It Pays to Be Kind: Snack-Bar Brand is Making a Profit -- And a Difference

Founder Learns That Cause Marketing Can Inspire Goodwill, But Product Quality Still Matters

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Marketers rushing to cloak brands in social causes might want to chat with Daniel Lubetzky. The Mexico-born son of a Holocaust survivor has dedicated most of his career to cause marketing, whether it's forming business partnerships between Israelis and Arabs to find "profits and peace" or launching Kind Healthy Snacks, whose mission is to inspire "unexpected acts of kindness."

But for a man whose ventures are about doing good, he is surprisingly bearish on the concept as a revenue driver. "I don't think social purpose is what drives our company's growth," he said about the Kind brand of snack bars. "And in most cases for real sustainable brands, that's not what drives sales or long-term success. The product has to stand on its own merits and it has to be the best product in its category."

The 10-year-old, Manhattan-based Kind has grown retail distribution from 1,000 doors in 2004 to 80,000 doors this year, according to company statistics, appearing in outlets such as Starbucks and Walmart. Competing with behemoths like General Mills and Kellogg Co., privately owned Kind claims sales of more than $125 million last year, double its 2011 revenue.

So if it's not the cause marketing -- and Kind does plenty of it -- what is the secret? Mr. Lubetzky, who has traveled the world, launched Kind in 2003 because he was unhappy with his snacking options. The bar's proposition was to be "kind to your body, your taste buds and the world." But it's those first two goals that appear to be powering growth. "We lead with our product," Mr. Lubetzky said. "We don't want to try to convince everyone to buy our product because we are nice or because of our social mission."

The Fruit and Nut line is packed with whole nuts and boasts "all natural" ingredients while including tasty additions like a "drizzle of honey." Another variety, called Kind Plus, includes antioxidants, protein, fiber or omega-3. Last year, the brand went beyond the bar to launch "Healthy Grains," which is marketed as a "better kind of granola" that the company said is lower in fat and sugar than other brands. All the items come in fancy see-through packaging.

Rick Shea, a former packaged-food-industry exec and president of Shea Marketing, said Kind has "grown through a combination of factors including great product quality, effective social and guerilla marketing" and by gaining trial through direct shipment, e-commerce and distribution at smaller health-food stores. While Kind is "very solid brand with good positioning" he noted that it is in "a highly competitive segment with many tough competitors."

Kind's mission, however, helps it to stand out. It is summed up on the back of the wrapper: to inspire "not so random acts of kindness." Consumers can join the "Kind Movement" by signing up online. The brand sends monthly newsletters that include "kinding missions," calling for small act of kindness. If enough people accept the challenge, the brand makes a "big kind act." In one recent example, people were asked to hold the door open for a parent with a stroller or babysit free of charge. If 4,500 people signed up, Kind promised to deliver diapers and other supplies to shelters in partnership with a nonprofit called Baby Buggy, which it did.

Kind says its newsletter has some 300,000 subscribers and that nearly 1 million people have been affected by small and big kind acts since the program started in its current form about three years ago. This summer, Kind will expand the initiative to allow people to submit their own ideas for kindness. The goal is to move from being a "business that people like into being a state of mind and a community and a movement," Mr. Lubetzky said. Still, he said cause marketing has contributed less than 5% of the brand's growth. Kind also does traditional advertising, consisting mostly of outdoor. (The company says it has no agency of record and works with many shops). To boost marketing, Kind last year hired former IMAX and Red Bull marketer Marc de Grandpre as its senior marketing VP.

Mr. Lubetzky, 44, said he learned "the hard way" about the risk of overplaying cause marketing. Some of those failures came under the umbrella of his PeaceWorks organization, which he launched in the early 1990s as a "not-only-for-profit" corporation pursuing "peace and profit" by uniting communities in troubled regions, such as Palestinians and Israelis, by having them work together. One business, called Dead Sea Cosmetics, was a cosmetic line that used minerals from the Dead Sea. But the advertising focused almost solely on the social mission and barely mentioned the product benefits, which he concedes was a mistake.

So why even bother with social causes? If done right, it can inspire consumer loyalty and goodwill, Mr. Lubetzky said, but management must "really believe in it."

His passion for doing good comes from the lessons of his father, Roman, a Holocaust survivor who moved to Mexico after being liberated from a concentration camp by U.S. soldiers at the age of 15. "He was a very rare person," Mr. Lubetzky recalled. Some Holocaust survivors "shut out that prior experience or they were embittered by it," he said, but his dad talked about the experience all the time. "As much as he taught me about all that horror ... he made sure to remind me about the occasions of kindness when in the worst and darkest moments, people were being kind to him and he lived because of them."

Holding back tears, he recalled one particular story: "There was this German soldier who gave him a potato. He could have gotten in trouble for throwing that potato at the floor to my father. But he threw that potato at him. It was one of those moments where my dad felt -- as he told us when we were kids -- that that potato gave him the sustenance maybe to live. And maybe without that, maybe he wouldn't be around."

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