Starbucks and Nestlé need each other to grow
Starbucks and Nestlé’s $7bn licensing deal brings two of the coffee industry’s biggest companies together to create an alliance that ought to strengthen both firms’ bottom line.
It might seem strange that Starbucks would want, or need, Nestlé’s help to sell coffee. It is already the biggest coffee shop chain in the world with a brand equity that you would think would make selling in retail easy. But in reality, Starbucks’ traffic growth has been slowing amid competition from fast-food chains such as McDonald’s pushing more aggressively into the market and more premium (and often independent) coffee shops.
It needs to focus its attention on returning its business to growth. And while retail is a major opportunity, building up this side of the business on its own would have been a distraction and taken a lot of investment in both time and money.
For Nestlé, the deal offers an opportunity to move into the US market, where its footprint has up until now been weak. It also gives it a better opportunity to compete with rivals, including JAB, a private equity company that is now the second biggest retail coffee business in the world after deals to buy Kenco, Douwe Egberts and Keurig, as well as coffee chains including Peet’s and Espresso House.
Unilever takes next step in sustainability push
Since Unilever introduced its ‘Sustainable Living Plan’ in 2010, its importance has continued to grow with sustainable brands now responsible for more of Unilever’s growth than ever before — delivering 70% of its turnover growth.
Consumers, especially younger ones, are caring more and more about brand purpose and want to see brands reflecting the beliefs of its buyers. Unilever has worked rapidly to integrate that purpose focus into more and more of its brands, increasing the number of ‘sustainable living’ brands from 18 in 2016 to 26 this year, with new entrants including Vaseline and Wall’s.
And now, eight years since since it launched the plan, the company is looking to employees for the the next step. It is talking to 40,000 employees in it’s largest ever listening exercise as part of its ‘Have Your Say’ project, which saw employees answer questions on what Unilever’s sustainable future should look like. The results are yet to be announced, but the company will be using the feeback to co-create its future agenda.
This is Unilever entrenching brand purpose and boosting employee morale while also prioritising an important issue. The issue of plastic earlier this year proved that consumers are keener than ever to find companies that have an environmental purpose and are willing to boycott those who don’t.
Budweiser ignores the political issues to launch biggest ever campaign for the World Cup
Anheuser-Busch InBev’s (AB InBev) CMO Miguel Patricio dismissed questions about the political problems in Russia as the company launched the biggest ever company for Budweiser to tie in with its sponsorship of the World Cup.
When asked about whether he was concerned about aligning his brand with Russia considering the geopolitical events threatening to overshadow this year’s tournament, Patricio shrugged off any concern saying Budweiser is purely focused on uniting people around the world. That’s an interesting take given Russia’s focus at the moment appears to be to do the exact opposite…
Yet there are sign brands are concerned. While the campaigns are now coming in thick and fast, they are launching activity much later than for previous competitions. Budweiser’s global marketing VP Brian Perkins was quick to explain why it has taken the brand so long to announce its World Cup campaign, claiming the reveal date was “deliberate” and based “current interest in the World Cup and football”.
But with only slightly over a month until kick-off, it seems strange that brands are only now starting to talk about their marketing plans. Last time around, in Brazil, brands started talking months out from the tournament sponsors, unveiling their campaigns and signing up the stars of the game.
But back to the campaign! Budweiser’s ‘Light Up The FIFA World Cup’ activity aims to bring people together while energising and inspiring the 3.2 billion football fans watching the World Cup. More details below.
Ad industry hits back at proposed junk food watershed
It has been a busy week for The Advertising Association (AA) as it looks to rally support to combat the proposed watershed on junk food ads. Both the AA and the Food and Drink Association (FDF) have hit out at the proposal to ban TV advertisements for high fat, salt and sugar (HFSS) products before 9pm, insisting it will be ineffective.
There’s also a concern about the impact it will have on broadcasters’ ability to generate revenue, critical for funding its programme. The ads lost due to the watershed could mean no Christmas Coca-Cola advert during X-Factor and no heartening Easter lamb roast and pudding during Loose Women.
To an extent both the ad and food and drink industries are right; multiple reports show that advertising is not the top priority for tackling obesity with localised health programmes and education having more of an impact. The problem is that tackling those issues is much harder, much easier to go after the low-hanging fruit of advertising. And it sends out a sign that the problem is being looked at.
Facing an uphill battle against celebrities and charities to prove that ads aren’t the root cause of obesity, there are unsurprisingly concerns that regulation is coming. Charities including Cancer Research UK argue that reducing children’s exposure to HFSS adverts can and will have an impact, as do chefs such as Jamie Oliver.
It remains to be seen what the outcome will be but it’s an easy win for the government.
The Entertainer’s focus on the retail experience helps it avoid fate of Toys R Us
Following the recent demise of Toys R Us, you would be forgiven for thinking that dedicated toy retailers are in something of a decline. And it’s true they face growing competition from both online (Amazon) and more generalist retailers (the supermarkets).
Yet retail chains including Smyth’s and The Entertainer are in rude health. The Entertainer has just opened a new £700,000 flagship store in Westfield, and with profits up 37% year on year, its CMO Phil Geary believes specialist high street retailing isn’t “dead”, it just needs to work on the experience.
This may seem obvious, but it’s clearly a warning Toys R Us didn’t heed. Keen not to follow its competitor’s lead, The Entertainer “ripped up its rule book”, transforming its static store windows into spaces that would inspire and delight children. It is also looking to widen its appeal by making its stores more accessible to children with autism. For example, it now has quiet hours when radios, demo toys and sounds are switched off.
This attitude to offering a better shopping experience for all its customers is one other retailers should look to emulate.