by Greg Thain
Supporting all of the food products divisions, the Central Research Institute has facilities in Taiwan, Shanghai, the Philippines, Thailand, Vietnam and Indonesia. It has a triple remit, to develop new products, new technologies and quality improvement technologies and processes. Outside of the food products sub-conglomerate is the logistics sub-conglomerate. This includes 51 wholesalers and 133 retail chains spread across Taiwan, distributing the products not only of Uni-President but of 30,000 other manufacturers through the country’s largest route-to-market system.
What Have They Done Recently?
There are two ways of looking at the performance of the Uni-President business, because it reports two levels of operating income. In 2008 the business generated nearly NT$ 50 billion of revenue ($1.7 billion) but if the revenues of the retail and wholesale businesses are consolidated, the size of the business rockets to nearly NT$300 billion ($10 billion). As the business grows organically, making very few major acquisitions, recent annual progress has been steady rather than spectacular. The one bad year was when the global financial crisis was at its height:
Year-on-year % Change
Consolidated operating revenue Operating Revenue
2008+3.9+7.4
2009-3.2-9.4
2010+18.3+9.3
2011+13.0+5.9
The bounce-back year of 2010 took the business to highs on new sales and market share in all its major markets. This feat was subsequently exceeded in 2011. The potential in China for instant noodles and beverages has encouraged Uni-President to commit to building another seventeen factories there over the following two years. Of the eighteen major food categories in Taiwan in which the company competes, it has over a 40% market share in five of them and over 20% in another six. This level of concentration results from the company’s focus on its megabrands: nearly fifty brands and hundred SKUs that each generate NT$100 million in annual sales.
In 2012, the company targeted the sale of a million tons of foodstuffs: nearly half a billion packets of noodles, 100 million cases of dairy and other beverages, nearly 100 million bottles of soy sauce and 200 million loaves of bread. This excludes activities in categories away from the food business.
What is Their DNA?
Uni-President has focussed heavily on building its brand management and R&D capabilities. Yet, at its heart, the company is run as a conglomerate rather than as a product-driven enterprise. High profit, high potential categories and businesses are pursued, while low profit, low potential businesses are sold, de-emphasised or given R&D focus to re-energise. We believe this gives Uni-President a quite different DNA to the other companies in this book. This is a company of business and market analytics.
Summary
Uni-President is in some ways a role model for other companies in this book who seek growth more through the selection and refinement of the categories in which they compete rather than through excellence in R&D, marketing or route-to-market. Uni-President enjoys nearly $13 billion in consolidated sales, generated across a host of business types, product categories and geographies.
With such a business model, management does not get too excited at the short-term ups and downs of either the economy or particular product sectors. Uni-President operates in mature product sectors like Taiwan, where it is the largest food company. Yet it has only a 10% total market share of total food, which offers plenty of scope for growth. In China, fully one-quarter of all consumer spending goes on food. This too provides almost limitless potential for growth.
It is an interesting business model and one we predict will become increasingly prevalent, as category-specific manufacturers struggle to cope with enormous and powerful retailers and seek scale through breadth rather than depth.
Global FMCGs:
Money, Mojo or Marketing?
In the introduction to this book, we commented: ‘It has become fashionable in some quarters to regard the FMCG category as old hat: yesterday’s manufacturers of humdrum products populating the boring centre aisles of yesterday’s bricks-and-mortar retail outlets’. We went further, and accused a few of the perpetrators of this ridiculous idea face to face: ‘MBA course attendees,’ we observed, showing no compunction at all in identifying the principal culprits and their modish preoccupations, ‘want new and they want exciting: Apple, Facebook, Google. Yet the biggest four companies in this book – Nestlé, Proctor & Gamble, Unilever and Pepsico – each have combined revenues larger than Facebook and Google combined, and by some distance’.
With the benefit of hindsight, which the concluding chapter of any book of hard fact often confers, especially a book so well furnished with the commodity as this one, we didn’t go far enough by a long way. Given the histories of the big eighteen we chose, and the less detailed tales of another six – for sure the tip of the ice-berg – already moving onto the global stage, what perhaps we should have said was something much more definitive: that FMCGs were now as entrenched in the story of humanity as the drive to procreate, as fixed as government, and as bound to evolve into fitter states as life itself. Come to think of it, that last point is probably why we discussed their DNA.
But didn’t some of the giants we’ve just examined come close to failure? Didn’t Coca-cola almost never start at all? Didn’t it almost fall of the edge of the world twice more? Wasn’t Kimberly-Clark on its uppers before the unlikely white knight of menstruation saved its bacon? Didn’t Pepsi go bust on a regular basis? Didn’t ‘the world’s best FMCG’ (Unilever) get almost fatally lost twice? Or possibly three times? Wasn’t Kraft rather finely sliced?
Admittedly, these were threats brought about by relatively sudden and deeply radical shifts in what looked like a status quo built on granite. Or fabulously bad decisions, gross miscalculations or terminal complacency. So are we saying that such things don’t happen anymore? We are not. Because they do. And one of those relatively sudden and deeply radical shifts is happening right now.
But before we examine more closely what is certainly the 21st Century’s watershed, two themes stand out from the welter of entrepreneurial drive, genius, failure, hubris, nerve, stamina and extremely hard work that have gone into the making of our chosen companies. Those two themes are firstly what everybody does and secondly what everybody is looking at. Marketing is what everybody does, and the spends easily reach into the billions, with the spend online permanently on the increase. Bart Becht, Rekitt Benckiser’s no-nonsense supremo until his wholly unexpected and wholly no-nonsense departure, summed it up: you get yourself a product, you get it on the market and then you ‘market the hell out of it’. Which brings us to the second theme: what is everybody looking at? The emerging markets are what everybody is looking at; and it is this combination of marketing and emergence that is driving the watershed.
Why? Let’s look at the mature markets: Europe, America, Canada, and Australasia. Here, even if more and more mistakenly, it is still perfectly possible to pursue consumers through what have become known as the traditional media: the push media. Companies can still take out newspaper ads, put expertly designed and expensively produced bill-boards on busy street corners, run even more expensively produced TV commercials on a variety of national networks and broadcast their cheaper cousins on the radio.
However, how does this mature market approach fare in the emerging markets? Not well, and sometimes not at all. Lake Tanganyika, for example, has no TV, radio, billboards or newspapers. But it’s a wi-fi zone, and its fishermen use their internet-enabled mobiles not only to see who’s paying the best fish prices but whose consumer goods do they want, or need, to spend their fish-money on. In emerging markets – FMCG’s next gigantic honey-pot – marketing is mobile-based and digital, because it has to be: there is effectively no over-arching media infrastructure to exploit. So one way of looking at the shape of the FMCG future is to look at how well the world’s best-known brands are keeping pace with this new, and immensely powerful, sales and marketing technique? How are they responding to the revolution in consu
mer expectations, interests and behaviour? And is digital marketing not simply the emerging markets’ future, but everyone’s?
One: Coca-Cola
Coca-Cola’s range of innovative sales and brand-awareness campaigns gives the company a leading position in the Modern Marketing landscape
It may not surprise you to learn that one of the world’s most iconic brands is also one of the world’s virtuoso exploiters of Modern Marketing. Coke’s early entry onto the digital landscape and its rapid implementation of best-practice Modern Marketing tactics has resulted in a catalogue of impressive achievements and ROI right across the product range. This case-study will look at three imaginative and highly successful campaigns that show how very effectively Coca-Cola has picked up the digital baton and run with it.
Before we look at specific campaigns, however, it is worth analyzing how and why Coca-Cola has embraced Modern Marketing, in particular one of its absolutely key elements: Social Media.
Coca Cola and the Social Media
Coca-Cola employs 150,000 employees in more than 200 countries, who together help to promote and sell over 500 branded beverages. And one thing it has come to understand very clearly is that not only are its employees talking to each other online every hour of every day, they’re also talking to their friends, who are talking to their friends, who are talking to . . . well, you get the picture. The world’s largest beverage company wants to be a part of that global conversation, to share its values and, of course, to promulgate its own, ‘to inspire moments of optimism and happiness’ as it builds its brand image.
To this end, Coca-Cola has invested heavily in building global communities. To date, its achievements include:
· Some of the largest online communities in the world, ranking in the Top 10 global brands, across all social media platforms and across all industries
· 63 million fans on its main Facebook page, which is focused on maintaining the brand image and raising awareness of its ad campaigns
· Facebook pages for other products, such as Diet Coke and Coke Zero. Such brands have far fewer fans than the Real Thing, but they effectively advance a key supporting strategy: niche platforms for niche products with niche consumers.
· One of the most active brands in the Twittersphere, a main-product Twitter feed with more than 700,000 followers and a 75,000 Tweet history
· The maintenance, like Facebook, of separate Twitter feeds for each of its local markets
The Campaigns
Coca Cola’s understanding of the power of social marketing is impressive. Even more impressive is the apparent ease with which it has been able to integrate that insight into the bigger picture, an integration which has been the key to its success. The Share A Coke campaign is a perfect example, showcasing how an FMCG brand can best use social media – Facebook in this case – to drive consumer engagement and thus achieve a real and clearly attributable improvement in global product sales.
The Share A Coke campaign offers consumers the chance to order personalized Coke cans via a Facebook app. Once people receive their bespoke Coca-Cola product, they are then encouraged to share their enjoyment of their very own Coke product online via the Coke Facebook page. This 2011 campaign increased global sales by a full 7 per cent. It created worldwide attention for Coca-Cola, amassing18 million online media events and fuelling a huge, 870 per cent rise in traffic on the Coca-Cola Facebook page, with page likes increasing by 39 percent.
Now let’s look at a second Coca Cola online success story, the Coca-Cola Happiness Machine. Here, Coca-Cola actually customized its popular vending machines; not only did they dispense the drink, but offered consumers extra treats like free drinks, pizza, sandwiches and even flowers. In Singapore, for example, physically hugging the machine itself would get you a free drink. In Belgium, you had to dance with it. Coca-Cola then videoed people’s reactions and put the footage on their specially branded YouTube channel, amassing millions of views and tons of brand goodwill. This highly imaginative campaign required relatively low investment, yet made brilliant use of the social media at a point-of-sale level to communicate the key brand values of fun and sociability.
A third campaign, this time exploiting Coke’s long-term sponsorship of global sports and music events, centred on the 2012 London Olympics. The campaign, Move to the Beat, is arguably one of the company’s very best, using both music and sport to help the company communicate with its thirsty teenage market. Coke recruited London-based producer Mark Ronson and singer Katie B, then took five Olympic hopefuls, recorded the sounds of their respective sports and combined the results to create a song. The campaign involved five key elements: a feature length documentary, the song itself, TV commercials, Beat TV, and a series of digital/mobile apps called The Global Beat. Move to the Beat was a master class in integration, and it achieved impressive results:
· More than 25 million video views in total across desktop and mobile
· 1,220 subscribers
· It made Coke the Games’ second most talked-about brand
· It prompted 242 million social web responses, 39 million on Facebook and 546,000 on YouTube and Beat TV
· Move To The Beat itself was mentioned 246,000 times on Facebook
Coca-Cola attracted an additional 1.5 million Facebook fans and 21,000 Twitter followers.
The campaign prompted 245 million searches, 461,000 clicks and a CTR of 0.2%.
Share a Coke, The Happiness Machine and Move to the Beat show perfectly how well Coca-Cola understands the power of social media and how well it is able to integrate that understanding into broader campaigns in both digital and traditional worlds, with the digital dimension now an indispensable part of its marketing strategies. The company understands exactly what its values are and with whom it needs to communicate them. Digital analyst John Furrier writing for Forbes.com said: ‘Successful brand marketers like Coca-Cola understand that traditional marketing disciplines must be supplemented with new models rich with content, engagement, conversation, and analytics – the essence of social commerce. As big brands need to create an even better brand experience and empower their marketers with tools that will allow them to do so simply and effectively, more and more companies are turning to social software solutions to provide them the advantage they need to stay ahead of the curve.’
Coca-Cola has shown the world how revolutionary the company can still be, how creative, and how the imaginative deployment of Modern Marketing techniques forges fresh, long-lasting and essentially emotional ties between consumer, company and brand.
Two: Colgate-Palmolive
In the last few years, Colgate has been criticized for its lack of ‘bite’ in responding to the growth of Modern Marketing. This may be about to change.
In 2012 Jack Haber, Colgate’s vice-president for advertising and digital, admitted his company was ‘not where it should be’ given consumer appetite for mobile phone marketing. Speaking at the GroupM What’s Next conference, Haber said: ‘It will take some time to get mobile fully woven into the fabric of the company’s marketing activities.’ The reasons for the omission are common enough: resistance to change both within companies and within the larger advertising and marketing community. Colgate-Palmolive was a typical case in point, still spending 80 percent of its ad budget on TV. But Haber saw the problem: ‘We’re all behind. The industry is not as focused as it should be, especially among the creative ranks. People talk about integration, but it’s still TV first at many ad shops. We need to change that.’
And it’s true that consumers have embraced mobile devices far faster than the FMCG industry anticipated; many brands are still trying to catch up. Colgate, however, has now made the development of a coherent, integrated and global mobile strategy one of its top international marketing priorities.
The company began its marketing makeover with There’s Something in Your Tweet, a pro-active entry into the social media launched via Twitter in 2013. The Canada-based campaign encouraged Tweeters to send Twitter a
lerts to Colgate’s Twitter account giving details of friends, family or colleagues who had food stuck in their teeth, with Colgate thoughtfully providing a menu – ranging from pop-corn to ‘super-healthy’ kale – to help distinguish precisely what was stuck. This social media-led campaign was designed to raise the consumer profile of Colgate’s Slim Softy/MC toothbrush’s 17x slimmer tips tapered bristles – ideal for removing foodstuffs from teeth – and played on the embarrassment of a social faux pas to do so. Both sender and ‘shamed’ associate were rewarded with a $1-off coupon for – yes - a new Colgate’s Slim SoftTM/MC 17x slimmer food-removing toothbrush.
Colgate has also turned to Facebook . The Smile Facebook campaign, supported by a Facebook mobile app, asked users to upload photographs of themselves smiling. The brand was now learning fast. By creating both a positive sense of community and a sense of fun, it has learned the lesson that positive impressions made on a second social medium lead to positive effects on purchasing decisions.
Much more dramatically, Colgate proved conclusively how big an impact online campaigning can make. In the summer of 2013, the company launched Brushswap, a promotion that encouraged existing consumers to trade their old electric toothbrushes for the new Colgate ProClinical A1500 toothbrush worth £170. A promotional stall first set up at London Waterloo station was swamped; too swamped, in fact: organisers were forced to close it. Colgate promptly moved the campaign online, asking all interested consumers to register at ColgateProClinical.co.uk and from there begin the full promotional journey via the internet: a clear case of the virtual world managing consumer demand, promotional delivery and campaign metrics from the more logistically manageable dimension of the web and thus achieving an outcome that no-one could swamp.
Unlike the agile Coca Cola, Colgate-Palmolive is one FMCG still in the process, if not the early stages, of making its transition from the old style of marketing to the new. But campaigns like Brushswap, and the company’s somewhat tentative move to mobile, are teaching them the hard way that consumers have changed both in how they get their information and how they interact with new products.
