Several ‘hot’ new food and beverage ideas recently voted as winners:
And a cool eco-packaging / ‘Loading’ idea from the strategy masters, P&G:
Drink Up another example how marketing behemoths (especially FMCG players), grow by monitoring closely who is growing, then candidly and honestly gauging whether it’s wiser to Build a copycat (Coke launching PowerAde to combat Pepsi’s Gatorade) or to Buy (Dr Pepper-Keurig buys CORE)
For DrPepper, adding CORE beverages boosts strength in ‘USDA-certified’ organic water, and ‘nutrient-enhanced’ water– err sorry, ‘Hydration vehicles’. Scoff if you will, but fruity water, organic water & certified water is hot; and accounts for a growing share of occasions for beverage drinkers. This buyout adds incremental consumers, consumption occasions & channel credibility (particularly with health shops, organic grocers, restaurants & cafeterias offering ‘organic’ fare, fitness/bodybuilding shops or gyms).
DrPepper already has a huge stable of ‘any occasion’ sports/ activity/ energy/ rehydrating beverage brands that would give a marketer a week’s worth of drawing classes on Positioning Maps (Snapple, Keurig, Motts, Venom, Bai,…and now CORE)
CORE’s channel credibility & Influencer cred may boost Influencer support for ‘the rest of DrPepper’s stable’; this is critical. Arch rival Coke has PowerAde, Dasani and (now) BodyArmor; Pepsi has Mountain Dew, Lifewtr and Gatorade (imo presence in ‘high-cred’ Influencer-rich outlets keeps the Pepsi group ahead of Coke’s line, in terms of having a reputation for being more viably ‘athlete-credible’ or ‘health-credible’ but the purchase of BodyArmor def help out Coke!).
The CORE acquisition certainly raises the efficiency of each DrPepper sales call, however imo something more exciting is that DrPepper gains credible beverage brands that might be expanded into solid foods- eg protein supplements, protein snack bars, meal replacements (these are huge, active markets -imo with exciting futures given Gen Y/ Gen Z tendency to eat & snack on the run &/or possibly as vehicles to pursue opportunities in medical/ serious nutrition counselling markets, or even with Seniors).
Now that Sobey’s parent (Empire) has bought FarmBoy, it’s time to re-review some of the main reasons for acquisitions:
- Cheaper to buy than build- and removes one strong competitor too!
- Buys existing brand equity, store traffic pattern, loyalty
- Immediacy– sales generated the day you sign the check (now that’s fast incremental sales!!!)
- Less risk, Less work: signing a check for a proven successful business does indeed reduce the risk you might learn it’s not that easy to hire/redeploy a sufficiently skilled team, and then build it from scratch
Loblaws nicely integrated Shoppers locations and their Optimum team into its operations stable and T&T without losing some of those acquisition’s best assets or people. Canadian Tire is a master of wise acquisitions. The Empire-FarmBoys news is well covered here, though it’s too early to say whether it will be seen a wise buy in the long term:
alas we must also mention some of the risks of acquisitions:
Overpaying for an asset: sometimes there are liabilities unaccounted for in the books (ask pet giant Mars about their purchase of destined-for-lawsuits Greenies!); sometimes the valuation seems mighty inflated (eg Chipotle?); sometimes there are bidding wars that push a price above rational levels when Executives are desperate to be seen to ‘win’ (just as any one has seen happen at a live auction: Disney-Comcast-Sky, anyone?).
Messing up the execution: WalMart and Target both bought existing Canadian-based retail chains – and, after extensive location analysis & store remodeling, both launched. Only one of the two remains in business today: hint: it’s NOT the one that messed up their launch execution.
Messing up the corporate culture analysis: Well executed efforts include TD buying Canada Trust and tapping into some of their best executives, brand icons, etc. And a certain (Cincinnati?) CPG firm although noted for ‘gutting’ the staff at virtually every acquisition target, then replacing them with their own staff, is actually pretty adept at doing this well. But there are many examples of inept people management eg when merging vastly different cultures:
- HP= Sales; Compaq = Engineering/Tech Expertise;
- I suspect Amazon-WholeFoods cannot be a comfortable fit;
- Scotiabank (Canada’s least tech savvy bank) buying tech innovator Tangerine???
- 3G Capital bought Tim Hortons- soon after, Tims’ Oakville office staff were gutted, spending on community charities was cut, food/beverage staffing was ‘cost optimized’ – and now franchisee rebellion is in the air
Messing Up the Brand: no matter how hard P&G tries, it just can’t stop… being P&G! Safe, strategic, sound— but never edgy, irreverent or fun. They bought Clairol’s Herbal Essence haircare (riding a share peak based on the success of irreverent positioning & saucy “Orgasmic” ad campaign) but evidently they just couldn’t un-P&G themselves; the next few years we TV viewers witnessed some of the most awkward, cringe-inducing, ham-fisted ads ever aired. Just about as sexy, saucy & irreverent as the iconic couple in Grant Wood’s American Gothic.
Doubling Down at the expense of other opportunities: this ‘Opportunity Cost’ drawback is imo the least visible flaw in making an acquisition, since it can take years (or decades!) to see the ‘true cost’ of a huge acquisition. When Kimberly-Clark bought Scott Paper in 1995, good or bad, it lifted their share in current categories but cost them the capital for any major further acquisitions or forays into new business for decades. Tissue & diapers aren’t hot ‘unit growth’ categories in Western economies; KC’s current CEO could legitimately blame their low-growth reality on the unimaginative – but safe!- 1995 Exec team who depleted the WarChest for decades to come by doubling down on ‘current category share’. Same argument for HP- by now, they might have become an IBM or a Google or an Oracle- but the buyout of Compaq in 2001, inflated their short term share in PC’s/ Laptops, yet cost them the chance to be serious about paying attention and resources to new categories.
Rarely do I see a business article use data with such clarity & insight
This surprisingly well written business article (esp for Canadian publication) supports oft-ignored lessons about Market Assessment; your boss will want to know 1. category size; 2. category growth,; 3. factors influencing growth and also 4. competitive SWOT’s. The data/ considerations should look out a few years.
Given the need for a ‘future focus”, many ppl may assume the Conventions/ Tourism Biz should be consumed about airbnb data. Not so fast. Despite the popular media’s focus on casual shared accommodation, the reality is that Bed & Breakfasts & airbnb-type accommodations don’t influence a location most meeting managers would select for a convention; what DOES influence it is a city’s perceived safety, transport & services infrastructure, entertainment options, meeting halls/ convention centres – and the capacity & service level of legitimate inns & hotels. And Toronto isn’t faring well on that front.
There are some extremely relevant figures here – on prices & capacity/ market. The Convention Biz is big- with big ripples to all aspects of a city’s economy. The data seems to indicate Toronto has an uphill climb to continue to be a ‘world class’ convention site. This Biz Category invites a market share fight as would any big category; I hope Mayor Tory takes time from ‘detail management’ to review this Big Picture opportunity – and to strategize/ invest accordingly.
In his favour? Mayor Tory’s business background, and his common sense actions to ease road traffic congestion on major routes.
Discouraging signs? A still-woeful regional transit ‘system’; a myopic decision to spend billions of taxpayer $ to BYPASS a borough with a subway; a brutal lack of accountability on transit car supply; road construction contracts that still seem to still be poorly written, unenforced, or both (youre hereby invited to play: “Let’s see if any work is done in the closed lanes of Hwy427 today!”)
A fine new list is out, reminding me how promising Convenience Stores (‘C-Stores’) are as a distribution partner, notably for:
- impulse-oriented items (snacks, gift cards, etc)
- off-hours purchases
- on-the-run commuter items (water, antifreeze, sunglasses)
- cottager or vacationer items (last-minute HABA items**, bug repellent)
- addiction-oriented fill-in purchases (caffeine, smokes, lighters, energy drinks, soda,…)
The 1st new promotion I brought to P&G Canada was to suggest P&G try a first-ever C-Store display event (Kudos to SalesMerch colleagues JFM & MattG!) targeting summer cottagers en-route, or at point of destination. Within P&G, we referred to it a the “Small-Size” event; the name understates the importance of these comparatively ‘low volume’ events.
- Although the event wasn’t just about making profit, it was nicely profitable (small sizes typically being the most profitable sizes!).
- It was strategic, preventing OUR customers (Crest, Scope, Always, Pampers buyers) from leaving our brand due to a temporary shortage. Holding loyalty before that was much of a revered idea elsewhere.
[side note: A big tip of the hat to the “crazy risk-takers” in the Sales Merch Dept who creatively massaged a way through P&G’s conundrum-creating criteria #2. ie It wasn’t hard to prove it’d pass #1. “On Strategy” nor #3. “Profitable”; the dilemma for entrepreneurish staff was showing an idea is already #2.”Proven” – when it has never been done before!]
C-Stores’ potential goes WAY beyond selling gas, lottery tickets, tobacco, rolling papers, Doritos. I worked in one for years & respect their resilience; when grocery stores added late-night hours, C-stores profited by selling lottery tickets. By the time grocery stores started selling lottery tickets, C-Stores had significantly upgraded their self-serve coffee & brought in lines of 24/7 RTE fresh prepared meals. Now, some C-Stores sell fine-quality fresh-cut flowers. And other- get ready for it- sushi!
So don’t count’em out. C-Stores are wiley; they’re flexible; they’re open-minded to make a buck. And they might be your next distribution partner!
The Top 100 USA list is here: https://csnews.com/top-100-convenience-store-chains-2018
This month/week/day/minute in #Tariffs– a subject historically characterized by rational thought, measured policy, business + govt in harmony (if biased by corporate lobbyists, union & farm groups etc); the #TrumpEffect = replace that w threats, false facts, seat-of-your pants “Policy”.
Implication: Businesses must learn to predict the unpredictable, rationally deal w the irrational. Dollar stores’ options are limited by their name/ positioning. Your cost structure is no longer your own- and the P (‘Political’) in PESTL-C external factors (those a business does NOT control) has taken on huge impact.
Tariffs, quotas, trade restrictions, sanctions, embargos have long been a government tool to protect public safety (non Tata Nano’s here pls, nor Chinese pet food laced w plastics or children’s toys made w toxins,…), ecological protection ( a bit late in the case of for Emerald Ash, Zebra Mussels, etc ) national security**, domestic manufacturing & farming.
The lines between those ‘legit’ reasons for trade barriers can be fuzzy; Canada’s Massey Commission started protecting Canada’s broadcast content to build national unity/ bonds, yet ended up being a de-facto trade barrier stalling a cultural invasion long enough to nurture what became a globally competitive Canadian Content (ie CanCon) industry in comedy, stage entertainment, music, …
To use the ‘national security’ trump card & slam your #1 trading partner with seat-of-your-pants tariffs on Aluminum & Steel for passenger automobiles – in an industry already thoroughly integrated continent-wide, is not only a betrayal of the spirit of NAFTA, it’s harmful to a North American auto sector that must compete against autos from Germany, Japan, Brazil, Korea.
Mr Orange has a more viable argument against Canada’s dairy industry; an effective lobbying group has stalled a tide of cheap US dairy imports, securing for Canadian dairy farmers more stable incomes than earned by sibling pork / beef producers. US milk producers need not meet our less well known ‘behind the curtain’ standards of practise for milk, making ours safer & more nutritious. wrt a ‘Public Safety’ argument, should a nation protect …..Mothers Milk? imo yes, you might argue that ‘s pretty fundamental.
On this side of the border: If you were the Dollarama #retail chain, what would you do? You might assume most of their store goods come from India or China, but many are shipped from the USA.
What if you’re Gildan, Roots, Canada Goose? Will your textile items next get the tariff attention of Mr Orange? Canadian labour costs may be higher than those of the USA – and Higher Cost of Goods nations are rarely see new tariffs by an importing nation – but we’re in uncharted waters. There is no rational reason for what Mr Orange is doing to global trade and diplomatic relations.
Also at risk: infrastructure contract bidders: Bombardier (transit cars), Aecon, SNC Lavalin,… Boeing-bought American politicians got POTUS to whack Bombardier with a ludicrous 292% penalty on its C-Series passenger jet; though eventually overturned by a red-faced court (yes; we DO need an objective ‘dispute resolution mechanism; in trade deals!), don’t expevct an end to the trump trade tirade any time soon.
Uncharted waters indeed.
Two topics covered lately that have caught passion of savvy Seneca students: 1. Ecosystems; and 2. Loyalty Programs.
How many Ecosystem partners does a typical consumer need?
Just ONE! imo it’s critical for Ecosystem players to be present in ALL ‘related’ categories of use, or risk being abandoned for a truly full-service tech partner.
Amazon, fb, Google & Apple all ‘play in’ several of these: file storage & sharing, photo storage & sharing, social media sharing, home security & home device monitoring, interactive voice recognition queries & trivia, home audio speakers, mobile shopping, customer reviews, personal banking, mobile payments, chat apps, mobile phone, film viewing, amateur video production & sharing, facilitating communities for ‘sharing’ resources, skills & time, etc, etc, etc…
Also catching students’ interest: Macro (multi-channel) loyalty programs: eg Aeroplan, AirMiles, PC Optimum. Loyalty players, in contrast to Ecosystem players, need not be present in every category, but typically tether to 2 anchors:
- a partner providing ‘dreamer you’ an aspirational, indulgent big incentive (a vacation); and
- a low value (frequent-use) anchor motivating ‘rational you’ to keep that loyalty tag/card on hand day to day.
Case in Point: Aeroplan lost both its Dreamer anchor – Air Canada- and its Rational anchor- Esso- but quickly regrouped, securing an Amazon partnership to fill both roles! (ie use Amazon for daily shopping, or buy yourself a holiday!).
However, the ‘anchor principles’ of critical relevance, don’t constitute the full list of success criteria for Ecosystem players, or for Loyalty programs.
What made this more evident lately? Evidence of their need to AVOID something- Leaks. And evidence they need to SHOW something- Respect.
iCloud leaks, fb leaks, Equifax leaks, etc make some consumers leery of ever joining a loyalty program. And undoubtedly cause others, to drop out.
Loblaws’ ‘transitioning’ of trusting SDM Optimum & PC Plus loyalty members to a newly consolidated [ ahem- more efficient(!)] program has been awkward for the very customers they should respect & value. A few years ago, AirMiles not only accelerated point expiry; they also imposed a needlessly complex, restrictive new 2-tier- award redemption structure. The 407 de-certifies members who spend ‘merely’ $3,000/year on their service via a rude letter (“You no longer qualify….”). I received such a letter; its inept wording prompted a few laughs (a ‘Hall Of Shame’ candidate, says a nearby CRM expert).
Loblaws, AirMiles and the 407 violate a basic principle of Loyalty programs: treat longstanding customers with some respect.
If you soon encounter press releases or Investor explanations about how tough the Loyalty industry has it, or how consumers are being more difficult, etc, feel free to join me in a laugh or two at their deserved expense.
Of course I could be wrong.
I’d welcome any comments!
Sorry to be insensitive but Problems DO signal opportunities for marketing professionals. Undoubtedly you have already ‘heard’ of some obvious solutions to Noise Pollution –> increased opportunities for hearing aid chains.
But think a step further away, Marketers! There’s also growth in
- noise-cancelling headphones;
- improved sound insulation for the New Construction/ Home Renovation industry;
- New Product Claims such as quieter vacuums, dishwashers,…
- New Services such as ‘Quiet Rooms’ where creative people can write their next great novel, screenplay or manuscript.
Omnichannel shopping. If you’re in FMCG marketing and believe that “online is a ‘future’ factor”, you’re already wayyyyyy behind, according to Nielsen.