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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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Cameron The Brand Slayer

January 25, 2013

BorgIf it weren’t for the fact David Cameron watches so little television, I would be forced to conclude he has been modelling his recent behaviour on Borg, the Viking Himbo now fronting Tesco’s advertising.

How else explain his assault on multinational brands in recent days – which has all the subtlety of Thor laying about him with his hammer after a particularly drunken binge?

Last week, it was Coca-Cola that got stomped all over, when Cameron told the House of Commons that he regarded it as his solemn paternal duty to prevent his children consuming “excessive” amounts of the sugary beverage.

This week he was at it again, telling the World Economic Forum in Davos that brands which avoided paying their fair share of corporation tax needed “to wake up and smell the coffee” – an unvarnished reference to Starbucks and those other egregious “tax dodgers” Amazon, eBay, Facebook, Google (and, er, Coca-Cola). And the tirade didn’t end there: so sick and tired is the British public of the multinationals’ fiscal chicanery that Cameron has decided to make clamping down on corporate tax-avoidance a central plank of our G8 Group presidency later this year.

Whoa, Dave. Is this your idea of a soft close? Britain shut for business before you oblige us to pull out of the EU?


Horse meat scandal puts grocers through the mincer

January 17, 2013

TescoUntil a couple of days ago, few outside the food retail and logistics business would ever have heard of Silvercrest. Now it has achieved household notoriety as the weak-link in the food chain that has served illegal horse meat up on British tables, in the guise of own-label supermarket beef burgers.

The reputational damage has, rightly, been severe for all those involved. Tesco – which fessed up to at least one line of its apparently legit beef burgers being contaminated with 29% horse meat – has seen £300m wiped from its stock market valuation overnight and has now taken out full-page ads in most national newspapers, grovelling abjectly. The timing could not have been worse, from a corporate point of view. Just days ago, a halfway decent set of financials had seemed to indicate that Tesco was on the ramp of recovery.

Luckily for Tesco, it is no longer alone. A host of other high street names – Aldi, Lidl, Sainsbury, Asda, the Co-Op, Morrisons, Burger King among them – have now opted to clear their shelves of the offensive products. In some cases because they use the same supplier, ABP/Silvercrest, in others merely as a “precaution” lest the same fate might befall their own supply chain. Only McDonald’s and Marks & Spencer have been able to stand aside, smugly waving a clean bill of health.

Their smugness is unwarranted. This disaster could so easily – in only slightly modified circumstances – have happened to them.

Some might argue that the horse-meat scandal is little more than a storm in a tea-cup, got up by the media. After all, no one died and no one is likely to: horse meat is eagerly consumed all over the globe, from Kazakstan to Argentina, as a tasty substitute for the tougher, stringier beef that can be bought for about the same price. Indeed, there’s not a little hypocrisy in this country about the cultural taboo surrounding horse meat. Until about 100 years ago, the Brits themselves were avid consumers of the stuff. Only more recently have we developed the refinement of conscience that prohibits national consumption, while allowing us to send up to 10,000 nags a year to specialist abattoirs, there to be despatched for the perverted pleasure of less civilised foreigners.

Alas, the ramifications of this affair go somewhat deeper. Imagine, for a moment, that instead of horse meat (and elements of pork), those eagle-eyed  inspectors at the Irish Food Standards Agency (FSAI) had found the minutest traces of human DNA. The uncontainable revulsion – far from affecting a few animal lovers, Muslims and Jews – would be universal. An official inquiry would, there and then, be instituted into how these three wise monkeys – the suppliers, the retailers and the regulator – had, through cavalier negligence and the unobstructed pursuit of greed, been allowed to corrupt the integrity of the food chain. Because, make no mistake, this little cock-up is all about money. The burgers most tainted were those from so-called “value” products where the cost of ingredients is at all times under pressure. Retailers want to satisfy their customers with the lowest possible prices consistent with food safety regulations. The suppliers – browbeaten by the retailers – seek low-cost substitutes (in this case from the less  punctilious Netherlands and Spain, where the consumption of horse meat is legal). And the UK regulator takes a passive, compliant attitude to anything that is outside its immediate remit (no conceivable threat to health, so why bother with DNA tests?), suggesting a “lite-touch” relationship that is too cosy with the industry it is supposed to govern.

It makes you wonder why the FSAI could be bothered with such tests, but the UK’s FSA could not. Or indeed, why the retailers didn’t carry out such DNA tests themselves. After all, it’s their brand reputation which is going through the mincer because they have not.


Max, Dan, Jerry – 2012’s out-performers

December 14, 2012

League tables of achievement are as commonplace as turkeys right now. Why burden you with another one? Well, I’ve been asked to – by the good folk at More About Advertising. So:

Ad of the Year. Yes, I liked BBH’s “The 3 Little Pigs” and Creative Artist Agency’s Cannes Chipotle winner. Also, Del Campo Nazca Saatchi & Saatchi’s work for – of all improbable B2C clients – air-conditioning specialist BGH. Of which this, directed by Juan Cabral, is the latest instance:

As MAA’s Stephen Foster puts it – “bleakly comic”.

My favourite, though, was “Follow the Frog”, a quirky satire of the desk-bound yuppie eco-warrior fantasising about making the World A Better Place. Writer, director, copywriter, art director is Max Joseph – clearly a bit of an Orson Welles in the making. The commercial was produced by Wander Films, a creative boutique in Los Angeles. The moral? You don’t need to go to the ends of the earth to save the rainforest. Just Follow the Frog by buying kitemark-certified Rainforest Alliance products. They’ll do all the ethical heavy-lifting for you: sustain the forests, uphold socially equitable farming methods, and guarantee that what you buy is economically viable:

It’s long – but isn’t nearly everything these days? The measure of the made-for-internet film is not its length, but how well it sustains our interest. On this criterion Follow the Frog succeeds very well. It’s got a good tale to tell, is directed with panache and enlivened by bold use of graphics. Oh, and it uses gentle humour to camouflage the piety of its evangelical message. Yes “Siri”, it get’s my vote.

Agency of the Year. I won’t beat about the bush: it’s got to be Wieden & Kennedy. International networks frequently produce isolated instances of brilliance (Del Campo being an example within the Saatchi organisation). Exceptional work, simultaneously executed on a number of fronts, is another matter. To take an investment analogy, W&K is a momentum stock outperforming in all its main markets. Whether that’s Clint fronting for Chrysler at the Super Bowl:

… London winning the £110m Tesco account – but also producing some of the most interesting creative work since “Grrr”:

Or Amsterdam’s slick spoof for the latest James Bond film, which neatly segues into its current Heineken campaign:

Person of the Year. Tempting to mention the name of Joel Ewanick, isn’t it? No one can be said to have made a bigger splash in the world of marketing over the past year. Arguably, however, the now-dismissed chief marketing officer of General Motors made headlines for all the wrong reasons. A change agent he certainly was, but were any of his changes for the good? And what sort of permanence will they have? We hacks miss him, but I suspect the wider marketing community will not.

Jerry BuhlmannInstead of anti-hero, therefore, I’ve plumped for a gritty go-getter: marketing services’ answer to Daniel Craig. Like Craig, he certainly wouldn’t be everyone’s first choice as the archetypal smooth operator. But his coolness under fire cannot be doubted. Step forward Jerry Buhlmann, chief executive of Aegis Group plc. If there is one thing archetypal about Jerry, it’s that he’s a self-made media man. He started off in the “five to one” slot, in other words the lowest of the low in the full-service agency hierarchy, at Young & Rubicam in 1980. Nine years later, he was setting up his his own media-buying outfit BBJ – along with ultimately less successful Nick Brien and the downright obscure Colin Jelfs. BBJ – nowadays Vizeum – though successful (it handled for example the BMW account) was originally a “second-string” shop for conflicted WCRS media. Buhlmann’s career really took off when WCRS’s Peter Scott had the inspired idea of acquiring Carat – Europe’s largest media buyer – and floating off the combined operation as a separate stock market entity, rechristened Aegis. Buhlmann and his company were soon swallowed up by the independent media specialist, which offered him much wider career opportunities.

But was he a man capable of capitalising on them? While no one has ever doubted Buhlmann’s single-minded ambition to succeed, a lot have wondered whether he had the competence to do so. Yes, he had a mind like a calculator and razor-sharp commercial acumen, but where, oh where, were those human skills no less essential for making it to the top of the corporate pile? There was much mirth in the senior reaches of the media industry when Buhlmann got his first big break as head of Aegis Media EMEA in 2003. “It’s like William Hague trying to emulate Margaret Thatcher” was a typical response to his promotion. Then, as later, Buhlmann’s critics completely underestimated his ability to learn on the job. When he became group chief executive in 2010, the reception was scarcely less friendly. The master of ‘focus’ and ‘detail’ was incapable of taking the broader view vital to successfully running a publicly-quoted company, it was said. And then there was Jerry’s far-from-diplomatic demeanour: how long before he rubbed the City up the wrong way and had to be dispensed with?

It wasn’t as if Aegis was an easy company to run, either. As a (near) pure-bred media specialist, it was susceptible to squalls in the media every time the inevitable financial scandal broke. Inevitable, because media buying and peculation are bedfellows and peculation distorts financial performance – meaning in Aegis’ case it had to resort to highly public mea culpas every now and then. Other major media outfits, by contrast, have been able to rely on defence in depth from the much bigger marketing services organisations to which they belong.

Not only that, Aegis’s card was marked as a public company. For years, it laboured under the strain of being a takeover or break-up target. The strain became nightmarish when Vincent Bolloré, the shareholder from hell, took a strategic stake in Aegis and began engineering a series of boardroom coups.

Some of the credit for Aegis’ eventual soft-landing – a 50%-premium, £3.2bn cash deal with Dentsu, sealed last June  – must go to Aegis chairman John Napier. But that still leaves a lot owing to Buhlmann himself. Not only did he keep all the plates spinning in difficult circumstances, he also demonstrated a strategic clarity which eluded his predecessors. He ruthlessly pruned the company of its lower-margin research operation (by disposing of Synovate to Ipsos), but at the same time bolstered its pure-play media-buying profile with the geographical add-on of Mitchell Communications.

Not a bad result, all in all, for the man once dubbed the king of the second-string.


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.


Cook acts after Browett upsets the Apple cart with half-baked retail recipe

October 30, 2012

The surprise is not that John Browett, former Dixons CEO and Tesco high-flier, quit Apple after only 6 months. The surprise is he wasn’t fired earlier: or indeed that he was hired at all.

Not that there’s anything wrong with Browett’s retail skills, in their place. Which is, or was, running a British high street retailer; not at the helm of the retail arm of a global corporation fanatically dedicated to innovative product launches and superior customer service.

The announcement of Browett’s departure, which coincides with – but is only tangentially connected to – the sacrificial dispatch of Scott Forstall, head of iPhone software (for the horlicks he made of the new Maps app), has been greeted with widespread “told-you-so” cynicism. And nowhere more articulately than in the comments section of The Telegraph online.

My own favourite? Quote from Mr Cook : ‘Mr Browett had a commitment to customer service “like no one else we’ve met.” ‘ Similar to Morecambe and Wise writing: ‘We shall tell all our friends’ in the visitors’ book at a particularly awful Blackpool b&b.

Quite. The fault lies not so much with Browett (who is in any case going to walk away with much of his £36m golden hello intact) for initiating ‘pile it high and flog it cheap’ tactics – the only thing he knows – but with Apple’s chief executive Tim Cook. Whatever was he thinking of when he made the appointment late last year? Browett is the complete antithesis of everything Apple stands for.

It’s not about command-and-control retail structures where costs are minutely controlled. It is about money-being-no-object where customer service is concerned. It’s also about silo’ed autonomy, something alien to Browett’s own retail culture.

Cook can chalk this one down to inexperience. But it does make you wonder whether he’s got a sufficient measure of the “vision thing”.


Big is beastly, especially if we’re talking big banks like Barclays

August 28, 2012

Which brands make us most angry? Yes, you guessed correctly. The big ones that rip us off, starve us of mortgage funds, pilfer our savings and behave with amoral disregard for everyone’s interest but their own. Anything, in short, that ends with the word “Bank”.

But come, let’s be a bit more specific. How about some brand differentiation – which is the worst, and which the runner-up? Well, coming in at number 2 – just behind the winning “All banks” category – is Barclays. And next, in 7th position, is Royal Bank of Scotland.

I know all of this thanks to some research, just out, conducted by YouGov and commissioned by creative agency Johnny Fearless (of which more below).

Why don’t Lloyds, Santander and HSBC make it into the top 10? Surely not on account of the odour of sanctity. We can only speculate, but could it be that Barclays and RBS have the two biggest Swinging Dicks attached to their brand heritage, namely Bob Diamond and Fred the Shred? I doubt that most people know who Antonio Horta-Osario is, and would struggle to recall his name in sufficient detail if they did. Which is probably just as well for Horta-Osario and Lloyds Bank.

More interesting, if perplexing in some ways, is the identity of the other 7 members of this exclusive Top 10 club. Tenth equal with Coca-Cola is Nestlé – still regarded as a corporate pariah on account of its anti-social baby-milk marketing practices in developing countries. I’m sure that doesn’t depress sales of Kit-Kats and Yorkie bars one bit, though.

And what’s Coke doing in there? Sorry boys and girls, for all your tender investment in clean athleticism, those grubby practices in Third World countries have not gone unnoticed.

Next up, “All utilities companies” at number 8, on account of their high prices and perceived profiteering. But two deserving special mentions here are British Gas – with its conspicuously bad customer service; and BT – with its ineffectual overseas call centres.

Virgin Media is in there at number 8 as well, although I have yet to discover whether this is because we’re all being beastly to Beardie or on account of some graver underlying cause – such as woefully inadequate service.

That leaves us with McDonald’s at number 4 – poor quality food and an inappropriate Olympics sponsorship, apparently.

…And, weighing in at number 3, the nation’s unfavourite retailer – Tesco. Memo to Tesco CEO Phil Clarke: it’s because you’re too big for your boots, despoil our high streets and blackmail your suppliers. No other retailer can do this so successfully, it seems.

  1. Which companies or brands make you feel angry? 
  2. What is it they do to make you feel angry?
Rank Company or brand
1 All banks’, ‘Banks’
2 Barclays
3 Tesco
4 McDonald’s
5 BT
6 British Gas
7 Royal Bank of Scotland’, ‘RBS’
8= Virgin Media
8= Utilities’, ‘Energy companies’
10= Nestlé
10= Coca-Cola

The research was commissioned by Johnny Fearless and carried out by YouGov. Total sample size was 2077 adults. Fieldwork was undertaken between August 3-6th 2012. The figures have been weighted and are representative of all UK adults (aged 18+).

Johnny Fearless is a Soho start-up agency founded by Paul Domenet and Neil Hughston, whose stock in trade is creating “social crackle” around brand messages. Or so it says in their publicity blurb.


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