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.


Chris Wood appointed chairman of COI

April 7, 2011

Things are moving with unaccustomed and electrifying speed at the COI. Chris Wood, the senior of two non-executive directors, has effectively taken over the tiller from CEO Mark Lund, who is stepping down some 5 weeks before he was expected to.

The catalyst behind this accelerated transition is Waitrose, as in the £25m advertising account. Although Lund had signalled a return to the private sector, the rapidity of the Waitrose win by his new agency Now took everyone by surprise. And made Lund’s continuation at the COI untenable. Hence his leaving party last night.

Technically, Wood is to be acting chairman. Two civil servants will be joint chief executives. Emma Lochhead, whose importance I flagged in an earlier post, is HR Director at COI/Cabinet Office (Government Communications); and Graham Hooper is head of client service and strategy. In other words, of the trio only Wood is a marketing professional with “outward facing” experience of the private sector. In recent times, every head of the COI has been recruited from the private sector.

The restructure is clearly an interim arrangement. It takes place against the backdrop of the Tee Report, drawn up by senior civil servant Matt Tee, recommending radical streamlining of the COI’s role and headcount. Tee’s recommendations are, for the most part, likely to be implemented but they need to be sanctioned by a public expenditure committee (PEX), which will not happen before June.

I understand that, once the formalities are out of the way, Wood’s role – which would appear to be executive chairman – may become permanent. As it happens Wood, who is a well-known figure in marketing services circles, has just stepped down from being chairman of branding, strategy and design consultancy Corporate Edge (now a subsidiary of Photon), which he has led since 1997. Earlier in his career he was CEO of innovation consultancy Craton Lodge & Knight, which eventually floated on the London Stock Exchange. Subsequently (1990-97) he was a senior executive at Princedale plc, another quoted marketing services company. He bought out Corporate Edge from Princedale in 1997.

Wood is now believed to be pursuing a portfolio career, and has business interests outside marketing services (such as a gastro pub in Wiltshire). He is known to be seeking non-executive positions.

It may be of considerable significance that the COI has appointed another senior civil servant, Ian Watmore, as accounting officer. Normally, the role of accounting officer – who is directly responsible to parliament for the COI’s activities – is wrapped up with that of COI chief executive. This was certainly the case with Lund and his predecessor, Alan Bishop.


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.


Is Asda right for Mark Price?

April 14, 2010

The two names most frequently mentioned as successors to Andy Bond – outgoing chief executive of Asda – are Asda trading director Darren Blackhurst and Waitrose managing director Mark Price.

Price would be an inspired and City-pleasing choice, given his performance at Waitrose, but I wonder whether such speculation is wide of the mark (so to speak). Let’s leave aside the fact that the ceo shortlist is very much biased towards insiders (for instance chief operating officer Andy Clarke and Wal-Mart’s David Cheesewright have also appeared on it) – and that an internal candidate would be in the Asda tradition. What would Price have to gain from such a move? Well, all right – recognition, a broader challenge and, of course, a bigger pay packet. But he could gain that anyway, if he hangs on a little longer at Waitrose. The key thing he lacks at John Lewis, and what he would also lack as a Wal-Mart employee were he to be offered the Asda job, is plc experience.

The plc issue seems to have been a catalyst in Bond’s own ‘surprise’ decision to stand down as Asda ceo after five very successful years at the helm. To be sure, relatively poor trading by Britain’s second-largest grocer during the Christmas period may have caused a bit of friction with Wal-Mart top brass as well. But if anyone thinks that was the real reason for Bond’s decision – after a preceding 15 consecutive quarters of unblemished growth – I cannot do better than quote Planet Retail analyst Bryan Roberts back at them: if Bond is leaving as a result of Asda’s recent trading “then Tesco boss Terry Leahy should be scared.”

Signs of frustration with Wal-Mart have long been apparent, for those who cared to read them. Like former Asda star Justin King – now heading Sainsbury’s – Bond was linked with the role of chief executive at Marks & Spencer; unlike King, Bond took his time in denying any interest. There has also been a suggestion that Bond resented Wal-Mart’s bone-headedness in refusing to provide the financial firepower that would have enabled Asda to better compete with Tesco through an acquisitions programme (embracing, for example, Matalan or Homebase).

As it is, Bond seems to have nicely parlayed himself into a three-day-a-week job as chairman of the Asda executive committee, from which he can consider at leisure his options in the wider business world. These include the Archie Norman/Allan Leighton portfolio route; or the more direct plc path favoured by the likes of King at Sainsbury’s and Richard Baker at Boots. One things is for certain: Bond won’t be short of offers.

Which brings me back to Price and plcs. Price, like Bond, has spent much of his career working his way up one organisation; even longer, in fact, than Bond’s 16 years at Asda. As much as anyone can be – as its first marketing director, now its managing director – the self-styled Chubby Grocer is Mr Waitrose. If he’s going to jump ship from John Lewis after all this time, he should set his sights higher than Asda.


Food for thought over research findings

July 6, 2009

FairtradeWhy am I not entirely convinced by new research from PR agency Cohn & Wolfe that claims about two-thirds of British consumers will cut back on organic food and pay less for ethically-sourced products even after the recession is over?

Let me say straight away that my reservations have nothing to do with the methodology of the survey – carried out by Lightspeed – which seems entirely beyond reproach.

My qualms have more to with human nature. People don’t tend to tell the truth, or at least the entire truth, when quizzed about this sort of thing. To be sure they are preoccupied with value lines, as the current success of Lidl and Aldi demonstrates. But then, we’re in the middle of a rather severe recession and every penny counts – doesn’t it? – especially if you’ve been made redundant.

Where I’m more sceptical is about reading consumers long-term intentions. They’ve said this sort of thing before, in previous recessions. But they’re quite happy to go back to premium lines (upmarket, fairtrade, or ‘green’) once prosperity returns. Lidl and Aldi tend to disappear off the retail analysts’ map during such periods, as they assiduously monitor the waxing margins of Waitrose, M&S and the like.

However, I have no reason to doubt Geoff Beattie, head of Cohn & Wolfe Global Practices, when he says: “A more prudent shopper is emerging”. These shoppers are internet-savvy about price comparisons, even where supermarket groceries are concerned. It would seem from the survey that they are also comparing supermarkets more critically with locally produced food – and quite often finding the supermarket value-for-money mantra a bit of a myth.


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