What are the responsibilities of multinationals? And muckraking
journalists? By Paul M. Barrett
A quick note to Coca-Cola's PR office: Let's stipulate that you deny just about everything in this book, starting with Michael Blanding's initial assertion that the company's 19th century
patent medicine was laced with cocaine. A writer for The Nation, The New Republic, and other magazines, Blanding thoroughly chronicles the company's every major misstep and act of hypocrisy.
He doesn't explore new terrain, but he raises important questions about what we can expect of major companies-and from muckraking journalism. According to The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink, the world's most successful soda company doesn't just rot your teeth-it's responsible for drought, disease, exploitation, and possibly even murder. It's tough stuffto swallow-and that's basically the point. Among Coca Cola's vast array of crimes against the human race, says Blanding, are ads that target children and unsophisticated
Mexican peasants with messages implying the sugary beverage makes you sexy, happy, and patriotic. Dasani, its bottled water brand, is hardly any better than what comes out of your tap. In India, he alleges, Coca-Cola's bottlers have sucked up scarce water supplies. And in Latin America, the company has shown active disregard for the employees of its local bottlers who get caught in the crossfire of ideological conflict.
There is, as his title states, some "dirty truth" in all these accusations (and, yes, there's more). However, Blanding may be underestimating the sophistication of his audience. A generation of readers informed by Eric Schlosser and Morgan Spurlock won't find it revelatory that a 12-ounce soft drink with 39 grams of sugar doesn't make you sexy. Others, immune to meaningless corporate names like Verizon or Altria, won't be bothered by the fact that the insipidly titled Dasani isn't even as good as the insipidly titled Brita. In a prosperous country suffused with needless frills, are many of us obsessing about $ 4 cups of coffee? Though he never says it, what may irk Blanding the most is that Coke tastes good-and that's what most consumers care about.Overseas, there is more nuance to the Coke story than the author admits. In India, Coca-Cola bottlers used a lot of water and may have emitted pollution, but they did not cause drought, as some critics claimed. In fact, the company seems to have done the right thing in closing a big bottling plant that stirred intense local suspicion and resentment.
As for the murder allegation, Blanding recounts how Colombian right-wing paramilitaries killed eight workers in Coke bottling plants in the mid-1990s. The deaths occurred during the hit squads' guerrilla war against unionists and leftist revolutionaries.
Through franchise contracts and partial ownership, Coca-Cola exercised influence over the plants but didn't directly control them. Some labor activists believe-without any direct proof-that executives at Coca-Cola's Atlanta headquarters must have orchestrated
the deadly union-busting. The corporation protested its innocence, and V.S. judges summarily dismissed a suit seeking to hold it liable.
As Blanding rails on, it's difficult to avoid the suspicion that his objections are rooted less in a deep dissatisfaction with Coke than in one with capitalism itself. Take his portrait of Asa G. Candler, the Atlanta pharmacist who incorporated the company in 1892. Candler was, by most accounts, a visionary whose franchise system spread financial risk to independently owned bottlers and made Coca-Cola an engine of Atlanta's growth. Introspective and austere, he pondered the duties a tycoon owed his community. Blanding describes this apparently genuine
inner struggle with condescension. Candler, he writes,was ashamed of the "obscene profits he made from such an ephemeral product." Throughout the book, profits are described with disdain, as though the purpose of business is to go broke. The author adds: "Candler was deeply ambivalent about the power of altruism-happy to give his money away for the greatergood when he wasin control ofwho received it." What's so bad about that?
It's an unfortunate reality that owners and executives live much better than factory workers. On
the other hand, factory workers have jobs that feedtheir families and, one hopes, allow them to send their children to college to one day become executives, themselves, or poets. Advertising may annoy and distract, but it also helps move the products that keep the factories running-and who doesn't enjoy those Coke-drinking polar bears?
A more balanced view of Blanding's evidence suggests that Coca-Cola turned into what most large companies become over time: an amoral, earnings driven, potentially harmful, but also potentially beneficial, employment-and tax-generating bureaucracy.
By this point, we all know that Coke is not exactly a health beverage, and that the company is less than a crusader for human rights. Doingbusiness in chaotic, violent countries presents a real dilemma to multinational corporations. People in Colombia may not need Coke, but they seem to like it and they can use thebottlingjobs. Without a doubt, the company has had some very bad ideas, and not just New Coke. For years, it paid public school districts to get soda machines
into cafeterias. Yet it seems highly relevant that school superintendents eagerly took the company's money, until activists blew the whistle. The lesson? Beware corporations suggesting quid pro quo arrangements; they're not driven by generosity.
Critical assessments of powerful corporations whether from regulators, activists, or journalists provide a vital check on free-market excess. The problem with a litany of undifferentiated accusations, however, is that it denies ambiguous reality. Simplistic screeds undercut the credibility of legitimate consumer protectionism and relieve the rest of us of our responsibility to exercise common sense.
vendredi 15 octobre 2010
Food and pharma prove a rich mix
By Louise Lucas and Andrew Jack
Published: October 12 2010 20:10
Food and drug industries have little in common: one is fast-moving and prolific in its output while the other toils for years to produce a handful of blockbusters.
Both sectors are now converging on the same turf. Nestlé’s push, announced late last month, into the field of clinical nutrition or nutraceuticals – which cover foodstuffs aimed at slowing or even preventing illnesses and doctor-recommended non-prescription products – pits it firmly against the pharmaceuticals industry.
This more established market, which ballooned with the advent of energy drinks about five years ago and, shortly after, probiotic yoghurts, has also been attracting attention from food multinationals.
Last week, Pepsi said it was setting up a global nutrition unit run by Dr Mehmood Khan, its chief scientist.
Nestlé is aware what lies ahead as it pushes into a relatively new area, as Peter Brabeck, the Switzerland-based company’s chairman, acknowledges: “Our competitors are today and will increasingly be in the pharma industry. Most of the pharma companies are moving into this area from a different angle ... It will be a different business which needs the understanding of people who are not necessarily experts of FMCG [fast-moving consumer goods] companies.”
That business covers everything from highly specialised research and development of products to combat diabetes, heart problems and Alzheimer’s disease, to distribution that is more dependant on doctors’ recommendation than bagging space on supermarket shelves.
As a new market segment, size and forecasts are thin on the ground; Nestlé itself simply says it foresees sales of billions rather than millions of Swiss francs.
But there are some indicators: Nestlé derives SFr1.6bn ($1.7bn) of sales from areas such as tube feeding and foods for the sick and convalescent. Danone of France is building on its health foods such as probiotic yoghurt.
Demographic and health trends have encouraged the companies to believe demand will increase. The developed world is seeing a rise in heart disease, diabetes and obesity at the same time as life expectancy increases, while governments rein in spending on healthcare.
Nestlé believes this phenomenon will spread to emerging markets too, where governments are also seeking to clamp down on spending.
Nutraceuticals also hold out the promise of better profit margins, at about 20 to 25 per cent – reflecting the elimination of costly ad campaigns and more pricing power. Dealing with hospitals rather than aggressive retailers means less margin erosion, and the fact insurers reimburse many of these products means consumers are less worried about bloated price tags.
Food companies should be able to make inroads into clinical healthcare, in part because they understand consumers and their needs better, says Warren Ackerman, analyst at Evolution Securities.
Charles Mills of Credit Suisse agrees: “The drug industry has very strong R&D but the food companies have the marketing skills.”
He points out that the pharma industry has already tripped up on the middle ground, in the area of over-the-counter medicines. Some drugmakers began leaving the business in the 1990s, viewing it as low-growth and generating relatively low margins. “Whereas it was an extremely dependable long-term earnings stream and they probably will now rather regret it,” he says.
But the drugmakers now have good reason to move back in. Expiring patents and difficulties in finding replacement prescription drugs are pushing executives to diversify. A shift into consumer healthcare is one response, a strategy championed by companies including Abbott.
One reason behind this February’s surprise promotion of Joe Jimenez to chief executive of Novartis, the Swiss drugs group, was his years of experience in the foods sector.
Mr Jimenez, an American who spent a large part of his career at Heinz, has said one of his aims at Novartis is to improve marketing, streamline distribution and squeeze costs – all based on techniques he picked up in his consumer goods career.
While the pharmaceuticals industry learns lessons from consumer food groups, it has a distinct advantage when it comes to designing rigorous clinical trials. These can be very costly, long term and uncertain. Drug companies spend an aggregate 17 per cent of sales on R&D, according to Bernstein Research, 10 times the proportion the European food industry spends.
Pharma companies would also claim the upper hand when it comes to distribution and working through the regulatory process. GSK, for example, has 250 employees dedicated to securing regulatory approvals and almost half of its sales are made through pharmacies.
The strategy is similar too, says John Clarke, president of GSK Consumer Healthcare: “We are working off macro trends. Smoking remains the biggest preventable killer and obesity is number two,” he says.
The risk for drugmakers, which shy away from corporate marketing, is reputational: they could see their image further burnished if poor quality health studies come under attack.
Mike Dennis, analyst at MF Global, says the use of scientific analysis to support the claims used for marketing products could prove the biggest hurdle for food manufacturers as they will have to secure approvals from the European Food Safety Authority and the Food and Drug Administration.
Food companies have already come unstuck over the ability to substantiate claims in a smaller way. Some were forced pre-emptively to withdraw ads claiming health benefits on fortified foods, such as probiotic yoghurts, ahead of the EFSA’s protracted deliberations.
“Food companies have to get the highest recognition for a human study which is extremely expensive to do and food companies just don’t have pharma companies’ operating margins or scale,” says Mr Dennis.
“So it is catch 22. It is difficult for them to go out and spend millions of dollars on a four-year trial to get an end product that’s absolutely nailed it to allow them to say ‘this product works’.”
Published: October 12 2010 20:10
Food and drug industries have little in common: one is fast-moving and prolific in its output while the other toils for years to produce a handful of blockbusters.
Both sectors are now converging on the same turf. Nestlé’s push, announced late last month, into the field of clinical nutrition or nutraceuticals – which cover foodstuffs aimed at slowing or even preventing illnesses and doctor-recommended non-prescription products – pits it firmly against the pharmaceuticals industry.
This more established market, which ballooned with the advent of energy drinks about five years ago and, shortly after, probiotic yoghurts, has also been attracting attention from food multinationals.
Last week, Pepsi said it was setting up a global nutrition unit run by Dr Mehmood Khan, its chief scientist.
Nestlé is aware what lies ahead as it pushes into a relatively new area, as Peter Brabeck, the Switzerland-based company’s chairman, acknowledges: “Our competitors are today and will increasingly be in the pharma industry. Most of the pharma companies are moving into this area from a different angle ... It will be a different business which needs the understanding of people who are not necessarily experts of FMCG [fast-moving consumer goods] companies.”
That business covers everything from highly specialised research and development of products to combat diabetes, heart problems and Alzheimer’s disease, to distribution that is more dependant on doctors’ recommendation than bagging space on supermarket shelves.
As a new market segment, size and forecasts are thin on the ground; Nestlé itself simply says it foresees sales of billions rather than millions of Swiss francs.
But there are some indicators: Nestlé derives SFr1.6bn ($1.7bn) of sales from areas such as tube feeding and foods for the sick and convalescent. Danone of France is building on its health foods such as probiotic yoghurt.
Demographic and health trends have encouraged the companies to believe demand will increase. The developed world is seeing a rise in heart disease, diabetes and obesity at the same time as life expectancy increases, while governments rein in spending on healthcare.
Nestlé believes this phenomenon will spread to emerging markets too, where governments are also seeking to clamp down on spending.
Nutraceuticals also hold out the promise of better profit margins, at about 20 to 25 per cent – reflecting the elimination of costly ad campaigns and more pricing power. Dealing with hospitals rather than aggressive retailers means less margin erosion, and the fact insurers reimburse many of these products means consumers are less worried about bloated price tags.
Food companies should be able to make inroads into clinical healthcare, in part because they understand consumers and their needs better, says Warren Ackerman, analyst at Evolution Securities.
Charles Mills of Credit Suisse agrees: “The drug industry has very strong R&D but the food companies have the marketing skills.”
He points out that the pharma industry has already tripped up on the middle ground, in the area of over-the-counter medicines. Some drugmakers began leaving the business in the 1990s, viewing it as low-growth and generating relatively low margins. “Whereas it was an extremely dependable long-term earnings stream and they probably will now rather regret it,” he says.
But the drugmakers now have good reason to move back in. Expiring patents and difficulties in finding replacement prescription drugs are pushing executives to diversify. A shift into consumer healthcare is one response, a strategy championed by companies including Abbott.
One reason behind this February’s surprise promotion of Joe Jimenez to chief executive of Novartis, the Swiss drugs group, was his years of experience in the foods sector.
Mr Jimenez, an American who spent a large part of his career at Heinz, has said one of his aims at Novartis is to improve marketing, streamline distribution and squeeze costs – all based on techniques he picked up in his consumer goods career.
While the pharmaceuticals industry learns lessons from consumer food groups, it has a distinct advantage when it comes to designing rigorous clinical trials. These can be very costly, long term and uncertain. Drug companies spend an aggregate 17 per cent of sales on R&D, according to Bernstein Research, 10 times the proportion the European food industry spends.
Pharma companies would also claim the upper hand when it comes to distribution and working through the regulatory process. GSK, for example, has 250 employees dedicated to securing regulatory approvals and almost half of its sales are made through pharmacies.
The strategy is similar too, says John Clarke, president of GSK Consumer Healthcare: “We are working off macro trends. Smoking remains the biggest preventable killer and obesity is number two,” he says.
The risk for drugmakers, which shy away from corporate marketing, is reputational: they could see their image further burnished if poor quality health studies come under attack.
Mike Dennis, analyst at MF Global, says the use of scientific analysis to support the claims used for marketing products could prove the biggest hurdle for food manufacturers as they will have to secure approvals from the European Food Safety Authority and the Food and Drug Administration.
Food companies have already come unstuck over the ability to substantiate claims in a smaller way. Some were forced pre-emptively to withdraw ads claiming health benefits on fortified foods, such as probiotic yoghurts, ahead of the EFSA’s protracted deliberations.
“Food companies have to get the highest recognition for a human study which is extremely expensive to do and food companies just don’t have pharma companies’ operating margins or scale,” says Mr Dennis.
“So it is catch 22. It is difficult for them to go out and spend millions of dollars on a four-year trial to get an end product that’s absolutely nailed it to allow them to say ‘this product works’.”
The potential - and perils - of PepsiCo's health kick Dairy, fruit and veg
Just Food - 14.10.10
The potential - and perils - of PepsiCo's health kick Dairy, fruit and veg. On the face of it, these products seem a world away from the carbonated soft drinks and crisps that have long been core to PepsiCo's business. However, the US food and beverage giant is set to make a serious move to grow its presence in the healthier areas of the market.
Last week, the group unveiled plans to set up a business unit focusing squarely
on nutrition and targeting sectors that are relatively untouched territory for PepsiCo.
Demand for high-sugar fizzy drinks and salty snacks is waning in the West and consumers in emerging markets, particularly in the key middle-class demographic, are also showing signs
of wanting healthier variants. For instance, research from just-food shows that India and China will be drivers of the global market for healthier snacks during this decade.
By positioning PepsiCo to focus more on health and wellness, Nooyi has a better chance of securing the long-term prosperity of the company. That said, the "nutrition" element of PepsiCo's stable is already a substantial business in its own right. The company claims its nutrition operations, home to brands like Quaker and Tropicana, already generate US$10m
in annual sales. PepsiCo's ambition is to triple those revenues in ten years.
Quaker and Tropicana are likely to be key planks in PepsiCo's plan. When PepsiCo announced the creation of the "global nutrition unit" last week, the company's ambitions in dairy, fruit and veg caught the eye. However, the group also included "grains" in its plans and, in Quaker,
they have a global brand upon which to build.
In the UK, Quaker is driving PepsiCo's growth as we speak. Speaking
to the BBC last week, Richard Evans, the head of PepsiCo's operations
in the UK and Ireland, said the brand was among the fastest parts of
its business. "If you look at that business the fastest growing parts of it are
actually juice and grain and Quaker Oats," Evans said.
PepsiCo's announcement last week was just the latest
in a series the company has made in the last 12 months,
from the establishment of an R&D facility in the US to
"fundamentally improve" the nutritional profi le of its
products to the creation of new targets to lower the amount
of salt, saturated fat and added sugar worldwide.
The company's UK arm made its own announcement this
spring that fi t the group's overall strategy. "In March, we
published a health report that said the kind of business we
wanted to be by 2020, which is one primarily based around
fruit, veg and grain," Evans said. "The reason we're doing
that is because consumers want healthier choices."
Of course, any moves to develop a business is a risk -
even in what could be deemed to be a company's area of
expertise. Last month, PepsiCo UK and Ireland said it
had pulled Pepsi Raw, a product that had been billed as
a "natural" alternative to Pepsi cola. The
company blamed a poor performance in the
UK supermarket channel.
There is an inherent risk to innovation and,
as PepsiCo looks to build its nutrition business,
some products will inevitably fail. But,
as Evans told the BBC, perseverance is vital.
"It's about trying. There are loads of products
that lots of companies have brought
to market and haven't worked. The trick is
[to ask] what did you learn from that? We
learned that it wasn't differentiated enough
versus what we sell every day, so consumers
told us in unequivocal terms that that wasn't
quite what they were looking for. It's about
going back and trying again."
The potential - and perils - of PepsiCo's health kick Dairy, fruit and veg. On the face of it, these products seem a world away from the carbonated soft drinks and crisps that have long been core to PepsiCo's business. However, the US food and beverage giant is set to make a serious move to grow its presence in the healthier areas of the market.
Last week, the group unveiled plans to set up a business unit focusing squarely
on nutrition and targeting sectors that are relatively untouched territory for PepsiCo.
Demand for high-sugar fizzy drinks and salty snacks is waning in the West and consumers in emerging markets, particularly in the key middle-class demographic, are also showing signs
of wanting healthier variants. For instance, research from just-food shows that India and China will be drivers of the global market for healthier snacks during this decade.
By positioning PepsiCo to focus more on health and wellness, Nooyi has a better chance of securing the long-term prosperity of the company. That said, the "nutrition" element of PepsiCo's stable is already a substantial business in its own right. The company claims its nutrition operations, home to brands like Quaker and Tropicana, already generate US$10m
in annual sales. PepsiCo's ambition is to triple those revenues in ten years.
Quaker and Tropicana are likely to be key planks in PepsiCo's plan. When PepsiCo announced the creation of the "global nutrition unit" last week, the company's ambitions in dairy, fruit and veg caught the eye. However, the group also included "grains" in its plans and, in Quaker,
they have a global brand upon which to build.
In the UK, Quaker is driving PepsiCo's growth as we speak. Speaking
to the BBC last week, Richard Evans, the head of PepsiCo's operations
in the UK and Ireland, said the brand was among the fastest parts of
its business. "If you look at that business the fastest growing parts of it are
actually juice and grain and Quaker Oats," Evans said.
PepsiCo's announcement last week was just the latest
in a series the company has made in the last 12 months,
from the establishment of an R&D facility in the US to
"fundamentally improve" the nutritional profi le of its
products to the creation of new targets to lower the amount
of salt, saturated fat and added sugar worldwide.
The company's UK arm made its own announcement this
spring that fi t the group's overall strategy. "In March, we
published a health report that said the kind of business we
wanted to be by 2020, which is one primarily based around
fruit, veg and grain," Evans said. "The reason we're doing
that is because consumers want healthier choices."
Of course, any moves to develop a business is a risk -
even in what could be deemed to be a company's area of
expertise. Last month, PepsiCo UK and Ireland said it
had pulled Pepsi Raw, a product that had been billed as
a "natural" alternative to Pepsi cola. The
company blamed a poor performance in the
UK supermarket channel.
There is an inherent risk to innovation and,
as PepsiCo looks to build its nutrition business,
some products will inevitably fail. But,
as Evans told the BBC, perseverance is vital.
"It's about trying. There are loads of products
that lots of companies have brought
to market and haven't worked. The trick is
[to ask] what did you learn from that? We
learned that it wasn't differentiated enough
versus what we sell every day, so consumers
told us in unequivocal terms that that wasn't
quite what they were looking for. It's about
going back and trying again."
Procter & Gamble to keep focus on innovation
Reuters News October 12th
Procter & Gamble Co Chief Executive Bob McDonald defended the company's heavy spending on product innovation and marketing as a way to boost market share for each of its brands.
The world's largest household products maker, known for such popular brands as Pampers diapers, Tide laundry detergent and Duracell batteries, has been spending heavily on developing and promoting new products to attract value-seeking shoppers.
In August, P&G posted a fourth quarter profit below analysts' estimates as higher spending on marketing more than offset sales growth. First quarter earnings will be released
on Oct. 27. "We're not yet growing profitable share on every one of our businesses," McDonald told shareholders at the company's annual meeting in P&G's hometown of Cincinnati,
Ohio, on Tuesday. "This remains a top priority," he said. "We have robust innovation
and marketing plans in place to accelerate share growth across the entire portfolio." McDonald highlighted the company's new Gillette Fusion ProGlide shaving system, which he said is already the number one razor in the United States, and Pampers Dry Max diapers.
Earlier this year, the company faced a public relations battle over its new Pampers after parents complained that the diapers caused severe rashes. U.S. and Canadian agencies investigating the claims said last month they found no specific link between Pampers and the rash cases.
Many packaged goods makers turned to promotions to lure U.S. consumers during
the recession's nadir. But as the economy shows halting signs of recovery, they are
focusing on new products with fresh features to attract purchases.
"Innovation that truly improves people's lives is more important than ever because
many of the economies in which we operate are still recovering from recession," McDonald said.
"Our own experience shows that companies that continue to invest in innovation during economic downturns enjoy more growth in the years that follow."
The company's increased investment in new product development will likely pay off despite a recent lackluster performance, said Lauren DeSanto, a stock analyst with Morningstar Inc.
"P&G's stock has been kind of languishing for a while but I think a lot of people including myself think it's undervalued and certainly they've been doing a little bit better job
getting the top line moving and defending market share," DeSanto said.
P&G's shares closed down 0.2 percent at $62.02 on the New York Stock Exchange. The shares are up just over 2 percent this year, compared with a 4.7 percent rise in the Standard
& Poor's 500 Index and a nearly 12 percent jump in smaller rival Clorox .
Procter & Gamble Co Chief Executive Bob McDonald defended the company's heavy spending on product innovation and marketing as a way to boost market share for each of its brands.
The world's largest household products maker, known for such popular brands as Pampers diapers, Tide laundry detergent and Duracell batteries, has been spending heavily on developing and promoting new products to attract value-seeking shoppers.
In August, P&G posted a fourth quarter profit below analysts' estimates as higher spending on marketing more than offset sales growth. First quarter earnings will be released
on Oct. 27. "We're not yet growing profitable share on every one of our businesses," McDonald told shareholders at the company's annual meeting in P&G's hometown of Cincinnati,
Ohio, on Tuesday. "This remains a top priority," he said. "We have robust innovation
and marketing plans in place to accelerate share growth across the entire portfolio." McDonald highlighted the company's new Gillette Fusion ProGlide shaving system, which he said is already the number one razor in the United States, and Pampers Dry Max diapers.
Earlier this year, the company faced a public relations battle over its new Pampers after parents complained that the diapers caused severe rashes. U.S. and Canadian agencies investigating the claims said last month they found no specific link between Pampers and the rash cases.
Many packaged goods makers turned to promotions to lure U.S. consumers during
the recession's nadir. But as the economy shows halting signs of recovery, they are
focusing on new products with fresh features to attract purchases.
"Innovation that truly improves people's lives is more important than ever because
many of the economies in which we operate are still recovering from recession," McDonald said.
"Our own experience shows that companies that continue to invest in innovation during economic downturns enjoy more growth in the years that follow."
The company's increased investment in new product development will likely pay off despite a recent lackluster performance, said Lauren DeSanto, a stock analyst with Morningstar Inc.
"P&G's stock has been kind of languishing for a while but I think a lot of people including myself think it's undervalued and certainly they've been doing a little bit better job
getting the top line moving and defending market share," DeSanto said.
P&G's shares closed down 0.2 percent at $62.02 on the New York Stock Exchange. The shares are up just over 2 percent this year, compared with a 4.7 percent rise in the Standard
& Poor's 500 Index and a nearly 12 percent jump in smaller rival Clorox .
Brands get up close and personal
Financial times
By Louise Lucas
Published: October 13 2010 20:49
A Chinese woman squats on a low plastic stool, reaches for the shampoo and begins massaging it into her head, fingers working deep into her scalp in a kind of ritual. She is not the only Chinese woman to use conditioner like this – as testified by hundreds of hours of videotape, all filmed in Chinese bathrooms.
Perverse? Pornography? Neither: this is the Holy Grail of fast-moving consumer goods companies seeking to make products that consumers want. To that end, FMCG groups are earnestly studying human behaviour through focus groups, surveys and, more frequently in recent years, ways that are distinctly up close and personal.
The business of consumer research is intensifying on virtually every level. FMCG companies, which typically spend 2-3 per cent of sales on research and development, are going further afield geographically and conducting ever deeper research. New media are being harnessed, be it through social networks or blogs.
“Traditional research concentrated on the ‘what’. Now we are trying to establish the ‘why’,” says Simon Stewart, marketing director at Britvic, the beverages company. “We are not asking what they think about products and ideas but focusing on what makes them tick.”
The spread of digital social networks is one reason for the more sophisticated approach. But changing market dynamics are also behind the new focus. Competition and a weak economy make it ever more important to win customers, particularly in emerging markets. Indeed, so lucrative is the business of understanding what makes the Asian consumer tick that Singapore, never a place to miss a business opportunity, plans next year to set up a government-funded Institute for Asia Consumer Insights.
The same dynamics inform L’Oréal’s experimentation in bathroom photography. In similar experiments conducted in other markets, the French cosmetics group discovered that Korean women apply more potions and cosmetics to their faces than anyone else – a total of more than 25 creams and cosmetics at any one time, compared with 20-25 in Japan and more than double the amount used by American or European women. Japanese women may apply more than 50 coatings of mascara at one time, making European women – five to 10 coatings – look mere amateurs.
New ways to generate feedback
Fast-moving consumer goods companies are devoting more resources to digital media. The increasing spread of social media gives them the perfect tool to understand consumers. Starbucks has nearly 15m fans on Facebook, more than Barack Obama or South Park; Coca-Cola has 13.5m fans and Oreo cookies 11m.
In addition to sheer numbers of consumers, the social networks can provide quick feedback. Britvic, for instance, points out that teenage boys are both big Tango drinkers and heavy internet users, providing a constant source of information and feedback.
These companies are also replacing old-style surveys and focus groups with field work. Experts from a range of disciplines – historians, anthropologists, semioticians – are increasingly called on to study consumers at close hand in order to analyse trends and build databases.
“It all starts with observation,” says Patricia Pineau, who oversees L’Oréal’s consumer insights team, talking about the company’s “evaluation centres”, which involve “labs” decked out as bathrooms as well as cameras in people’s homes.
“Observing is necessary to decode exactly what [women] are trying to get and what they are attracted to. Sometimes it is the gesture that will reveal something that they really want to gain,” says Ms Pineau.
And what gestures. Japanese women spend a full minute massaging in lotions, patting their faces and eyelids. In Brazil, women change their nail polish every day to match their dress – and are wanton with the brush, painting their fingers along with their nails and relying on a cotton bud to mop up afterwards.
Back in the labs, scientists respond in turn. Thus Lancôme’s Génifique Youth Activating Concentrate has a stickier consistency in Japan than in Europe or the US, the better to pat in. Lip gloss is lighter in Japan, the better to allow the constant reapplication beloved of Japanese women.
Sometimes, however, gestures are not enough. Hence Nestlé’s strategy of embedding researchers in family homes, taking tea with a multigenerational Indian family or sitting cross-legged on the floor pounding pulses with a group of scarved women and their jeans-wearing daughters in Syria.
Chandan Mukherji is a veteran of embedding. The New Delhi-based head of consumer insights at Nestlé India has in recent years watched the lifestyle of the middle classes in towns and cities seep out to the villages and countryside. Seated at the family table, he saw housewives were turning to instant noodles but that they still supplemented them with extra vegetables and garnishes. Nestlé responded by supplementing its own instant noodles with vegetables.
“It really is an eye-opener for most of the teams, because they get a real life understanding,” says Mr Mukherji.
Also, after witnessing at first hand India’s small kitchens and vulnerability to rodent infestations, the Swiss group reduced pack sizes.
Drinks companies take a similarly up close and broad remit – looking not just at what people like to drink but where and how. Take SABMiller, the brewer. In the important market of Latin America, the urge to go out to where its drinks were actually drunk – and especially to mix that favourite cocktail of beer and football – was strong but the availability of venues less so.
Rob Priday, managing director of SABMiller’s Peruvian operations, says: “There’s a dearth of pubs in the country. In the terrorist years, people did not go out and now it is over, there are not enough pubs for on-premises drinking.”
Research showed that consumers want ed more choice of places to drink and the results can be seen on the streets of Colombia and Peru. The company worked with local businesses and entrepreneurs to open café-style joints attached to soccer fields, where fathers can down a glass while their children play – or even have a kick-about themselves before sinking a glass or two. There are also bars where customers can play simulated golf or a few rounds of cards.
When Nestlé in Peru was debating which new flavour to introduce for its popular Besos de Moza – a marshmallow and cookie confection – it asked sweet-toothed consumers themselves to choose between the lucuma, a local fruit, or strawberry. “The feedback was amazing,” recalls Carlos Velasco, who heads the Peruvian operation. They chose lucuma, and Nestlé went on to sell 56m lucuma-flavoured units in 2009.
Asking consumers directly is valuable but FMCG companies also call on a range of experts: historians for historical context (say, the caste system in India), psychologists, anthropologists and ethnologists and even semioticians.
Greg Rowland, a semiotician based in London, advises FMCG companies on the messages they need to send to woo customers through their packaging and placing on supermarket shelves.
Supermarkets, Mr Rowland says, are a battleground between puritan and hedonistic pleasures – plain fruit and veg stalls as customers first walk in, with the indulgent pleasures of alcohol and chocolate waiting to assail them further down the aisles.
We instinctively want to stay on the sober side, says Mr Rowland, so packaging of indulgent items is classily low-key. Hence the naive smiley face on Innocent’s drink cartons or the use of white space on packaging for top-notch biscuits. Or take the heraldic devices on bottles of lager, designed to establish the brewer’s authority in the minds of drinkers. This is serious stuff, the emblems say, none of your “hooch”.
For all the time, money and expert investigation FMCG companies throw into understanding consumers, mistakes are made. During research into Japanese skincare, a L’Oréal team was surprised to see a woman supplementing her beauty routine with a tiny razor.
She slid it around her nose, below her eyebrows and on the nape of her neck. The reason: she was removing almost imperceptible hairs to get a better effect when powder was applied. As a non-daily ritual, and one that required the woman to bring her own razors (which were not on offer in L’Oréal’s labs), it had until then completely bypassed the ranks of researchers.
Delivery can miss a step too: SABMiller, identifying a desire for a sweeter drink for women in Peru, produced the cider-like Red – which turned out to be extremely popular with the men.
But for consumers, the question is surely whether they are just victims of clever advertising.
As Mr Rowland says: “You may think you are buying and eating this tin of biscuits. But really, the tin of biscuits is buying and eating you.”
By Louise Lucas
Published: October 13 2010 20:49
A Chinese woman squats on a low plastic stool, reaches for the shampoo and begins massaging it into her head, fingers working deep into her scalp in a kind of ritual. She is not the only Chinese woman to use conditioner like this – as testified by hundreds of hours of videotape, all filmed in Chinese bathrooms.
Perverse? Pornography? Neither: this is the Holy Grail of fast-moving consumer goods companies seeking to make products that consumers want. To that end, FMCG groups are earnestly studying human behaviour through focus groups, surveys and, more frequently in recent years, ways that are distinctly up close and personal.
The business of consumer research is intensifying on virtually every level. FMCG companies, which typically spend 2-3 per cent of sales on research and development, are going further afield geographically and conducting ever deeper research. New media are being harnessed, be it through social networks or blogs.
“Traditional research concentrated on the ‘what’. Now we are trying to establish the ‘why’,” says Simon Stewart, marketing director at Britvic, the beverages company. “We are not asking what they think about products and ideas but focusing on what makes them tick.”
The spread of digital social networks is one reason for the more sophisticated approach. But changing market dynamics are also behind the new focus. Competition and a weak economy make it ever more important to win customers, particularly in emerging markets. Indeed, so lucrative is the business of understanding what makes the Asian consumer tick that Singapore, never a place to miss a business opportunity, plans next year to set up a government-funded Institute for Asia Consumer Insights.
The same dynamics inform L’Oréal’s experimentation in bathroom photography. In similar experiments conducted in other markets, the French cosmetics group discovered that Korean women apply more potions and cosmetics to their faces than anyone else – a total of more than 25 creams and cosmetics at any one time, compared with 20-25 in Japan and more than double the amount used by American or European women. Japanese women may apply more than 50 coatings of mascara at one time, making European women – five to 10 coatings – look mere amateurs.
New ways to generate feedback
Fast-moving consumer goods companies are devoting more resources to digital media. The increasing spread of social media gives them the perfect tool to understand consumers. Starbucks has nearly 15m fans on Facebook, more than Barack Obama or South Park; Coca-Cola has 13.5m fans and Oreo cookies 11m.
In addition to sheer numbers of consumers, the social networks can provide quick feedback. Britvic, for instance, points out that teenage boys are both big Tango drinkers and heavy internet users, providing a constant source of information and feedback.
These companies are also replacing old-style surveys and focus groups with field work. Experts from a range of disciplines – historians, anthropologists, semioticians – are increasingly called on to study consumers at close hand in order to analyse trends and build databases.
“It all starts with observation,” says Patricia Pineau, who oversees L’Oréal’s consumer insights team, talking about the company’s “evaluation centres”, which involve “labs” decked out as bathrooms as well as cameras in people’s homes.
“Observing is necessary to decode exactly what [women] are trying to get and what they are attracted to. Sometimes it is the gesture that will reveal something that they really want to gain,” says Ms Pineau.
And what gestures. Japanese women spend a full minute massaging in lotions, patting their faces and eyelids. In Brazil, women change their nail polish every day to match their dress – and are wanton with the brush, painting their fingers along with their nails and relying on a cotton bud to mop up afterwards.
Back in the labs, scientists respond in turn. Thus Lancôme’s Génifique Youth Activating Concentrate has a stickier consistency in Japan than in Europe or the US, the better to pat in. Lip gloss is lighter in Japan, the better to allow the constant reapplication beloved of Japanese women.
Sometimes, however, gestures are not enough. Hence Nestlé’s strategy of embedding researchers in family homes, taking tea with a multigenerational Indian family or sitting cross-legged on the floor pounding pulses with a group of scarved women and their jeans-wearing daughters in Syria.
Chandan Mukherji is a veteran of embedding. The New Delhi-based head of consumer insights at Nestlé India has in recent years watched the lifestyle of the middle classes in towns and cities seep out to the villages and countryside. Seated at the family table, he saw housewives were turning to instant noodles but that they still supplemented them with extra vegetables and garnishes. Nestlé responded by supplementing its own instant noodles with vegetables.
“It really is an eye-opener for most of the teams, because they get a real life understanding,” says Mr Mukherji.
Also, after witnessing at first hand India’s small kitchens and vulnerability to rodent infestations, the Swiss group reduced pack sizes.
Drinks companies take a similarly up close and broad remit – looking not just at what people like to drink but where and how. Take SABMiller, the brewer. In the important market of Latin America, the urge to go out to where its drinks were actually drunk – and especially to mix that favourite cocktail of beer and football – was strong but the availability of venues less so.
Rob Priday, managing director of SABMiller’s Peruvian operations, says: “There’s a dearth of pubs in the country. In the terrorist years, people did not go out and now it is over, there are not enough pubs for on-premises drinking.”
Research showed that consumers want ed more choice of places to drink and the results can be seen on the streets of Colombia and Peru. The company worked with local businesses and entrepreneurs to open café-style joints attached to soccer fields, where fathers can down a glass while their children play – or even have a kick-about themselves before sinking a glass or two. There are also bars where customers can play simulated golf or a few rounds of cards.
When Nestlé in Peru was debating which new flavour to introduce for its popular Besos de Moza – a marshmallow and cookie confection – it asked sweet-toothed consumers themselves to choose between the lucuma, a local fruit, or strawberry. “The feedback was amazing,” recalls Carlos Velasco, who heads the Peruvian operation. They chose lucuma, and Nestlé went on to sell 56m lucuma-flavoured units in 2009.
Asking consumers directly is valuable but FMCG companies also call on a range of experts: historians for historical context (say, the caste system in India), psychologists, anthropologists and ethnologists and even semioticians.
Greg Rowland, a semiotician based in London, advises FMCG companies on the messages they need to send to woo customers through their packaging and placing on supermarket shelves.
Supermarkets, Mr Rowland says, are a battleground between puritan and hedonistic pleasures – plain fruit and veg stalls as customers first walk in, with the indulgent pleasures of alcohol and chocolate waiting to assail them further down the aisles.
We instinctively want to stay on the sober side, says Mr Rowland, so packaging of indulgent items is classily low-key. Hence the naive smiley face on Innocent’s drink cartons or the use of white space on packaging for top-notch biscuits. Or take the heraldic devices on bottles of lager, designed to establish the brewer’s authority in the minds of drinkers. This is serious stuff, the emblems say, none of your “hooch”.
For all the time, money and expert investigation FMCG companies throw into understanding consumers, mistakes are made. During research into Japanese skincare, a L’Oréal team was surprised to see a woman supplementing her beauty routine with a tiny razor.
She slid it around her nose, below her eyebrows and on the nape of her neck. The reason: she was removing almost imperceptible hairs to get a better effect when powder was applied. As a non-daily ritual, and one that required the woman to bring her own razors (which were not on offer in L’Oréal’s labs), it had until then completely bypassed the ranks of researchers.
Delivery can miss a step too: SABMiller, identifying a desire for a sweeter drink for women in Peru, produced the cider-like Red – which turned out to be extremely popular with the men.
But for consumers, the question is surely whether they are just victims of clever advertising.
As Mr Rowland says: “You may think you are buying and eating this tin of biscuits. But really, the tin of biscuits is buying and eating you.”
lundi 11 octobre 2010
Mr. Propre se transforme en laveur de voitures
08/10/10 22:35
le Figaro
Procter & Gamble, leader mondial des biens de consommation, a créé deux réseaux de franchises aux États-Unis. Il compte les tester en Europe et en Asie, afin de profiter de la puissance de ses marques phares.
Un centre de lavage automobile Mr. Propre, un pressing Ariel, un salon de coiffure Pantène, une garderie Pampers, ou encore un barbier Gillette… Ces nouvelles boutiques pourraient bientôt s’installer près de chez vous. «La création de réseaux de franchises à l’enseigne de nos marques est une priorité, assure au Figaro Ross Holthouse, porte-parole de Procter & Gamble, leader mondial des biens de grande consommation. L’Europe de l’Ouest, notamment la France, et l’Asie présentent des opportunités.» Une première tentative pourrait avoir lieu «d’ici douze à vingt-quatre mois» sur un marché test.
Depuis trois ans, Procter & Gamble s’essaie à cette activité aux États-Unis. Le groupe américain, présent dans les lessives, produits ménagers, shampoings, couches et produits de beauté, a choisi le nettoyage pour ses deux premiers réseaux : le lavage auto avec Mr. Clean Car Wash, et le pressing avec Tide Dry Cleaners. Il a créé une filiale dédiée, Agile Pursuits Franchising, confiée à un vétéran du secteur, et recruté une vingtaine de personnes. «Tester et commercialiser de nouveaux modèles économiques, cela fait partie de la R & D du groupe» , selon Ross Holthouse.
Cette nouvelle activité a un double intérêt. D’une part, elle constitue une source de revenus, avec les royalties versées par les exploitants des boutiques. Le groupe ne communique ni ses objectifs ni le pourcentage prélevé sur le chiffre d’affaires de ses franchisés. D’autre part, ces magasins augmentent la visibilité des marques, en développant leur présence en dehors des rayons des hypermarchés et des pages de publicité. P&G reconnaît vouloir ainsi doper le chiffre d’affaires de ses produits phare.
Maîtrise de l’image
Après deux ans de test à Cincinnati (Ohio), où son siège est installé, le groupe compte seize stations de lavage aux couleurs de Mr. Clean, le nom américain de Mr. Propre. Six autres ouvriront leurs portes cette année.
Avec trois points de vente dans le Missouri, les pressings aux couleurs de Tide (l’équivalent d’Ariel) commencent tout juste à se développer. Tous proposent un service dans la journée, un système de «drive-in» ainsi que la possibilité de déposer ou de récupérer les vêtements dans des casiers 24 heures sur 24. Le groupe a signé avec une dizaine de franchisés supplémentaires. L’un d’entre eux compte créer de 150 pressings d’ici à quatre ans sur la Côte Ouest. Dans un marché de 8 milliards de dollars aux États-Unis, Procter & Gamble parie sur l’ouverture de plusieurs centaines de pressings d’ici à deux ans. P & G, qui recherche activement des franchisés dans les grandes villes du pays, vise «une croissance à deux chiffres d’ici un à deux ans.»
En France, Nescafé et Lustucru avaient tenté une diversification similaire il y a quelques années, avec les cafés Nes et les bars à pâtes Lustucru. Dans les deux cas, le succès n’a pas été au rendez-vous, le recrutement et la gestion de franchisés s’étant avéré plus compliqués que prévus pour des groupes agroalimentaires, plus habitués à négocier avec les géants de la distribution. Par ailleurs, si le recours à la franchise est moins risqué que l’ouverture de points de vente en propre, cette stratégie présente un risque pour la maîtrise de l’image des marques.
Letessier, Ivan
le Figaro
Procter & Gamble, leader mondial des biens de consommation, a créé deux réseaux de franchises aux États-Unis. Il compte les tester en Europe et en Asie, afin de profiter de la puissance de ses marques phares.
Un centre de lavage automobile Mr. Propre, un pressing Ariel, un salon de coiffure Pantène, une garderie Pampers, ou encore un barbier Gillette… Ces nouvelles boutiques pourraient bientôt s’installer près de chez vous. «La création de réseaux de franchises à l’enseigne de nos marques est une priorité, assure au Figaro Ross Holthouse, porte-parole de Procter & Gamble, leader mondial des biens de grande consommation. L’Europe de l’Ouest, notamment la France, et l’Asie présentent des opportunités.» Une première tentative pourrait avoir lieu «d’ici douze à vingt-quatre mois» sur un marché test.
Depuis trois ans, Procter & Gamble s’essaie à cette activité aux États-Unis. Le groupe américain, présent dans les lessives, produits ménagers, shampoings, couches et produits de beauté, a choisi le nettoyage pour ses deux premiers réseaux : le lavage auto avec Mr. Clean Car Wash, et le pressing avec Tide Dry Cleaners. Il a créé une filiale dédiée, Agile Pursuits Franchising, confiée à un vétéran du secteur, et recruté une vingtaine de personnes. «Tester et commercialiser de nouveaux modèles économiques, cela fait partie de la R & D du groupe» , selon Ross Holthouse.
Cette nouvelle activité a un double intérêt. D’une part, elle constitue une source de revenus, avec les royalties versées par les exploitants des boutiques. Le groupe ne communique ni ses objectifs ni le pourcentage prélevé sur le chiffre d’affaires de ses franchisés. D’autre part, ces magasins augmentent la visibilité des marques, en développant leur présence en dehors des rayons des hypermarchés et des pages de publicité. P&G reconnaît vouloir ainsi doper le chiffre d’affaires de ses produits phare.
Maîtrise de l’image
Après deux ans de test à Cincinnati (Ohio), où son siège est installé, le groupe compte seize stations de lavage aux couleurs de Mr. Clean, le nom américain de Mr. Propre. Six autres ouvriront leurs portes cette année.
Avec trois points de vente dans le Missouri, les pressings aux couleurs de Tide (l’équivalent d’Ariel) commencent tout juste à se développer. Tous proposent un service dans la journée, un système de «drive-in» ainsi que la possibilité de déposer ou de récupérer les vêtements dans des casiers 24 heures sur 24. Le groupe a signé avec une dizaine de franchisés supplémentaires. L’un d’entre eux compte créer de 150 pressings d’ici à quatre ans sur la Côte Ouest. Dans un marché de 8 milliards de dollars aux États-Unis, Procter & Gamble parie sur l’ouverture de plusieurs centaines de pressings d’ici à deux ans. P & G, qui recherche activement des franchisés dans les grandes villes du pays, vise «une croissance à deux chiffres d’ici un à deux ans.»
En France, Nescafé et Lustucru avaient tenté une diversification similaire il y a quelques années, avec les cafés Nes et les bars à pâtes Lustucru. Dans les deux cas, le succès n’a pas été au rendez-vous, le recrutement et la gestion de franchisés s’étant avéré plus compliqués que prévus pour des groupes agroalimentaires, plus habitués à négocier avec les géants de la distribution. Par ailleurs, si le recours à la franchise est moins risqué que l’ouverture de points de vente en propre, cette stratégie présente un risque pour la maîtrise de l’image des marques.
Letessier, Ivan
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