Via ConvergEx's Nick Colas,
Note From Nick: In today’s note Sarah addresses the psychology of short-lived trends, the humble avocado, and the challenge of investing. If you have a set of Crocs in your closet, or went to prom in a leisure suit, or are waiting for headbands to come back, please read this note. Please…
Remember when pet rocks were “a thing”? What about lava lamps and mood rings? Bellbottoms and “leisure suits”? If you need something a little more recent to test your memory: how about MySpace and Furbies?
Feeling nostalgic (or more accurately, embarrassed) yet? Don’t be. Consumer research and psychological studies across the spectrum of sectors and disciplines tell us joining in on a fad is a natural and expected human behavior:
So-called “superfoods” – the topic of discussion today – are still on the rise after first gaining popularity in the mid-2000s (charts from Google Trends above). Unlike some fad diets or exercise trends, superfoods have gained some real traction that has lasting potential. 10 years ago, you weren’t likely to find kale or Greek yogurt in anyone’s fridge at home, much less chia seeds or quinoa in their cabinets. And yet there they are. What is it about the superfood fad that’s made it outlast trendy diets, weight loss supplements, and even Beanie Babies and bellbottoms?
At the most fundamental level, superfoods share a few key elements with successful fads like the iPod and Ugg boots. Good endorsement is one, of course, but even the best ad campaigns can’t prop up a failing product. Instead, there are a few key elements superfoods have that enable them to succeed, all of which we can attribute to learning more about long-term investment:
1. Simplicity. All of us have seen one version or another of the “get thin quick” diet, where you’re promised 3+ inches off your waistline within a month if you stick to the rules. The Atkins diet, the “Master Cleanse”, Nutrisystem, and weight loss pills are all iterations of this concept. Just eat no carbs – or no solid food, or only the food we give you – and the results are there. Notice something here? All of these trends also require quite a bit of effort on the part of the consumer: rules and exceptions and prohibitions must be observed. It’s no wonder many of them fade out after a while.
The message of a superfood, though, is perfectly simple: eating this is good for you. Nowhere on an avocado or a can of lentils will you see any phrase relating to a “superfood diet”, let alone that the product is a superfood at all. Moreover, superfoods are not exclusionary: choosing to buy a bag of pistachios alongside a bag of potato chips is not off limits. Nor does buying turmeric necessarily mean you’re obligated to buy chia seeds. Superfoods are independent. The same concept goes for the iPod and Ugg boots: they are utterly simple, non-chaotic, functional products. And that’s part of the reason they’re so successful.
2. Reach and affordability. Superfoods, unlike many fads gone by (remember the “Snuggie” blanket? Neither do I…), catch the entire population in their net: they are accessible at virtually any food market you walk into, regardless of whether it is a health/organic food store or not. Kids, adults, teens, you name it – all of them are the target market of a superfood.
And anyone can buy a superfood. Avocados range from $1-3, quinoa from $2-5, and nuts are usually about $3/lb. Consumers of virtually any income level are capable of buying superfoods at their local grocery store. They will probably buy them more than once. When we extrapolate this affordability concept to the iPod and Uggs, remember: “affordability” is in the eye of the consumer. $100-200 is the sweet spot for iPods and Uggs, but it’s doubtful any avocado would go for that much. Rather, consumers buy these products because the perceived benefits – in the case of superfoods, more vitamins, minerals, omega 3s, etc. – outweigh the costs.
3. Popularity. According to research from Jonah Berger and Gael Le Mens at Wharton, the quicker a fad is picked up the faster it is doomed to fail. To rework an old phrase, “the quicker they rise, the harder they fall”. Kids’ toy fads are probably the best retail example of one of these fads: sillybandz and webkinz only lasted about a year in the spotlight, according to Google trends search data. They rose quite quickly, as any parent could probably tell you, but (as the Berger and Le Mens research predicts) fell out of fashion just as fast.
The adoption speed of superfoods, by contrast, was years in the making. Dieticians began to identify certain foods that had “more bang for their buck”, or a disproportionate amount of fiber or protein or vitamins for their size or composition. Soon you could find lists of superfoods on the web; next television hosts were doing “top 10 lists” of their favorite superfoods. The movement wasn’t advertised like a diet or weight loss plan, and the trend caught on relatively slowly. The same happened with the iPod and Uggs: not everyone owned them at first, but with some organic growth in the consumer base they became the successes they are today.
4. Psychological positivity. Finally, superfoods have managed to stick around partially because of how the consumer reacts to buying them. Purchasing a superfood is cognitively positive: the consumer is going to feel better about him/herself for choosing this over, say, a burger. Moreover, that’s a feeling that, if repeated, is likely to last.
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