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Sorry Costa – are you better than Caffe Nero too?

June 16, 2010

Practical experience has long told us that Costa coffee tastes better than the Starbucks brew. So Costa, owned by Whitbread, must have felt on a pretty safe wicket when it came up with a knocking campaign to prove the point. Do its research properly, and it would romp home.

So it turned out. Costa launched a poster and print campaign, via Kamarama, which rejoiced in such wounding straplines as: “Sorry Starbucks: the people have voted”; “Starbucks drinkers prefer Costa” and “Seven out of ten coffee lovers prefer Costa”. And it was a winner. Costa’s sales, on a like-for-like basis, rose 5.5% during the period (though how much of this was share stolen from the unfortunate Starbucks I do not know).

Most wounding of all, no one complained about the unfairness of it all. Well, almost no one. A single complaint was lodged with the appropriate watchdog, the Advertising Standards Authority. Guess who lodged it? A comprehensive inquiry investigating everything from Costa’s methodology to the size of its small print followed. And the result? Triumphant vindication for Costa and superheated milk-froth in the face for Starbucks, all five of whose grounds for complaint were rejected. Game, set and match to Costa.

In such circumstances, it might seem churlish to rain on Costa’s parade, but I do have a niggle. Well, more an enquiry really. The ASA seems more than happy with the professionalism of the market research on which these sensational Costa claims were based, so who am I to complain? Just for the record, though, the blind-taste tests in question also involved a Caffe Nero cappuccino, which alternated with Starbucks’ equivalent brew as the foil to the Costa product. Yet we hear nothing of what our sample thought of Caffe Nero vis-à-vis Costa. Common sense suggests it performed rather better than the Starbucks product, which has unkindly been compared to a warm adult milkshake. But the ASA adjudication document does not make this entirely clear. Supposedly, the full research results are published on http://www.costa.co.uk. See if you can find them. I can’t.

On a footnote, taste isn’t everything. If it were, Pepsi would long since have overtaken Coca-Cola in the UK, according – so I am told – to periodic blind-taste tests.

UPDATE: You will search in vain for the research findings on the Costa website: they have been removed. However, a kindly PR has provided me with a copy of the results and I can report the following:

“Preference for Costa’s cappuccino is remarkably strong in comparison to competitors among those who identified themselves as “Coffee lovers”, With 7 out of 10 preferring Costa (with 72% preferring Costa versus 28% Starbucks; and 69% preferring Costa versus 31% Nero). Significantly, coffee drinkers who prefer Caffè Nero and Starbucks as their main outlets preferred Costa cappuccino over their preferred retailer’s product.”

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McCall’s ambition takes flight

March 26, 2010

Commentary on Carolyn McCall’s decision to quit the top job at Guardian Media Group in favour of the top job at Easyjet has tended to focus on two astonishing observations. The first is that she is a woman; the second, that she doesn’t know anything about aviation. Both spot on, of course. But it’s the sly implication behind them that’s the real blinder. If she’s a woman, poor dear, she’ll be utterly outclassed in the macho world of boys toys. Whatever was she thinking of leaving the comfortable, cocooned world of GMG?

Maybe it’s just me, but I’ve never noticed Guy Zitter, Murdoch MacLennan or Les Hinton wearing a skirt. The management of newspaper publishing, in which McCall has spent most of her career, was until very recently a dauntingly masculine environment. The first to break the glass ceiling was Sly Bailey, when she took over at Trinity Mirror in 2003 – and she herself was a product of the more genteel, feminised world of magazines. Only now is change in the air, with Rebekah Brooks (formerly Wade) taking the helm at News International.

The credit for leading the way, however, should really go to Caroline Marland, once chief executive of Guardian Newspapers, and her young protegée McCall, who succeeded her in 2004. Like any disciple of talent, McCall has exceeded the achievement of her mentor – by being the first woman to head the organisation as a whole.

There’s a second, and somewhat overlooked, dimension to McCall scaling the heights of GMG. More important than being a woman, she’s an insider; whereas traditionally the job of group ceo has gone to a seasoned outsider, well versed in the ways of the City but coasting through the autumn of their career. The late Sir Bob Phillis springs to mind. For someone like McCall, in her forties and highly ambitious, this was never going to be her last job of consequence.

All the same, it was a formative experience that created a window onto the world of plcs. On the one hand, GMG is unique in being governed by a trust, whose primary purpose is not to appease shareholders but to guarantee the editorial independence of The Guardian and associated GMG newspapers. On the other, it shares exactly the same structural problem facing the rest of the print-based media, most of whom are public limited companies: how to survive the internet. It so happened that during McCall’s tenure, this crisis has come to a head, giving her the opportunity to shape the organisation for years to come.

She’s divested and she’s acquired; she has given whole-hearted commitment to an open online strategy – as opposed to the paywall route now being explored by Rupert Murdoch et al. With what results, we cannot yet be certain. The divestment of half the Auto Trader group to private equity company Apax looked a smart move; the subsequent decision to join Apax in carving up the Emap empire less so (if only because the world financial crisis intervened, making the acquisition look very over-priced). Probably, she should have closed the heavily loss-making Observer when she had the opportunity to do so – although the decision to make cuts elsewhere is entirely understandable within the context of the Trust. The success of the online strategy pioneered by McCall and Guardian editor Alan Rusbridger will be a matter of opinion for some time to come. The important point, though, is that the die has been cast.

But why, of all places, seek a new challenge in the world of aviation? In fact, the similarities between a newspaper publishing group and an airline are greater than they might seem at first sight. Both are high-fixed-cost businesses whose profitability is highly sensitive to the economic cycle. Both industries have been forced into great change in recent years, which has involved shedding costs and people. Both exist within a regulatory straitjacket that makes industry consolidation an unlikely solution to economic difficulty. Both, so far as leadership is concerned, have an entrepreneurial ‘seat of the pants’ feel to them.

I could go on…the point being that relevant, rather than previous, experience is the key requirement for the Easyjet job. Final proof being that McCall’s predecessor, Andrew Harrison, came not from the airline industry but from the RAC. He has gone on to Whitbread.

One other quality that might come in handy from McCall’s Guardian days is her skill as a boardroom tactician. The airline industry is not known for its diplomatic finesse – witness the clumsy confrontation at BA and the management style of Ryanair. But it will certainly be at a premium in the boardroom of Easyjet, where the airline’s founder and major shareholder, Sir Stelios Haji-Ioannou, has been in a smouldering feud with the management team over the airline’s strategy.

Good luck to her.


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