Apps like Yuka, Fooducate and ToxFox are the new-age sages of the grocery aisle

As anyone who’s done segmentation studies knows, not all shoppers or consumers are the same.

Marketeers love to cluster shoppers into groups based on demographics, lifestyle, shopping habits and of course spend. It’s a fundamental part of segmentation (and I have done a fair few of these studies!)

The rise of apps like Yuka, Fooducate and Toxfox signal the growth of a heavily involved, nutritionally aware and possibly cynical cluster: shoppers who doubt what’s written on labels; or more accurately what isn’t on the labels.

Yuka was launched in 2017 and now has around 10m users. The App’s raison d’être is to score a product’s health. Food analyses are based on nutritional quality, presence of additives and whether they are organic.

Fooducate hails from Silicon Valley and has been around since 2009, whilst Tox Fox was pioneered by German NPO Friends of the Earth.

Whilst it would be misleading to claim these apps are mainstream, they clearly resonate with an educated, nutritionally aware and probably high spending demographic. Watch this space!

I have sat in many focus group studies round the world and just because many struggle to elucidate concepts like ‘protein’ or an ingredient label, it doesn’t mean they don’t care.

Premier Foods and Chadha Oriental get their noodles in a twist over Nissin’s best selling ramen

Last week I visited Asda in Gloucester and walking through the international food section, came across Nissin’s Demae Ramen. It’s one of Nissin’s pillar brands, launched in Japan over 50 years ago and now riding a global ramen boom, available across Europe; and made in Hungary.

Demand is obviously strong. Nissin announced in April this year a capacity investment in Hungary, only four years after the plant was built.

Asda is not the only UK supermarket listing the Demae Ramen range, Tesco is in on the act too. It indicates how UK consumer tastes have changed since I lived here. 

What’s really interesting is that Nissin acquired a large stake in Premier Foods in 2016. Premier is a listed company with turnover close to £1b. Premier claims to be in the top 10 grocery brands in the UK with a portfolio that includes Oxo, Bachelors, Ambrosia, Birds and Sharwood, amongst others.

Premier is also a company that works with the large supermarket chains day in day out so whilst Premier is selling some Nissin noodles (Soba and Katsu Curry for example), it’s not selling Demae Ramen. 

Getting in store activation with the UK multiples is not easy, but it is not impossible either. I noticed little to drive trial in Asda Gloucester. 

It seems that Chadha Oriental, an Asia food importer and  distributor, fully owned by a Grace Foods, a business with Jamaican origins have the sales rights for Demae Ramen. Chadha are also selling other people’s noodles, for example Indonesia’s IndoMie.

If I were Nissin, I would want to consolidate my noodle brands under one sales operation, especially as category growth is so critical. Whilst ramen is becoming well known here, I suspect penetration is under 10% and so there is huge upside by acquiring new users. That is a story I would want to tell to the UK multiples, and there are many compelling reasons why they would listen.

Inflation’s up, brand managers sweat price algorithms; and food scientists cook up new recipes

In the past two weeks we’ve seen inflation numbers from both the US and the UK exceed central bank targets. Eurozone inflation is also climbing, though at a slower pace. Brazil raised interest rates three times this year.

There’s a whole bunch of reasons behind the inflation numbers: stoked commodity prices, shipping bottlenecks, labour shortages, fiscal stimulus to boost recovery; and more recently consumers splashing out hoping lockdowns might be over.

Whilst central bankers are talking down the inflation risks – undoubtedly to curb expectations – I’m less convinced it’s a temporary phenomenon.

Over the past few years brand owners have had few credible reasons to raise prices and when they’ve tried, faced heavy resistance from retail buyers. Those barriers are now crumbling.

Yet experienced executives remain wary of pushing price increases too overtly. Many brands are price elastic and clumsily executed price increases can quickly precipitate market share declines. In most western markets, private label shares have never been higher; more shoppers are frequenting discounters like Aldi and Lidl.

So Brand teams will be busy crunching numbers.

In the coming months, expect to see the following:-

Short term initiatives

  1. Reduced trade spend
  2. Mix management switch of trade investment away from lower priced categories
  3. Further promotion of online channels, especially where the maker controls pricing eg Amazon seller accounts or Shopify

Longer term plans

  1. Product reformulations. This is not as hard as envisaged. Whilst ingredients lists are fixed, there’s still room for manoeuvre with substitutes; packaging re-specification is another area
  2. Relaunches with different pack-size-price structures
  3. Reduction in number of SKUs
  4. Outsourcing and factory switching

A busy time for food scientists, technical & R&D teams!

The Powerful and the Dammed; a tell-tale newspaper editor reveals all

I’m a fussy and impatient reader. Either the book fascinates and I read it voraciously or it fails to enthral and it’s quickly dropped.

This wasn’t the case with Lionel Barber’s tome, ‘The Powerful and The Dammed’.

For 15 years Barber was editor of the Financial Times (retired Jan 2020) and by his account turned the paper into a digital powerhouse with a global audience. (Though curiously for a business journalist there are only a few figures floated to support these allegations).

The book is written like a journal, episodes are chronological with short pithy sentences typically starting with Barber’s own reflection in italics, followed by a succinct account of an incident. The book dives straight into issues; all padding has been mercilessly deleted.

Want an insider’s perspective of Lehman, Brexit or meeting Obama or Putin? Fascinated how an old media brand turned digital? Barber tells all.

If one takes Barber at his word, he’s a pivotal influencer and ear for leading politicians, bankers, flamboyant business tycoons and oligarchs. Even Prince Andrew seeks his counsel.

I think Barber overstates his influence. My take is this due to the FT’s Rolodex network rather than Barber’s own insights.

If you wonder how the super powerful business folk swing, smooch and boogie then this ones a must-read.

(As an aside Barber tells a fascinating tale of how the Nikkei swooped at the last minute to buy the FT when German media group Axel Springer had been the pundit’s favourite. For those (including me) who think Japanese corporates can be slow to move, this is a wake-up)

Where will punk craft beer brand BrewDog head next?

The last twelve months have been a rocky road for craft beer punk-cum-goliath BrewDog.

One normally associates craft beer brands as being small, local and bespoke. BrewDog which was founded in 2007, has been an extraordinary marketing success with revenue exceeding £237m in 2020, 4 breweries (UK, US, Germany & Australia) and over 2000 staff. 

These are not the sort of metrics one associates with a craft beer business.

Late in 2019 BrewDog was even planning an IPO. 

However, like many brewers, 2020 changed everything and BrewDog saw its bar sales plummet due to Covid-related shutdowns. 

Although 2020 revenue was up on 2019 thanks to a pivot to retail, e-commerce in particular, where it shipped over 750,000 orders, and a new brewery in Brisbane.

In 2021 as many are seeing upswings, challenges have come from two unexpected quarters. Firstly there are claims by some ex-employees that BrewDog’s work environment was ’toxic’. Secondly, some independent investors, dubbed equity punks, who have stumped up over £80m to date, allege that larger PE shareholders are getting better financial terms. These ‘indie-punks’ exceed 180,000; their head banging skills will be of greater concern to the founders, I imagine.

If this wasn’t bad enough, a news report in the Times suggested that one of BrewDog’s founders has been renting property to the company for substantial gain.

Where BrewDog heads next to satisfy its investors growth mantra isn’t obvious, at least from the filings I’ve seen.

At a time when global travel is heavily restricted, some may feel BrewDog’s geographic reach is more of a liability than an asset. Whilst there are clearly some new products in the pipeline – the founders often share new designs on Twitter –  the keys to growth are new users and building frequency. The company spends little on traditional media relying instead on the cult status of its owners.

Jello Biafra once said, “Punk rock will never die, until something more dangerous replaces it.”

Interest in ethnic foods soars in the lockdown. Fancy a Balti anyone?

Last weekend I enjoyed a home delivery Balti-Indian meal from a Birmingham restaurant called Aktar.

The chef is Michelin starred and has soared in popularity during the lockdown. His order book is full until the end of August.

Birmingham is not close (by UK standards) and the food was sent frozen the day beforehand. It just had to be heated.

It was delicious. Even though I enjoy cooking, preparing ethnic foods well is not for the faint hearted.

Back in the 1970s just as Birmingham’s balti food emerged (it has Northern Indian-Pakistan origins and is prepared and served in thin metallic woks), few would have imagined it would be exported far and wide.

In Japan, where I reside, there are several thousand Indian restaurants and a thriving import retail channel. British Indian packaged food brands like Patak’s (a client) and Geeta’s can be found in many stores. Across Asia-Pacific there is a growing market, hungry for sophistication and variety, open to new tastes.

Ethnic foods, whether this means Thai, Mexican, Korean or Japanese is surging.

Not many people know that one of Japan’s famous curry brands made by House foods, is based on an old Royal Navy recipe from the 19th century.

Tesla fast charges up the UK electric car market

As readers of this blog may know, I am spending 3 months in the UK this ‘summer.’ It was difficult to visit last year due to the coronavirus pandemic and I was last here 18 months ago.

One of the more obvious changes I’ve noticed is the presence of electric cars on the roads, especially Tesla.

In 2020 UK electric car sales were around 110,000 units and looking at various sources I estimate Tesla has around 14% share. According to the stats they were not the leader, that accolade has gone to VW with around 20%.

However, on the road, I have hardly seen any electric VWs, either the ID3 or the newer ID4. I cannot say the same for Tesla. I am staying in rural Norfolk, hardly the electric capital of the world, yet have seen many in these parts too. On the motorways I have seen many more.

Tesla’s UK models are coming from California currently, however there are some signs it may shift source to its new China plant. Some models in France have been shipped from China.

There is much press coverage of Tesla’s new German plant, where planning delays and objections are pushing back delivery schedules. Certainly the UK Government, and the energetic mayor of Teesside, who has reached out to Musk directly, are hoping to persuade Tesla to build in the UK.

Self-health and Covid boost vitamin market, but careful the regulators are ready to pounce

Ten years ago wellness and preventative health were niche but today in the US over 83% of households use vitamins, minerals or supplements (VMS). Many other developed markets are close behind. Down under most Aussies pop VMS in some shape or form.

Globally VMS is worth over $140b; and it grew strongly last year as consumers sought to boost their immunity. GSK’s Centrum, one of the leading brands soared 16%.

However, VMS is a confusing market. For a start there is no clear definition of what it includes, or excludes. There are pills, powders, drinks, food products with nutraceutical claims, not to mention cosmetics with functional ingredients.

Online is now one of the category’s biggest channels. Since VMS are generally not classed as drugs it’s not difficult for new comers to conceive a concept, find a third party OEM, fire up a fancy website and start selling.

There are some consumers, perhaps not the majority but certainly a significant cohort, who actively avoid brands sold by big-Pharma.

No surprise the top 10 brands globally account for less than 20% of the market.

In America, VMS are classed as food products by the FDA regulator, meaning brands don’t have to prove they’re safe before being sold, unlike drugs.

Compounding matters further, some VMS brands, especially those sailing close to the wind, use ‘borrowed’ science to validate claims, communicated through word-of-mouth and social media.

A recent report in the WSJ suggested that the FDA is taking a closer look at VMS, especially as surveys have shown a significant number of products contain undeclared ingredients.

It’s an industry that has become too big for the regulators to ignore. 

This is also a watch out for Nestle, Unilever and other big companies who are aggressively pushing into this space, largely through M&A. They’re usually amongst the first to come under the microscope.

Into lobster or langoustines? Ullapool is the destination of choice for French and Spanish fishermen

I’ve just spent 3 days in Ullapool, Scotland. I had to collect my daughter who has just finished her graduate studies in Glasgow and decided to explore further North.

It’s a beautiful town in the county of Ross and Cromarty.

Ullapool was founded as a herring port back in 1788 by the British fisheries society.

Before WW1 the herring industry was one of Britain’s strongest export industries, the fatty fish were a favourite amongst eastern Europeans and Scandinavians. Two world wars, modern fishing techniques and changed consumer tastes brought it to a rapid halt.

In the last twenty years Ullapool has witnessed a rebound, it’s a key port for more gourmet fare, especially lobster, langoustines, crab and other crustaceans. 

UK exports of crustaceans exceeded £300m in 2020. But it’s not just British fishing vessels searching these waters for prime catch. Ullapool and nearby port Lochinver have become popular amongst French and Spanish fishermen.

If you have time to visit, it’s highly recommended. The weather is cool at best, rain in some shape or form is guaranteed. But the food is exquisite.

I ate at the award winning Seafood Shack. It has also published a cook book. You won’t be disappointed!

Luxottica banks on virtual Ray Bans when sun breaks out after Covid 19

Staying cool and keeping your eyes shaded from the glaring sun is a big business. Italy is the world’s biggest exporter of sunglasses and accounts for over 40% share with China, a distant number two.

Italian sunglass exports were growing steadily in the years before the crisis, up 15% between 2015-19 when they exceeded US$2.7bn.

sunglass exports

The covid pandemic put a stop to that and last year exports dropped 25%.

Industry giant, one is almost tempted to say, monopolist Luxoticca, is the world’s largest lens and eyewear manufacturer with over 20% share. The business is vertically integrated with famous brands including RayBan, Oakley and Costa. It also controls over 9000 retail locations with franchises like Sunglasses Hut. The group also has a wholesale distribution business.

Luxottica’s history has been one of M&A and alliances with leading luxury groups. Last year, to the surprise of many, the EU approved the company’s acquisition of GrandVision, Europe’s largest optician.

As many businesses have found, shopping habits shifted dramatically in the pandemic. Once reliant upon its retail stores, Luxottica saw sales on its eCommerce platform grow 40% last year to exceed Euro1.2bn. 

One recent survey reported nearly half of all eyewear shoppers have used virtual try-on while shopping online. Unlike many EC categories where Amazon dominates, the survey showed that eyewear shoppers are 3x more likely to trust an eyewear brand over the EC giant.

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