I were them, and of course, hindsight is 20 20, because I have a lot of respect and love for brand marketers who are driving an evolution of a business. But you could do things in a staged approach. There's an evolution and a revolution. I felt like that was a revolution and I think it happened too quickly. But again, I would also say that any marketer in this environment that we're in this highly polarized space where you have bots who are amplifying negative content and feeding that polarization, you can get into, you know, anybody can get into this sort of very difficult space and have to make some unfortunate choices that may set their business back.
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Thank you for taking time out of your day to join us. Appreciate it.
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Thank you so much, Ann.
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Well, huge thanks to Charisse Hughes for joining me. It's 4pm on the east Coast. There's the closing bell. The market's wrapping up for the day. John, did anything catch your eye this week?
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Right. There were so many big names in retail reporting earnings this week, we didn't get a chance yet to talk about Bath and Body Works ticker bbwi. The company reported a drop in sales and earnings and slashed its forecast for the year. The stock dropped 25% and is down over 50% this year. And what struck me was the bluntness of the company's CEO, Daniel Heath, saying our organization has become slow and inefficient, that the brand has not attracted a younger consumer. And quote, we have had a very tough start to the holiday now. And Heath was previously an exec at Nike, which we covered, has recently relaunched a branded store on Amazon. Well, Bath and Body Works itself will soon launch on Amazon, estimating that currently 60 to 80 million of its company's products are sold via the gray market on Amazon. So he sees launching there as, quote, an incredible sales opportunity.
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Well, that's it. It has been a sprint through this earnings season. We've really got the bulk of it behind us now. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Ann Berry and produced by John Crateau, Tarka, Bella Teef and Emily Millar technical direction by Lonnie Fiskis and Uchenawa Ogu and the president of Morning Brew Inc. Is Devin Emery.
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Wake up on Monday with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. We'll see you back here then. Have a great weekend. We'll be here Monday afternoon, same time, same place.
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