coca cola

Don’t Panic, Just Pivot

What to do when the biggest shockwave of them all hits

Is there really such a thing as ‘FMCG’ anymore? We believe that those FMCG brands that are going to see success in the long run are those that can see beyond their sector. As the boundaries between health, tech, and FMCG become increasingly blurry, and as FMCG reduces its dependency on retailers by developing in B2C, we’re tapping into our expertise across sectors to explore how brands can innovate and change the game more rapidly, with better joined up thinking. It’s time to ask yourself if being single minded is making you narrow minded…Can FMCG really win on its own? 

We often use shockwaves in workshops, intended to push participants’ thinking by posing an unusual scenario, and challenging them to operate within it. The best shockwaves are unlikely, but believable. Sometimes, it’s fun to throw in a scenario so unreasonable, so totally beyond comprehension, you kind of think; that’s just silly.

The government imposes a nationwide ban on all your industry’s operations, preventing your business from trading as it normally does.

The above sounds like one of those unreasonable shockwaves, right? Yet, as is all becoming painfully apparent, this not only can happen, but is happening right now, with far-reaching consequence. My beloved restaurant industry is facing a particularly tough time; independents are going out of business, behemoths like McDonald’s and Nando’s are shutting up shop, and even high-end restaurants are feeling the stress.

Rather than wallowing in the doom and gloom, I wanted to shine a light on the fantastic food service businesses who are doing, frankly, inordinately incredible things at this time. With some businesses making the difficult decision to lose staff and suppliers alike, some are refusing to take this challenge lying down. They really are following the principle of “don’t panic, pivot”, shifting their business models with incredible speed to survive, and help the wider industry.

Take Leon for example, the healthy fast food chain known for their delicious wraps, meatballs and meal boxes. Not only have they pledged to offer 50% off all their meals for care workers, free coffee for retail & hospitality workers, free meals for kids and free delivery, they have also pivoted their business model. In a world where supermarkets are buckling under the demand for food, Leon has repurposed their network of kitchens into shops, not only for customers directly but also “last-mile logistics” brands like Uber Eats and Deliveroo, enabling them to get food that would otherwise be sold in their restaurants to people’s homes.

And speaking of Uber Eats, they have been benefiting massively from the closure of restaurants, reporting in the US a “10x increase in the number of self-serve signups by restaurants between March 12 and March 19 than it does during a normal week”. Yet in the UK, Uber Eats is helping to relieve the financial burden placed on small restaurants, by waiving delivery and activation fees they normally charge. This means restaurants can take advantage of their network of delivery drivers for free. What a fantastic initiative to service those businesses who are now reliant solely on delivery trade to survive! It’s great to see Just Eat and Deliveroo following suit with similar arrangements. Interestingly, restaurants that have previously never signed up for delivery platforms, such as the lauded Indian restaurant Dishoom, and most of Gordon Ramsay’s restaurants, have signed up this week.

B2B food delivery service Natoora, whose fresh produce from small producers is used to supply the hospitality sector, has recently opened up its services to the public. For the first time, those in London can order direct from their app, getting a range of fresh, seasonal produce direct to their door. What a time to launch your B2C proposition!

And lastly my old favourite M&S. Like most supermarkets, they are responding admirably to the challenge of feeding the nation at a time when there are few other options available. So it is fantastic to see them launch a partnership with Deliveroo, to get their products out to those who aren’t able to; all you have to do is order via an M&S BP Simply Food outlet. Who would have thought a few months ago that this partnership would have happened, and so rapidly!

So in sum, shockwaves (be they invented or real) can force new ways of thinking that shake up the status quo.  One shockwave we used with Coca-Cola and smartwater a few years ago “the government bans plastic bottles” led to the creation of their 100% recycled plastic range, which is now in-market and bang on-trend.

Hats off to all those at the moment working hard to feed us all in this time of crisis. Maybe some of the ideas borne out of this difficult time will stick, and revolutionise our relationship with food for the better.

 

Originally posted on The Value Engineers’ blog.

COKE BUYS MONSTER-A NIGHTMARE FOR RELENTLESS AND BURN?

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To buy or not to buy. That is the question.

Apologies to the Shakespeare aficionados amongst you for the blatant bastardisation of perhaps the bard’s most famous quote.

However, it is a question that many corporations often ponder (presumably with a copy of Hamlet to hand) when considering how to defend themselves from a young upstart in their industry, or when judging how best to enter a new market. Do you pour your resources into building a brand, or do you save yourself the hassle and buy up a rival?

The former seems exciting, and the creative amongst you wouldn’t undoubtedly be chomping at the bit to launch a new brand with all the vim and vigour of a start-up. Yet a new brand is unproven and unfamiliar to consumers, and with this comes an inherent risk of failure. The alternative, buying another company outright means you acquire a key strategic asset in their brand. A proven, ready-to-market brand with an identity in consumers’ minds and a consumer base with which it resonates is surely an enticing prospect. But such acquisitions do not come cheap, and thoughts immediately go to how best reclaim the significant investment.

These musings were undoubtedly swirling around the minds of Coke executives when they decided to purchase a 16.7% stake in Monster, the energy drink brand, a few weeks ago for $2.15bn (£1.28bn). The move will be great for Monster, who will surely benefit from Coke’s behemoth global distribution network. Coke will probably do well out of a stake in Monster too, which is the largest energy drink brand in America, and the only real global competitor to Red Bull.

But spare a thought for Relentless and Burn, the two existing energy drinks brands in the Coke portfolio. Much like a kid with a new toy, Coke has cast aside its existing play things and plumped for something new and shiny to take on the energy drinks market. In recent years Monster has powered ahead of Relentless in terms of market value in the UK (£108.1m vs. £59.9m) with Burn energy drink not even making the top ten. And with the positioning of Relentess, around the alternative music scene, feeling like a subset of Monster’s broader positioning around alternative music and sports, one wonders what the fate is for these lesser energy drinks brands within the Coke portfolio. Is there room for all three brands? Will they be repositioned, catering to an even smaller niche to accommodate their bigger brother? Or will they end up on the scrapheap, their assets consumed (ironically) by a turbo-charged Monster?

To me, the Monster brand has always felt more dynamic and exciting than its Coke contemporaries, with an underground grit that Red Bull had, but seems to have lost in recent years as it has gone more mainstream. So I approve (if they care) of Coke’s decision to buy, not build, its way to greater success in the energy drinks market. However, I suspect that Relentless and Burn will be sleeping less easily with this Monster nearby.