Bord Bia Brand Forum. Paul Foley Dublin, 5. March 2015

Transcription

1 Bord Bia Brand Forum Paul Foley Dublin, 5. March 2015

2 About Paul Foley Founder and Managing Partner of Foley Retail Consulting Over 40 years of experience in retail Former Board member at Iceland Foods Ltd Former Board member of ALDI (23 years till 2012) Board member: OKEY Russia, GIPPO Belarus and INVERTO Germany Foley Retail Consulting (FRC) Based in Vienna, Austria Privately owned/ owner managed Focused purely on retail, FMCG and e-commerce Operating in multiple geographical markets Working with a variety of retailers and channels Solutions derived from real practice! Partners of FRC have combined 135 years of top level retail management experience Bord Bia Brand Forum 2

3 The grocery scene Ireland & Britain 2015 Irish and British grocery market is being disrupted by the displacement of sales to the discount channel. Why? Discounters seek 4 certain conditions for market potential: High standard of living: GDP above global averages High EBITDA average earnings: 7-10% High wage economy Property ownership surety and possibility Critical point is when discounter reaches scale point of buying power. Let s do the math together! Bord Bia Brand Forum 3

4 The grocery scene Ireland 2015 Buying power comparison Tesco sales 2014: 3.097b / 38,000 SKU = 81,500 per SKU Pareto principle: 80% sales from 20% of range 80% Tesco sales 2.477b / 7,600 SKU = 325,921 per SKU Aldi sales 2014: 1.518b / 1,400 SKU = 1,084,285 per SKU Aldi and Lidl are both 3x buying power size of Tesco per SKU Bord Bia Brand Forum 4

5 The grocery scene Ireland & Britain 2015 Today Aldi and Lidl have real market power. They exceed all other players in Irish market for sales per SKU and they have 20% of the grocery market! Discounters have today 260 stores in the Irish Republic, they plan 350. That s 34% more stores and 40% more space! Bord Bia Brand Forum 5

6 Market share of Ireland s top 6 grocery retailers (2014) Market share % Dunnes 51% private label 7.44 Lidl 76% private label 10.2 BWG 23% private label Aldi 91% private label Market share % Tesco 46% private label 22 Musgrave % private label Source: Planet Retail Bord Bia Brand 20 Forum

7 The role of private label (2014) The % private label penetration of Irish grocery trade by major product category Aldi and Lidl have 29% of all private label market Spirits 7 Beer 11 Personal care Cleaning Pet food Cooked meat % Private Label penetration Paper 32 Dairy 36 Dry and tinned packaged grocery Source: Planet Retail Bord Bia Brand Forum 7

8 How should the brands fight back? The branded part of the grocery industry is under sales and margin pressure, there are though ways of using, enhancing or inventing brand equity : 1. Quality unique selling points 2. Provenance and history 3. New product development 4. Marketing telling the story 5. Join the party and sell to the discounters/bargain stores 6. Sell a bit of Ireland to the world! 7. Sell your product to the discounters! Bord Bia Brand Forum 8

9 Brands doing a great job - three examples Butlers Chocolates 80+ years old, owned by Sorensen family Fabulous chocolate confectionery made in Dublin Tourist attraction in Dublin - Butlers Chocolate Experience Sells in 60 airports, 40 different countries and online Bord Bia Brand Forum 9

10 Brands doing a great job - three examples Jameson Irish whiskey Famous old Irish brand owned by Irish distillers Produces a new variant every year Focuses on ambitious social males aged Sells 60m bottles per year and growing at 5% pa Spends 80m pa on marketing and sponsorship Brand is said to be worth 1.68b Bord Bia Brand Forum 10

11 Brands doing a great job - three examples Keogh s Irish crisps 200 year old family run potato farm now producing crisps in Oldtown County Dublin Fantastic products like Dubliner and cheese, shamrock and sour cream Brand is every inch the personification of the countryside of Ireland Sales since 2011 have doubled every year Now exports to the UK Bord Bia Brand Forum 11

12 How a retailer thinks across different formats? The supermarket/superstore operator is focused on: consumer total needs satisfaction The convenience store operator is focused on: distressed needs that are time or distance constrained Consumer needs based organisations The discounter is focused on: low prices via low costs All three understand popular products and popular quality levels! Functional based organisations Bord Bia Brand Forum 12

13 What a retailer needs from a supplier, (especially a discounter)? Key is to understand or create a customer need: Time/cost/health/feel good/reward/event/stress relief/entertain Be an expert in your category Your retail partner should not know more than you! Research constantly and find the gap This is what keeps you ahead of the competition Never rest, always upgrade the product Constantly test the next generation of NPD You have to sell your story to the consumer and the retailer simultaneously! Bord Bia Brand Forum 13

14 Weetabix cereals - a case study Product was at first unique but then reasonably well copied by private label (PL) manufactures. Future was examined! Foreseen problems of all their New Product Development (NPD) being copied and delivered quickly to market As a solution Weetabix bought as much PL manufacturing capacity as possible Increased the quality of PL product to rival its own brand Gained the major supply of PL in British market because of quality and price Increased NPD but only switched (NPD) into PL after 18 months Relied on constant NPD to drive growth Successful business in a sector that has high PL penetration Sales up 3.3% in 2014 Pre-tax profits up 21% (2013/14) Bord Bia Brand Forum 14

15 The key questions???? 1. Who depends on whom? Partners or advisories? It s an interdependency! Retailers need products, brands need a route to market Think constantly about your partner s needs. There are not enough top management meetings, vital if your going to understand the needs Bord Bia Brand Forum 15

16 The key questions???? 4. Do retailers really care about long-term supplier relationships? Yes, but they care more when you have something of value! You need to be hard to replace. Your relationship with the end consumer is critical here Bord Bia Brand Forum 16

17 The key questions???? 5. How retailers really think about Trade Marks and IP? This is not uppermost in a retailer s mind. If it is important to you, make the product hard to copy and do as many unique selling points as possible Bord Bia Brand Forum 17

18 The key questions???? 6. What s the single most important thing a brand operator can do that would make their product indispensable? HAVE PERSONALITY! (IT S VERY HARD TO COPY) Bord Bia Brand Forum 18

19 Thanks for your attention! Kärntner Ring Vienna Austria Phone: office@foleyretailconsulting.com Bord Bia Brand Forum 19