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Supermarkets should remember the consequences of the Perrier scandal

February 18, 2013

Malcolm WalkerDuring the early part of 1990, health officials in North Carolina, USA, made an alarming discovery. Some Perrier bottled mineral water, whose purity was so legendary they had used it to benchmark other water supplies, was found to be contaminated with minute traces of benzene.

Benzene is a natural component of crude oil. Ingested in sufficient quantities, it can cause cancer in humans. Of course, there was no question of that happening in North Carolina. As a Federal Food and Drug Administration official drily observed at the time: “At these levels there is no immediate hazard. Over many years, if you consumed about 16 fluid ounces a day, your lifetime risk of cancer might increase by one in a million, which we consider a negligible risk.”

But no one was listening to the FDA’s voice of reason. Panic broke out all over the USA – and not just there. Perrier, at that time world leader in the mineral water category, was obliged to withdraw its entire global inventory of 160 million bottles. Brand integrity was further compromised by the discovery that the “natural” bubbles in the bottled potion were actually added back later. Perrier never fully recovered: it lost its leadership and became just another branded mineral water, albeit still a famous French one. Commercially, the crisis was if anything even more disastrous. The independent Perrier bottled water company was, within two years, sold to Nestlé.

I think you know where I’m leading with this. Fast-forward 23 years, to a full-page ad that appeared in yesterday’s national newspapers. It was inserted by Malcolm Walker, founder and chief executive of  leading UK food retailer Iceland. Its purpose was to divert responsibility for the horse meat scandal now engulfing our supermarkets by pointing the finger of blame at cheapskate procurement in local government, the National Health Service – and its equally unscrupulous counterpart in the catering industry – which has connived at bringing down processed food costs to their lowest possible denominator. Doubtless, judging from the ensuing squawks of indignation, the Iceland boss has a point – though how exactly his tirade exonerates the supermarkets from their own ruthless manipulation of supplier lines is not entirely clear. However, Walker does not stop there. Having scored some points on behalf of his sector, he then goes on to trash it by adopting a “holier than thou” approach:

“Iceland does not sell cheap food. We sell high-quality own label frozen food that is good value. We do not sell – and never sold – ‘white pack’ economy products.” Unlike, he carefully does not add, Tesco and Asda. And, just to ram the point home, he goes on to claim that “no horse meat has ever been found in an Iceland product”.

Well, almost none. At the bottom of the ad there is a mealy-mouthed admission that 0.1% of equine DNA was indeed found in two Iceland Quarter Pound burgers. But these don’t count, because the test, carried out by the Food Safety Authority of Ireland, was not an “accredited” one, and the discovered traces of horse were “well below the current accepted threshold level” of 1%. So, yaboo sucks to any critics.

Nice one, Malcolm. You’ve managed to spread, or at least smear, the blame far and wide, and thrown into the processor just a hint of xenophobia. Ireland, Romania, France – these horse-eating monkeys, they’re not like us – not to be trusted, whatever their professions of rigorously adhering to EU-wide standards. But, leaving aside the lowly populism of his message, Walker, in waxing eloquent about the infinitesimal amount of contamination in his own burgers, has committed a revealing tactical blunder.

Perrier logoThe current food scandal is not about parts per billion contaminants found in horse meat; it’s about trust in the brand. Just like the benzene found in Perrier all those years ago, consumers would have to ingest an awful lot of horse burger infected with “bute” equine painkiller (over 500 250 gram ones, to be precise) before experiencing any appreciable side effect. But that won’t prevent them passing summary judgement on those august brands – at the head of the supply chain – that have allowed this scandal to happen: namely the UK grocery multiples.

Possibly with devastating consequences for future sales.

One interesting aspect of this scandal is that its ramifications have now moved on from cheap lines of processed meat – in short, “poor people” – to ready-made meals. In the other words, the sort of thing consumed by affluent and articulate members of the middle-class. That’s bad news even for elite purveyors, such as Waitrose and M&S.

In all probability there’s nothing to worry about. But that’s not the point, is it? My local butcher tells me business has gone gang-busters over the past couple of weeks. And for good reason. In the past, there was a perception (false, as it happens, in many cases) that local businesses could not match supermarket fresh meat prices. Now, understandably, people seem a lot more concerned about local provenance. If you must have lasagne, it’s as well to see the meat being minced while you wait, rather than trusting the word of some supermarket about the integrity of its supply line.

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Tim Mason – end of the road for the other half of the Tesco dynamic duo

December 6, 2012

Tim Mason, former chief executive of Tesco's Fresh & EasyChief executive Philip Clarke’s ruthless dispatch of his number two, Tim Mason, is a final reminder – if any were needed – that the past is another country, so far as Tesco is concerned. They did things differently there; they will never do them the same again.

Eventually, someone had to pay the price for Tesco’s enormous strategic folly in setting up – from scratch – the ironically-named Fresh & Easy retail venture in California. One thousand stores were promised in 2006, when the initiative was hatched; 200 have actually opened and nothing but a £1bn loss has been banked. By rights, the faulty judgement was Sir Terry Leahy’s (as he himself has admitted). But Leahy has long since departed as chief executive; while Mason fronted it and is still very much in the public eye. Mason offered to conduct the strategic review into Tesco’s US operation himself, but Clarke needed a scapegoat and declined the offer. Mason had to go.

Arguably, however, Mason set himself up for a fall with his own poor judgement call in 2006. He should never have allowed Leahy to prevail upon him to undertake mission impossible in the first place. The USA – even in the heady early noughties – was widely perceived to be a graveyard for aspirant UK retail brands. Marks & Spencer, Sainsbury and several others had broken their back on the same reef – and paid the price in years of dysfunction. But Tesco, at the time, was in the grip of advanced corporate hubris: as the head of world’s most successful retailer, Leahy was convinced he would be the one to buck the trend.

And who better to lead the vanguard than his most trusted lieutenant, Mason? Mason and Leahy were the dynamic duo at the heart of Britain’s most successful retail story. Leahy was the sharp business brain, and Mason the marketing man with an uncanny, intuitive feel for what the customer wanted. Together they had not only assured Tesco’s dominance in the UK retail market, but put an unchallengeable distance between Tesco and all its competitors – encapsulated in a single, extraordinary, statistic: By 2005 £1 in every £8 spent in Britain’s shops went to Tesco.

The feverish back-story to all this success was more disquieting. What would happen, in the not-too-distant future, when Leahy retired? Leahy clearly supposed that Mason could make the leap from marketing to corporate leadership that he himself had so effortlessly executed. Mason, who joined Tesco in 1982 and had headed marketing since 1997, was desperate to prove him right, and eagerly clutched the poisoned chalice of Fresh & Easy.

The transition fatally upset the balance of power at Tesco. Mason may have had his fair share of bad luck in California, but his operations skills were clearly inferior to those of Leahy. With the result that, as US losses inexorably mounted, he was passed over when the succession issue finally came to the fore. Not only that. Mason’s marketing nous was sorely missed back home, just when Tesco’s UK operation most needed it.

When Mason – then group marketing chief – decamped to America, he took with him his head of UK marketing Simon Uwins. Their UK successors lacked finesse. High turnover of subsequent personnel did not help. But something other than stability was missing – that old Tesco marketing magic. Marketing became too formulaic, and too sales-obsessed.

While Tesco struggled to find a new compass-bearing in post-recession Britain, it let its competition off the back foot. Asda, Sainsbury’s and Safeway (now recast as Morrisons) began to catch up. The Tesco offer, by contrast, began to look tired and over-extended (particularly in non-groceries). The retail behemoth was engaged on too many fronts at once and it showed – in declining profits and advertising campaigns that lacked the common touch.

Would this have happened if Mason had actually been chief marketing officer in more than name? That’s the thing about subjunctive history – we will never know. An easier lesson to draw from the Mason story is one about symbiotic work relationships. Corporate success is rarely the product of a unique talent. Would Mason and Leahy in their heyday ever have succeeded to the extent they did without each other? I suspect they would not.


I’m dreaming of a John Lewis Christmas

November 14, 2010

Christmas is terribly important. And I am not talking about the Season of Cheer and Goodwill to All Men. Oh no, this is something much more fundamental: the rush to get punters into the shops with their wallets open for a last hurrah spending fest.

Up to 25% of UK retailers’ annual business is generated in the narrow period from the Christmas run-up to the end of January. And this year could well be a bonanza. Retail expert Verdict reckons it’s going to be the best time to pluck the goose since 2007, if only because a massive hike in VAT will make all of us feel much poorer by the end of January. Verdict is not alone in this opinion.

So, why do retailers saturate television air-time with so much boring, formulaic, rent-a-celeb advertising that largely fails in its primary objective of distinguishing one brand from another? With so much at stake, you’d think they’d try a little harder than throw lots of money at a small idea with big production values.

Tesco received a lot of stick for its feeble Amanda Holden vehicle. Admittedly the Belcher/Belle Chère gag isn’t that funny, but it’s a smidgin more memorable than Peter and Danii not putting a foot wrong over at M&S; Hester and Delia mouthing off at Waitrose; or the lovely Coleen prancing about like a demented fairy in the Littlewoods Christmas mansion. If you’re looking for meaningful, branded, celebrity, there’s still nothing to beat Jamie at Sainsbury’s. But that’s not saying much these days. Who wants to watch him doling out another stuffed turkey – even if it is in Halton Gill, Yorkshire’s prettiest hamlet?

One or two retailers have taken the hint and steered away from celeb culture. Asda has focused on its suppliers with a well-shot cameo of Young Farmer and Farmer of the Year Adrian Ivory and his beautiful Asda-bound Charolais. Pity he’s so wooden speaking to camera. Morrisons has been trying to teach kids the nutritional value of brussels sprouts; meagre fare – good luck to them with that one. Boots has injected a little more personality into its long-serving ‘Here Come the Girls’ theme with some slice of life stuff from five comediennes. And there’s the twinkle of an idea in Argos’s ‘Crooner’ – extinguished the moment Bing picks up the microphone and attempts to ‘update’ a White Christmas. Dream on. No amount of “Argosing” can improve on a classic; and any way, Volkswagen did it so much better with Gene Kelly Singin’ in the Rain.

The big present at the bottom of the tree must surely go to John Lewis’ Crimble effort, which just manages to veer clear of the saccharine, while reminding its audience – now here’s a lovely touch – that Christmas is as much about giving as taking. There’s even an oh-so-tasteful nod to celeb culture in there: Critics Choice 2010 BRITT Award winner Ellie Goulding backs the ad with a singalong rendition of Elton John’s ‘Your Song’.

Shame on the rest of the field for allowing that johnny-come-lately to TV advertising, John Lewis, to upstage them.


Phil Rumbol lays his reputation for creativity on the line

September 8, 2010

For months it has been an open secret that Phil Rumbol, former Cadbury marketing director, was plotting to set up an advertising agency. The trouble was, most of us were on the wrong scent; the idea being he was going to head the London arm of Omnicom’s creative boutique, Goodby Silverstein & Partners.

At the same time, there were ominous rumblings of discontent at Fallon, the creative outpost of SSF, which also runs Saatchi & Saatchi London. Fallon – once highly praised for its Sony Bravia and Cadbury work – has latterly been dubbed “Fallen” by industry wags who, no doubt, have in mind the successive loss of the £70m Asda account, Sony, and the transfer of the £100m Cadbury account to Saatchi after some controversial Flake work went awry. The talk was of a possible management buyout. In the event, it is chairman Laurence Green and creative director Richard Flintham, rather than the agency, who have walked.

What we had failed to do was mix these two things together and make an explosive compound. All the more so since the story – broken by my colleague Sonoo Singh, editor of Pitch – has self-detonated in the very week that Saatchi & Saatchi celebrates 40 years of success in its party of the decade.

Details remain sketchy. We don’t, for example, know what the breakaway agency is to be called, nor whether it has any business. Kerry Foods has popped into the frame, specifically the Wall’s sausage brand. If so, it must be a gift from Saatchi.

Whether that’s the case or not, what’s really interesting about this start-up is the key role being played by a former client. Rumbol, so far as I can make out, has never worked in an agency himself, but he has had a distinguished career as a client, which has resulted in some memorable advertising. Boddington’s Cream of Manchester campaign was one of his early achievements, he was the Stella client (need I say more), and the commissioning force behind Cadbury’s Gorilla and Eyebrows campaign, not to mention the more controversial launch campaign for Trident chewing gum.

Rare is the client with such a creative pedigree. Possible examples: David Patton, patron of the Sony Bravia “Colour like no other” campaign; Simon Thompson, long-time sponsor of Honda ads such as ‘”Cog” and “Grr” ; and – long ago – Tony Simonds-Gooding, who tore up some unsupportive research and gave Lowe Howard-Spink the go-ahead with ‘Heineken refreshes the parts other beers can’t reach’. Rarer still is the client who is physically involved in a start-up and prepared to put his reputation, and possibly career, on the line; as rare in fact as hens’ teeth. It’s said that Rumbol earlier got close to signing a deal with Goodby, but that the stumbling block was the creative process, which would be shipped out to HQ in San Francisco. I can well believe it. Here’s someone who clearly has the courage of his convictions.

POSTSCRIPT: Spookily, Fallon has just conjured a new chief executive out of the hat, after a 6-month search. She is Gail Gallie, who was responsible for the BBC becoming Fallon’s first client in 1998.

PPS. It has been pointed out to me that the nearest precedent to Rumbol is the revered John Bartle. Oddly enough, Bartle himself was a Cadbury client. He worked at the confectionery and food company for eight years and, among other things, fostered Boase Massimi Pollitt’s celebrated Smash campaign. The significant difference with Rumbol is that Bartle then spent nine years in an advertising agency, TBWA, before forming the breakaway group that set up Bartle Bogle Hegarty in 1982.

UPDATE 24/12/10: The new agency is to be called 101 (not, thankfully, Room 101). The name has nothing to do with the agency’s official opening day, 10/1/11 – I’m told by a reliable source. We have yet to learn whether it has landed a big fish.


ASA rebukes Asda over phony 100-day George clothing range guarantee

July 5, 2010

The Advertising Standards Authority will next week officially reprimand Asda for broadcasting exaggerated and misleading advertising – an ironic counterpoint to the supermarket’s successful challenge to Tesco advertising on one of the self-same grounds last week.

The complaint was about a TV ad – agency Fallon – featuring a 100-day guarantee being offered by the clothing range George at Asda. In the ad, the voiceover states: “At George, we know what makes a difference; the quality and feel of the fabric, the stylish cut, the stitching, colours that stay colourful, extensive testing and the finer details. And that’s why at George, we now offer a one hundred day quality guarantee on all our clothes, so you can enjoy quality that lasts. Yes, that’s George, exclusively at Asda.”

The complainant suggested the ad was misleading because the guarantee was a superfluous gimmick; consumers are already offered a longer period to return faulty items under the Sale of Goods Act.

Asda responded by claiming that the 100-day guarantee enhanced the rights of the consumer beyond the Sale of Goods Act, by covering not only faults but issues with quality. It also argued the guarantee encompassed a 100-day “cooling off” period during which consumers could return any item of clothing if for any reason they did not like what they had bought.

The advertising watchdog found fault with Asda on several grounds. It said the Sale of Goods Act required sold goods to be of satisfactory quality as well as fault-free and, under that legislation, a consumer had 6 years to bring an action for breach of contract; in addition, for the first six months the onus was on the seller if a consumer found fault with quality.

It said the ad failed to make mention of any 100-day “cooling off” period. Asda has been ordered not to show the ad in its present form.


Asda Owen appointment rings the changes

June 15, 2010

More musical chairs in the grocery sector. Although at a lower level than those explored in my Marketing Week column this week, they are connected to the same phenomenon: the need for change.

Mark Sinnock, Asda’s marketing director, has mysteriously quit after only 15 months in the job and been replaced by director of marketing strategy Jon Owen.

To outward appearances, Sinnock was a fish out of water in the hermetic world of supermarket senior management. Rather than working up from the ranks, he was imported directly from Asda’s then advertising agency, Fallon, where he was chief strategy officer. On closer inspection, however, there were some uncanny echoes in his career move to that made by his mentor and boss, Rick Bendel, who currently rejoices in the title of chief marketing director.

Bendel: Like Sinnock, a former adman

For years, Bendel himself had been an adman – one of whose principal concerns was nurturing and safeguarding the invaluable Asda account (it spends £70m a year in today’s terms). When, after reaching the top of the greasy pole at Publicis Worldwide, his luck ran out in the agency world, he was able to make an effortless transition to the client side – as marketing director of Asda. By a further curious irony, Bendel, having left Publicis, promptly fired his former agency and transfered the Asda account to Fallon; in a similar fashion Fallon lost the business to its sister SSF agency, Saatchi & Saatchi, when Sinnock himself went client side.

The Sinnock hiring was part of an elaborate empire-building exercise in the marketing department whose welter of titles has left outsiders bewildered at to what exactly everyone does. Sinnock reported directly to an elevated Bendel, and was responsible for “developing the marketing and customer strategy across the breadth of Asda’s marketing function,” whatever that means precisely. Alongside him was Katherine Paterson, Asda’s marketing director for communications. Then, reporting to Paterson, was head of brand marketing – and former McCain marketing director – Simon Eyles.

One thing transparently clear from the title verbiage is that Sinnock was brought in to simplify Asda’s complex marketing problems. It’s equally clear that the once-favourite has failed in his task, or perhaps been scapegoated for a collective failure. The new boy, Owen, is of more traditional stock, having joined Asda as head of research in 2005. He will combine responsibility for strategy, advertising, insight and pricing.

It’s hard to avoid linking his appointment with chief executive Andy Bond’s move upstairs at Asda and the arrival of a new ceo, Andy Clarke – Asda’s former chief operating officer. In May Asda revealed a slump in its like-for-like figures, which were down 0.3% in the first three months of the year. It marks the first time they have gone into reverse since 2006. Asda is desperate to shed its image as a recession-driven, promotion-mad price-slasher and has returned to its traditional strategy of everyday low pricing. It is claimed that Owen masterminded the recent Asda Price Guarantee initiative. Certainly his appointment underlines a shift towards greater simplicity and a reassertion of the tried and tested in Asda’s marketing strategy.


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