Why the Walmart-Snoop Cereal Saga Matters: From Breakfast Bite to Legal Fight

“Reminisce when I had the morning appetite

Apple Jacks and after that I hit the TV Guide

Animaniac the only thing that gave me peace of mind”

“Cartoon & Cereal”

Rap Song featuring rappers Kendrick Lamar and Gunplay

Cereal can give you superhero-like superpowers.  That is what my cousin told me in second grade.  It sounds incredulous until you see a second grader eat a bowl of sugary cereal and then climb a vertical wall in footie pajamas.  Sure, cereal does bestow superpowers, albeit for the short period prior to the sugar rush wearing off and the child in the footie pajamas slips into a sugar-induced coma.

Walmart’s smiley face mascot might need a bowl of Grape Nuts following Broadus Foods CEO, Percy “Master P” Miller announcing on February 6, 2024, a $50,000  lawsuit against Walmart and Post Brands alleging they “hid” their Snoop Cereal in Walmart store stock rooms far from retail customers in a “sabotage” plot.  Snoop Cereal is a cereal brand inspired by Calvin Broadus who is better known as the Rapper Snoop Dogg.  Master P and Snoop Dogg are being represented by Florida-based civil rights attorney Ben Crump. Master P and Snoop Dogg are seeking damages exceeding $50,000, covering the cost of the lawsuit and attorneys’ fees

No Strangers to Adversity

Master P and Snoop Dogg are no strangers to adversity.  Both navigated the quagmire of the rap music industry for over three decades.  The New Orleans-born, Master P started his own independent record label, No Limit in 1990 with money left to him from the death of his grandfather.  He started by selling records out of his car.  This was three years before Snoop’s first album was released in 1993 on Death Row Records.  Master P spent the remainder of the decade flying mostly under the mainstream’s proverbial radar.  By the late 1990’s, he had developed his own production team and No Limit became a vertically integrated business with everything from the beats to the tongue-in-cheek album covers all developed in-house.  No Limit was relentless at releasing diverse content from albums to movies and had developed a strong underground hip-hop following that was strong enough to recently allow No Limit to create a reunion concert tour.  

In the late nineties Death Row began having internal issues that led Snoop to leave the label and sign with No Limit where he released a number of albums, made a movie, and began a long-term relationship with Master P.  Snoop credited Master P with saving his life when he advised him against making a diss record against his old label, Death Row.  Smart move and mentorship from the master salesman.

A Brand With a Purpose

Fast Forward to 2022 when Master P and Snoop began Broadus Foods on a foundation of “inspiring and creating opportunities” for minority-owned food products, according to their lawsuit.  Snoop Dogg and Master P approached the Post Consumer Brands company to form a manufacturing and distribution partnership.  Initially, Post offered to buy Snoop Cereal outright, but Snoop Dogg and Master P rejected the offer as it would have gone against their foundational goal of promoting minority-owned businesses, according to the lawsuit.  By December 2022 Broadus Foods and Post entered into a fifty-fifty profit split contract allowing Post to take over the production, packaging, and distribution of Snoop Cereal.

Self-Made

I personally experienced the birth of Snoop Cereal firsthand through Master P’s magnanimous Instagram (IG) postings.  I had always admired Master P as a self-made entrepreneur from my home state of Louisiana.  He still is a hero to many rappers who still glam rap about how he became independent and kept all the money he made. 

Master P’s IG channel is where he provides ongoing musings about his businesses and his family including the children he raised in suburban L.A., including one son who plays basketball for the University of Louisville.  Master P also includes a lot of self-help advice and inspirational videos whether made by himself during walks through his neighborhood or by way of sharing other influencers' inspirational videos.

All I want for Christmas is For Snoop Dogg to Run Twitter

Building a brand with the godfather of social media must have been a no-brainer for Master P.  Snoop Dogg has been credited with being the celebrity numero uno on Instagram by its founders themselves.  His first photo on Instagram alone earned 2.5 million followers.  Recently he garnered nearly 2 million users to support him to run Twitter (current ‘X’)  in his own Twitter poll asking who should replace Elon Musk when he steps down.

The Sales Master

Prior to December 2022, Master P started promoting his own ramen and snacks called “Rap Noodles” and “Rap Snacks” via Instagram videos.  This evolved into Snoop Cereal taking over as the lead brand he promoted beginning in early 2023.  As a master salesperson, Master P has a knack for using street team style tactics to promote Snoop Cereal from promoting fan and influencer social media videos on his 3.8 million follower Instagram channel including videos of himself going into Walmart retail stores looking for Snoop Cereal.  The reality is that in many of those videos, they came up empty-handed and could not find the product.  In some cases, they found it on an end cap far from the cereal aisle and would subsequently engage with store personnel to ask why Snoop Cereal was so hard to find.

The Chokehold

The lawsuit contends “Because the largest seller of Post’s products is Walmart, Snoop Cereal should have been placed on Walmart’s shelves right next to the dozens of other Post branded products”.  The lawsuit went on to allege that given Snoop Dogg and Master P refused to sell the brand outright, Post engaged in a “false arrangement where they could choke Broadus Foods out of the market, thereby preventing Snoop Cereal from being sold or produced by any competitor”

The Four ‘P’s of Marketing

The lawsuit also calls out the importance of having a shelf presence which Snoop Cereal lacked, thus preventing it from being within the sight lines and arms length of potential cereal shoppers. 

Shelf or “placement” is generally considered one of the four ‘P’s of Marketing along with Price, Product, and Promotion.  While pricing is at the discretion of the retailer, the Snoop Cereal lawsuit also contends that their products were not priced to sell.  The week of the lawsuit briefing there was an Instagram video on Master P’s IG account that showed a gentleman searching through a Walmart for Snoop Cereal.  He finally found cases of Snoop Cereal in the stock room priced at over $12 per box.  Anyone who knows Walmart’s retail process and low-price focus would question the probability those boxes will ever make it to the shelf at such a high price point.

Being a small brand is hard.  I observed this from experience.  In the mid-2000s, I was fortunate to be asked by my then Sales Director to attend an all-day partnership meeting with the General Manager of our Cosmetics division and the supermodel Iman and her cosmetic brand’s team in Baltimore, Maryland.  Iman and her team arrived the morning of the meeting in a taxi cab from the train station.  They had taken Amtrak from New York City.  No limos, nothing flashy, just same-day round-trip train tickets and a motivation to win.  

Iman was the epitome of a highly involved, humble, and intelligent businessperson as she commanded the room sharing all aspects of her cosmetics brand business and the challenges they faced and hoped to overcome with the help of partnering with a large CPG company from securing R&D support to trade funding advice.  We eventually split off into our respective functional areas, focusing on the due diligence of understanding each other’s strengths and weaknesses.  

The Challenges of Smaller Brands

I was amazed at how challenging it was for this smaller brand to compete, from product development to simply trying to get sales appointments with major retailers.  My sales counterpart was a Phoenix, Arizona-based contractor who was very passionate about helping the brand to win, but his hands were clearly tied and limited by being such a small brand trying to compete with the larger brands.  They lacked the big promotional marketing and sales budgets that we managed as a larger CPG company.  A big part of what our company saw in the relationship was an opportunity to close a gap in our own portfolio by learning from a small minority-owned brand that successfully catered to an underserved market in black and brown-toned women (an area that we were weaker at).

Lack of Scale or Lack of Demand?

So have we grown so stale and numbed to only buying big brands that the smaller brands no longer have a chance to reach our palates?  Is Post really threatened by a small brand like Snoop Cereal or is it a question of scalability?  Both Walmart and Post have taken a defensive stance on Snoop Cereal citing how their intentions were good and that there were multiple factors that can have an adverse effect on a brand’s sales including weaker-than-normal consumer demand.

Growing the Long Tail 

The year 2004 was a beast of a year.  Not only did our Iman Cosmetics meeting happen during this time, but there was a litany of pivotal events that happened that year from the launch of the Apple Music Store to Mark Zuckerberg launching Facebook as “TheFacebook” located on the internet at thefacebook.com. There was also a lesser-known, but no less pivotal event that happened in British-American magazine writer and editor, Chris Anderson coined the phrase “long tail” after writing about the concept in an article in Wired Magazine.  The article described the long tail as a business concept that credited the burgeoning internet boom as a reason for companies to gain significant profits by selling low volumes of hard-to-find items to a high frequency of customers, in lieu of selling only the largest most popular brands.  The name “long tail” came from the visual of the product distribution curve flattening out from left to right leaving the very narrow “tail” as the point at which some of the most hard-to-find items could be found.  

The Modern Music Store’s Death Knell

Apple’s Music Store was the long tail’s “exhibit A”.  Finally, shoppers who felt limited by only being able to procure their favorite music from a limited physical collection inside of music superstores like Tower Records and the Virgin Megastore could find some of their favorite and most obscure and hard-to-find music on the Apple Music Store.   The iPod and the Apple Music Store were the modern music store’s death knell.  This “long tail” article also left many of us thinking we were finally turning a corner in the development of brands and small businesses.

However, the long tail has not solved all of the smaller brand’s problems.  Even with music, the Apple Music Store phase was superseded by the arrival of streaming.  We now have access to an ungodly amount of music in the palms of our hands and yet it still comes with limitations.  The limitations are that the streaming service you are listening to carries that once obscure and sought-after dope beat you are feening for.  This is probably the same reason I have a half dozen boxes of CDs in storage. I have to dig through the boxes to get that one song or album that no music service is streaming; e.g., see De La Soul’s pre-2023 music catalog.  Ironically, the physical music store has now resurrected itself as the record store now selling in-demand items at the far end of the long tail:  vinyl LPs and CDs.

Slaying the Long Tail

While both Amazon and eBay still profit from pseudo long tail business models  (the algorithms they use can trim the long tail to a degree), the very notion of the “long tail” was subsequently discredited and debunked by professor Sergui Netessine less than a decade after it was postulated: 

“The big message is we didn’t really find any evidence of the long tail effect, and that goes contrary to the theory and contrary to a few studies that were done before us. We found that, if anything, you see more and more concentration of demand at the top. When faced with this huge and increasing variety of choices in movies that people can watch, they tend to gravitate more and more towards what they know best, such as movies in which Tom Cruise appears.” “Is Tom Cruise Threatened? An Empirical Study of the Impact of Product Variety on Demand Concentration” Serguei Netessine

Scale Did

If the long tail did not play a part in Snoop Cereal’s challenges, then what did?  Scale did.  The very notion of the long tail existed due to the idea that technology had finally done its part in the democratization of business.  Scale is what always enabled the Goliaths to crush the Davids with their puny slingshots.  The long tail gave David hope, but as we learned the long tail provided little to no guarantee.

Walmart’s Secret Sauce

Walmart won’t be threatened because of scale.  Walmart is scale.  Walmart’s secret sauce is not low prices.  Walmart’s secret sauce is supply chain scale because they can move items from their warehouses to the store shelves faster and more efficiently than any other retailer.  Supply chain is to Walmart what french fries are to McDonalds.

Scale Matters

Smaller brands like Snoop Cereal will always suffer within a larger portfolio because of their lack of scale.  Despite technological advances, the scale still matters.  Scale matters until either AI or some other unforeseen future tech takes it out.  AI has tons of potential to create scale given its cost efficiencies relative to expensive human labor and intellectual property.  Neither Walmart or Post has the resources to cater sufficiently to a smaller brand like Snoop Cereal.  Scale is a matter of mathematics and economics.  You would be challenged to make it mathematically pay to support the smaller brand at the same rate as the larger brand because it is a zero-sum game.  Even if Post had bought Snoop Cereal outright, the historical data shows the success rate for smaller acquisition brands in larger companies tends to fail in the long term (especially if it's a midsized company) because the larger company is challenged to take money from a larger brand to help support the smaller less scalable brand long enough to allow it to reach scale.

Why Snoop Cereal Matters

Snoop Cereal matters and small brands matter because if a smaller brand can’t win on an even playing field, we as a nation will continue down a path as a corporatocracy.  A nation run by monopolies of larger companies and brands leaves the end consumer with a lack of variety and monotonous unimaginative choices.  True innovation will go on hiatus and we all lose out when we are no longer innovating.  

Planograms Matter

The question for this case will be to what degree the Snoop Cereal representatives secured an agreement from Walmart's buyer on promoting their products in-store. If Walmart allocated Snoop Cereal shelf space for a permanent home in their cereal planogram, then Snoop Cereal would have a written document to provide proof of their argument. Unfortunately, many national retailers now allocate promotional and flex space for new, local, and "in-and-out" items brought in-store on a temporary or "test" basis. Also, these agreements can sometimes be made verbally without a contract or handshake. What happened in the sales meetings the Snoop Cereal/Post Brands representatives had with the Walmart cereal buyer in Bentonville, Arkansas will be pivotal to the case.

Survival of the Fittest

If there is one thing in common between all the parties involved on both sides of the Snoop Cereal lawsuit is they all want to make money.  Walmart and Post Brands really don’t care what widget or brand is in their stores or portfolio as long as it is selling and making a profit.  Winning brands will always have a proclivity to profit.  The reason I have always loved the CPG industry is the almost Darwinistic survival of the fittest environment that it creates for its companies and brands.  No brand will survive on the shelf if it can’t hold its own.  The retail environment is as unforgiving as Tanzania’s Serengeti.  You want your brand to always be the Lion, Cheetah or Leopard.  In a perfect world, all the brands would survive, but it is not a perfect world.  Some brands must win while others will lose.

“We Ain’t Build This Brand to Sell It”

The unfortunate footnote to Iman Cosmetics is when I researched the brand for this edition, I learned the Iman brand is on “hiatus”.  I read speculation that it was due to the untimely 2016 death of Iman’s husband, David Bowie.  Speculatively, Iman probably received multiple offers to sell her brand, but she has said ‘no’ in the same vein as Master P and Snoop Dogg did.  During their media briefing on the pending jury trial, Master P indicated the lawsuit, “is about minority-owned companies getting a fair share”, followed by Snoop Dogg stating, “We ain’t build this brand to sell it”.

“Sometimes I'm sitting at the window

And the world that I see

Makes me ask myself the question

‘Yo, how numb can we be?’

…So glad we're not in the field

We're glorified instead trying to destroy and rebuild

How many hopes have we killed by doing nothing at all

Or planting seeds to succeed by either drugs or basketball

Or worse, that a rapper laying your life on the top

I listen to the radio and yo, that ain't hip hop

So numb to make it big is the way that I chose

So I could rip off all the children for my sneakers and clothes

I thought we'd lower the prices not give companies the license

To divide and conquer us with the modern day devices

We take what's priceless with hope for personal wealth

Turn a life into a struggle for life itself (can you feel me?)”

“Novakane”

Black Sheep