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    The Scoop from CAGNY, with Russ Dieringer, Founder and CEO of Stratably

    The annual CAGNY event in New York, is a rich opportunity to get the pulse of CPG CEOs and CFOs, and identify business trends and areas of focus that will impact the industry up until the next CAGNY. We are delighted to welcome Russ Dieringer, Founder and CEO of Stratably, back on the podcast to summarize the shifts we can expect from some of the largest companies on earth, and the takeaways for you.


    Our transcripts are generated by AI. Please excuse any typos and if you have any specific questions please email info@digitalshelfinstitute.org.

    Peter Crosby (00:00):

    Welcome to Unpacking the Digital Shelf where we explore brand manufacturing in the digital age.


    Hey everyone. Peter Crosby here from The Digital Shelf Institute. The annual CAGNY event in New York is a rich opportunity to get the pulse of CPG CEOs and CFOs and identify business trends and areas of focus that will impact the industry right up until the next CAGNY, Lauren Livak Gilbert and I are delighted to welcome back Russ Dieringer, founder of and CEO O of ly, back on the podcast to summarize the shifts we can expect from some of the largest companies on earth. And the takeaways for you. Russ, welcome back to the DSI podcast. We are so excited to dig in with you on CAGNY.

    Russ Dieringer (00:54):

    Well, thanks for being here, Peter. It's great to be back another year at CAGNY more to talk about.

    Peter Crosby (01:00):

    Yeah, I just wonder, for those of us that are not familiar with the CAGNY Conference, it's a conference where all of the large CPG companies, executives come together with investors, they share their corporate strategy and vision, and they often unveil a lot of things that we just haven't heard before. And you're always our, well always now, this is the second time you've been our spy on the inside, in addition, of course, to the fantastic newsletter that you do at Strata. So we wanted to mine it again for our podcast audience, which we really, really appreciate. So let's dig in. Where do you want to start?

    Russ Dieringer (01:39):

    Yeah, sure. So you let off with 30 different CPG companies go and they share their short and long-term strategies within the investment community. It's not a conference that is specifically around digital, it's just around their overall business. But we look at it through a lens of how is digital playing a role in these strategies inside of these organizations. So we try to pull out what's interesting from a digital e-commerce media perspective, and it also gives us sort of a sense of the state of the overall CPG world, which is by and large, I think healthy enough certainly for CPG companies In 2024, a big focus is on trying to drive volume growth. They've the last couple of years been able to put through a lot of price less able to do that today. So they're very focused on volume growth. Growth rates are again, okay, maybe decelerating a little bit compared to last year, but still healthy enough and more in line with sort of historical norms On the digital side, one of the themes that stood out to us was just how much e-commerce is contributing to overall growth.


    Now, not every company shared insights that allowed us to do this analysis, but there were a handful that provided some interesting information on their digital penetration, including General Mills Church and Dwight Colgate and ELF Beauty, and I'll spare you the details of the analysis, but online for these businesses is growing 12 times faster or has grown 12 times faster than their store channel. And so when you do the math on that type of outperformance, more than half of their incremental dollar growth over just the last couple of years has come from e-commerce. A lot of times companies lose sight of that because they oftentimes look at digital penetration rates. Like our business, 8% is coming from online or 12% is coming from online or something of that nature, but they don't think about where the incremental growth is coming from. So we encourage brands to do that type of analysis. At CAGNY, it was interesting to hear brands share more information around their e-commerce growth and just how much it's contributing to their overall business.

    Peter Crosby (04:05):

    Yeah. You've put a lot of thought into that, changing that narrative and shifting people's viewpoints to where the incremental dollars are coming from. So were you a little smug sitting in the room just hearing that you're right.

    Russ Dieringer (04:24):

    Well, the reason why we keep kind of pressing on that is because we see the reaction when we do presentations inside of companies like this. And it is very shocking oftentimes to senior leadership teams to see the data presented around incremental growth. And in our analysis of CAGNY, it was backwards looking what the company's performance was. We've done a lot of forecasting work to talk about, okay, over the next five years where growth is going to come from and when they see, oh, more than 50% of growth is for Walmart as an example, for a retailer is going to come from walmart.com, they're kind of shocked because Walmart's business, it's low double digits in terms of penetration. How is that possible? Well, penetration is increasing by, let's say a hundred basis points a year towards online. And that translates to significant dollar growth even though e-commerce penetration rates at a base level are still relatively low.


    So we encourage every consumer brand to do that analysis, forward looking analysis and say, alright, how much growth do we think for our market? And then how is that growth going to arrive? How much is it going to arrive from stores? How much is it going to arrive from online? And I would be willing to bet nine times out of 10, the majority of that growth is going to come from online channels. And so therefore, are you investing accordingly into that growth opportunity? And that's what makes it so powerful for senior leaders because it starts to change their mental model of the world and how they need to be thinking about investing.

    Lauren Livak Gilbert (06:03):

    I'm sure that changes organizational structures too. I'm sure they didn't talk about this at CAGNY, but the first thing that I think of is how many people are you hiring to be able to support this? What technology do you have? I don't think they mentioned anything about resourcing or did anybody talk about expanding teams or functions? Yeah,

    Russ Dieringer (06:19):

    They didn't talk too much about incremental resources either from a personnel standpoint. I mean, they do certainly talk a lot about their technology stack, at least at a high level. And no surprise they're investing fairly aggressively there. Sometimes it can be hard to parse out those investments, how they're applied to brick and mortar channels to e-commerce channels. But no, they didn't get into too much detail around their resourcing for e-commerce. We think companies still have a long way, long ways to go, whether it's around really getting the organization to a good spot on product detail, page content, and supporting that initiative. Retail media continues to be an area that they're adding people to. They didn't really talk about that at the conference, but that's just another parts of our research teams have grown. E-commerce teams have grown meaningfully at a lot of these organizations, but I still think they're suboptimal point

    Lauren Livak Gilbert (07:23):

    Quite small for what's needed to be done. Yes,

    Russ Dieringer (07:25):

    Small for where the business is at today and what's how much it's grown, and then small for where it's going to be. So the rapid hiring in this space, it should continue because the consumer, which I like to remind people, this is what it's about. The consumer continues to spend more of their wallet online, and that's a factual thing. And you can look at pretty much any data set that you want to look at, that's what's happening. And so as the consumer shifts their behavior, the retailers, the brands need to evolve with that. And one of those ways they evolve with that is the investments they make.

    Lauren Livak Gilbert (08:00):

    I feel like that's a great mic drop moment.

    Russ Dieringer (08:04):

    Should we wrap it up? That's

    Lauren Livak Gilbert (08:06):

    All right. That's it, Ru. No, let's dive into the second theme. So this one I'm actually really excited about the role digital is playing in product innovation. I think this is something that has been talked about a little bit as e-commerce has grown, especially pulling in ratings and review data to product innovation or making our testing products online and then figuring out how to launch them in store. So tell us about this one. I'm excited about this theme.

    Russ Dieringer (08:32):

    Yeah, one of the fun things with reviewing this conference is you don't really know what some of the themes are going to pop out. And this is a surprising one. I hadn't anticipated necessarily this standing out as much as it did, but the big takeaway from the conference around this was that it felt like companies were starting to flip the script when it comes to go to with product innovation and the role that online plays. And what I mean by that is historically companies would design products for the brick and mortar channel, packaging everything and put that stuff into stores and list. And then as an aside list this stuff online regardless of whether product content was available and whether it looked good, whether or not the economics of the product would do well online because of the unique economics online, et cetera. So digital was sort of an afterthought.


    At the CAG conference this year, we saw several examples where actually digital is the first place that companies are launching, and only then are they going to expand these items inside of stores. So a couple of examples to share with you. Kraft Heinz had a great one. So they repackaged their ketchup and ranch mixed product into ketchup and seemingly ranch based on the cultural phenomena. That was Taylor Swift and Travis Kelsey where she's at a chief's game, she's eating chicken tenders with apparently ketchup and seemingly ranch. So they jumped all over that and how do they get that product to market? They put it on walmart.com first and their own D two C site, and they did that in 15 days. So they had a good comment about moving at the speed of culture and online uniquely enabled that speed of culture. If you had to distribute that stuff acRuss all the store bases and mean, we're talking many more weeks, maybe more than a month, something like that, culture moves on much faster than that, so they couldn't take advantage of it. So that was one, a great example of a company using the unique advantage of online when it comes to speed for a product innovation.


    Another example, even more sort of like brass tax practical was with church and Dwight, they shared several different innovation opportunities that they are coming to market with this year in order to drive growth. And on these product innovations, they talked about how the product was already in market on Amazon and they were looking at the sales trajectory, they were looking at the ratings and reviews, and then they had on their slides, this is in Amazon, this is the data on Amazon, and it's like launching nationally in 2024. So at some point. So a lot of implications to that. From a brand side, it's brands are putting this stuff on Amazon first in order to see how it resonates or doesn't resonate with the consumer. The Amazon consumer is more or less if we're talking about the US market, the American consumer, they have enormous reach.


    It's pretty much everyone, great representation of how the product is going to do acRuss the entire market. They want to see how it performs in the cases they shared. Those products are performing great, of course they're going to take that information and go to merchants and say, look at how great this product is doing. That should improve their overall negotiation position with those retailers because they have a ton of confidence that this product is going to do really well. That other thing that's interesting with it is what does this do from a long-term digital growth perspective? If companies increasingly launch products online first, which we think we're just starting to see examples of this, more and more consumers are going to get habituated to understand, Hey, where do I go to find the newest products? It's not inside of a store, it's online. And so I think this is another sort of feather in the cap, if you will, for online. And it's going to be another certainly difficult to measure, but growth contributor to online's continued rise in the retail market.

    Peter Crosby (12:51):

    And how do you think retailers feel about this trend overall? I imagine the big box ones probably are fine with it. They have marketplaces, they can be the experimental platforms, but I don't know, what do you think is going on in the mind of retailers who still in store is their bread and butter?

    Russ Dieringer (13:10):

    I think they're probably nervous. I mean, I think Walmart's happy that they've got a marketplace that has pretty low barriers to entry at this point. So brands can do interesting stuff and get product to market if you don't have that low barrier to entry. And you're very reliant on your store business to drive your online business, which we've talked about that on this podcast before. What do we mean by e-commerce concept? So if your stores are more or less driving all of your online business and the products aren't inside your store, you can't sell that stuff online. I'd be very nervous. And I think it was interesting to see over the course of the conference, different retailers were mentioned, but the most common retailer mentioned in a variety of constructs was Amazon. And so if you're an omnichannel retailer, you're an Amazon competitor, this should make you I think very nervous. It's like, wait a minute, launch products with Amazon first. It's like, well, yeah, we could do it more quickly. We get enormous scale quickly. We know what that product launch looks like and that's what brands are doing. So I think it would be concerning if I were running a omnichannel retailer to see some of the commentary out of this conference.

    Peter Crosby (14:30):

    And are you seeing inside the brands that are now creating digital first products, then a lot of the issues that we had of the brick and mortar silo versus online where products were being designed and brought to market without thinking of online, are you finding that when it reaches the brick and mortar phase from online, is the silo going the other way now or is the fact that it's been prepared for online make it automatically okay, in store? Do you have a sense of that?

    Russ Dieringer (15:07):

    I think it's getting better overall. And I think there's less of an issue around going online to in store. I don't think a company's ever going to forget. I'll use a ridiculous example. I don't think a company's ever going to short sell the importance of what their packaging looks like inside of a store, right? So when you go from digital to store, that's going to be taken care of. But when you were going from store to digital, did you have the right a good number of images for your PDP? Oftentimes not. So I don't necessarily see the same issue just in reverse. I think it's gotten better overall acRuss the board. And these are just digital. There are CBG companies of course, that because of the unique economics, they have to do super big packs online and that sort of thing. With these examples or the specific tagging commentary, I'm not really talking about that. It's more products that can do well in both channels. They're choosing to put that on digital first and then expanding into stores from there.

    Lauren Livak Gilbert (16:15):

    I wonder how that will change the entire new product development process, right, because I feel like every company has a very standard, we launch X number of products every year. It starts in January or starts in May. And so we only do innovations at this time. It's a very structured process because there's so many steps and so many functions that are involved. So I'm wondering, as launching online becomes easier for brands and more of a benefit overall, how the whole new product development process will change and if they're going to be able to spit out many more products and even if that makes sense

    Russ Dieringer (16:52):

    Or, and just shorten the timeframe. And I would say, not to throw another sort of variable into the mix, but one of the Clorox, the companies at the conference shared, I thought sort of a shocking example. I'm surprised I didn't get picked up in the media more, but around putting AI to work in product innovation. I mean, I'm going to sell this a little short, they'd be able to talk better about it. But essentially using AI enabled models to do all this social listening. And I guess bath bombs are a trending thing, a big thing. And so they take it apply to their category, they create toilet bombs, which is a little bit different, but I guess similar enough

    Lauren Livak Gilbert (17:33):

    To clean the toilet though, to clean

    Russ Dieringer (17:35):

    It. Exactly. A little bit different. And so I'm

    Peter Crosby (17:37):

    So glad we cla. I

    Lauren Livak Gilbert (17:38):

    Saw your face, Peter. I was like, no, no, no, no, no, no.

    Russ Dieringer (17:41):

    So in any case, yes, thank you for that. We'll cut that hopefully. But anyways,

    Peter Crosby (17:47):

    No, that's good stuff.

    Russ Dieringer (17:49):

    Yeah, well, it'll be the blooper, but in any case, they said, so CLO said that using that process cut down on their innovation cycle time by 50%. And what stood out to me is like they're getting this product into market. They were putting it into market this month. So it's not like a theoretical thing. We're deploying ai. It's like we did this, we created this product, it generated a new idea that we hadn't thought of that seemed on trend, and we're putting this into market. And it took us only four months to do that in total, which was a dramatic reduction in overall time. So you think about that example, you think about using online to launch more quickly, maybe it does allow brands to either iterate more or just iterate more quickly and save resources that way. I'm not sure which way that it'll go.

    Peter Crosby (18:42):

    Fascinating. One of the other big areas that I would imagine was of interest is what's happening in media and the media that brands use. Can you tell us what's changing over on the media side? For a lot of these brands,

    Russ Dieringer (19:00):

    More digital, which go figure, but definitely the arc is very clear that brands continue to put more and more into digital. If it was 50% last year for a brand, it's 55% this year or 60%. Now, that being said, I will comment that brands were very interested in sharing their Super Bowl ad. This conference comes right after the Super Bowl. Brands were very excited to share their Super Bowl ad even more so than talk about retail media. I felt like retail media caught a little bit, got kind of the short end of the stick a little bit this year almost unexpectedly. There just was not a lot discussed specifically around retail media. But digital media more broadly a big theme, improving media efficiency, a major theme, mostly because advertising and promotional line items on CBGs p and l are growing. And so they're spending more and more on media.


    And investors are naturally asking, well, are you generating a good return on that or not? And the answer is as they shift to digital channels, they're continuing to improve the ROI in the variety of ways that they measure. So that was a big theme within that. And related to that measurement analytics broadly, analytics specifically around retailers was another theme that came up. And I was kind of almost surprised by how much discussion there was. Colgate as an example. They were talking about a clean room capability that they developed with a specialty retailer. As far as I'm aware, that's the first time anyone has been talking about clean rooms at CAGNY. I mean maybe even with earnings calls and that sort of thing, Amazon Marketing Cloud fits into that. I'm not saying that's what Colgate was talking about, but just bringing up clean rooms and this type of setting is notable and it demonstrates how much complexity is happening around measurement.


    And I would say the competitive edge opportunity that is presenting itself to brands that really invest into measurement, particularly around media. And I would also go a step deeper and say retail media. We know retailers need retail media and analytics business lines in order to have a strong e-commerce and a viable e-commerce business. And so they're investing more and more into analytics capabilities and they're more or less saying, Hey brands, you got to buy this stuff from us. And so brands really need to invest in this area. Measurement and analytics specific to retailers, I equate it to 10 years ago, we were telling brands you need to invest in your e-commerce team. Five years ago we were saying, brands, you really need to build out this retail media capability in 2024. And really the last year or two, Hey, you really should invest in measurement as an example.


    You really need to dive in and dig in to Amazon Marketing Cloud. Very powerful tool, fewer using it. This is only going to grow and become more complex and more capable. You won't be able to overbuild in this area. So we're really trying to get brands' conviction to go in here and really make this a capability. Walmart illuminate, not the same thing as a MC, not the same capability, but equally important to doing business with Walmart. And that's an analytics offering there. So measurement came up in a variety of ways at CAGNY, and we think that this is really going to be an area probably brought up even more next year as brands try to demonstrate to Wall Street like this is we're building in this area. This is the type of benefit that we're getting and we think it's a differentiator for us.

    Peter Crosby (23:02):

    Do you know where those organizations are living on the org chart? Do a lot of them already have deep analytics around other areas of the business and now they're adding media to that? Or is it a separate thing or what do you see?

    Russ Dieringer (23:16):

    Yeah, I think they already have it and just applied in different areas. I mean, Colgate invited their chief analytics and insights officer, Diana Shield house to the actual meeting. I think they were the only one that invited that particular role, although Hershey's talked about the new role that they created a chief analytics officer, and he was coming from Amazon. I believe General Mills talked a little bit about their analytics division. So I think they all have it. I think what in varying degrees, but I think the change, at least through our lens of how brands do business with these retailers, it's the opportunity that retailers are now presenting brands with data, which has only become more powerful because of the privacy issues around data that has really hamstrung meta and others, the value of that data has grown. The accessibility in a sense has grown as well.


    They're creating data products for brands to buy and to dig into. It's challenging to dig into it. If you try to go use a MC in a sophisticated way, it's very challenging if you try to go use Luminate. I mean, brand sell is like, this is esoteric. It's very difficult to get the data out of this tool and to which I say yes, and that's a great opportunity. Therein lies competitive, differentiate. If it's hard, it's hard for everyone. And so you don't necessarily even want it to be easy. You want to have the right people and capabilities to unlock that data in whatever difficult version it is because that's going to give you a chance to do something new and different and notable and maybe share it at a conference with investors down the line.

    Lauren Livak Gilbert (25:08):

    And Peter, I'm glad you asked that question because I was thinking if I put my old brand hat on, most CPG companies have an analytics team. We had an analytics team, and I remember when I started in my e-commerce role, I didn't really talk to them and we were trying to figure out analytics for the PDP, and then we were looking at ratings and reviews and all this stuff. And as e-commerce got a lot more visibility, the analytics team reached out to me and we ended up having a conversation. And I think the big shift that I'm seeing from my past experience in working with brands is those analytics teams usually sit in sales and they'd usually look at audience and high level category insights to say, if you are in the baby category, here's performing really well, or here are how our products are performing.


    But what I always struggled with was I needed s skew level data. And that's where I think the shift of the analytics teams are going to say, we're not looking more broadly to help inform sales and RD, we need to get down to the specific SKU level to understand how each SKU is performing at each retailer. And that was kind of the double click where they were like, oh, that's where you need to be able to do your job better. And that's what I'm seeing with clean rooms. And I know Peter, we had someone from ours on to talk about clean rooms there. They're getting down to that skew level information that can have an effect on an e-commerce team who's building out a PDP or running a retail media ad. And that's what I'm seeing is the difference for us. I don't know if you've seen that kind of shift between how analytics teams are looking at the data, but that's what I've seen recently with brands.

    Russ Dieringer (26:44):

    Yeah, very much. And the data with a MC is just at such a granular level that was previously unavailable. I mean, Amazon is consciously trying to give brands in a privacy safe way, in a way that can't be gamed more and more data and more and more analytics. And that's at an nascent level. And what's interesting with A MC is that it's not just getting insights on the shopper, but it's enabling you to turn that around and create audiences and target those audiences with very specific ad campaigns at different parts of the funnel and that sort of thing. So it's insights and it's actionability, and that's really the power that I think a MC brings. And to your point, it's a little bit of a different way of thinking for analytics teams. That's why I'm almost struggling to articulate to folks in the industry. It's like analytics has been around for a while, but it's analytics like retailer analytics is s skew level

    Lauren Livak Gilbert (27:53):

    Retailer analytics. Yeah,

    Russ Dieringer (27:54):

    Skew level. Yeah, there you go. SKU level retailer analytics. That is this capability that you really need to be building out because you're going to, and it seems extra right now, but it's not going to be extra. Just like e-commerce felt extra a few years ago. It feels a little extra right now. Like illuminate. It's like, yeah, but if you want to have influence with your merchant, which is very influential with the store business, you're going to need Luminate data. So if you are on the fence about it, if you have the ability to buy it, I hate, I'm not paid by Walmart to say this, we're an independent objective research firm. You probably just should buy it inevitable, more or less. So that's I think how the industry is changing a little bit. But I bet it's buy it unless you have somebody that can actually put it to work.


    We see that all the time with data, different data, yeah. It's like, well, we bought the data and we can't have anyone to look at. It's like, that's an important part, but brands tell us that's part of the issue with Luminate in particular is not only do we have to make that big investment in getting access to it, but then it's like when we got to have people to look at it. And so it's a meaningful investment for brands, and so you don't want to take it lightly, but I think that's the direction that we're going

    Lauren Livak Gilbert (29:20):

    Call to action. Go talk to your analytics team. Definitely. Yeah. Yeah, for sure. So we talked about AI a little bit, Russ, but we can't not go through a whole podcast without really diving into it. So what was happening at the conference around ai, you told us a story already. Where else did it show up?

    Russ Dieringer (29:36):

    So I thought that was the Clorox example was the most sort of practical and just very real example. But in other areas where it showed up a lot of, well, I shouldn't say a lot, but Mondelez as an example and a few others, talked about using AI for content development and personalization and both coming up with content ideas, but then also actually executing it. I do feel like you hear in the industry pretty commonly now, companies using AI for content creation. So that came to life during the conference as another area in addition to the product development example with Clorox that we talked about earlier.

    Peter Crosby (30:29):

    Well, Russ, when this podcast airs, it will be the day that probably most of the attendees are on the plane flying to Nashville for the digital shelf summit. Alright, so this will be their little taste before they get to see you on the main stage on Wednesday. So we're super excited. One as always, grateful for you coming on the podcast and sharing your information, but I've seen the slides for your session and it's going to be a epic. Oh

    Russ Dieringer (31:04):

    My god. Set high expectations,


    But no. Well, thank you for inviting me to come. We are, I do have some of the themes that we talked about in this podcast, in that presentation, so hopefully make it come to life for people. But like we were talking about before we got started on podcasts, this conference is going to be a smash hit in the spring in Nashville. You've got such a good group of speakers, you've got hundreds of people come into this thing. And I'm so excited. I think the industry needs some new conferences and some new energy brought to in-person gatherings. And so I can't wait to go. My colleague Claire McBride's going and doing a session too, and we're pumped. We can't wait to see you all down there and everyone else.

    Peter Crosby (31:51):

    Yeah, I know. We're over 600 customer brand attendees and then you add on all of our partners and speakers and it's just going to be, especially because we haven't done it since before Covid, I'm just giddy to have all these conversations. So thank you again as a subscriber to your newsletter, I have to encourage everyone who's listening who's interested in the CPG space and in e-commerce and trying to figure it all out. Go subscribe. It's a tremendous thing that hits your inbox, I dunno, a couple times a week. What's your pay? Yeah, a couple times a week.

    Russ Dieringer (32:37):

    Yes. Yeah. Two to three to four times a week. When you say busy over here, we say never a dull moment. There's so much to try to cover. But no, thank you for that. I appreciate

    Peter Crosby (32:46):

    It. But it's such meaningful practical research combined with calls to action that I just feel like probably a lot of your readers and clients feel like you're a member of their team towards their success. So thank you again and we can't wait to see you in Nashville.

    Russ Dieringer (33:11):

    Well, thank you, Peter. Thank you Lauren so much for inviting me on the podcast. And yeah, can't wait to see you all about we a week and a half or so

    Lauren Livak Gilbert (33:18):

    Can we to see you in real life. Thanks so much,

    Russ Dieringer (33:20):

    Ru. Yeah, they'll figure it out over Zoom.

    Peter Crosby (33:22):


    Russ Dieringer (33:23):

    Thanks Russ. Thank you.

    Peter Crosby (33:26):

    Thanks again to Russ for his brain and everything. Swing on over to digital shelf institute.org and become a member to keep this kind of knowledge coming your way. Thanks for being part of our community.