Each month I write a feature for Media Post:CPG, an integrated publishing and content company whose mission is to provide a complete array of resources for media, marketing and advertising professionals. This article first appeared on Media Post: CPG in April 2015.
Article Link (http://www.mediapost.com/publications/article/247317/3gs-creative-destruction-of-kraftheinz.html)
We’ve all read plenty about the whopper of a merger between Kraft and Heinz, creating the third-largest food and beverage company in North America and fifth-largest in the world. The question I’d like to explore is, “Is it a good thing or a bad thing?”
On the “good” side:
- Undoubtedly good for Kraft shareholders who, since the news, have already seen a nice jump in the value of their shares
- Good for 3G and Warren Buffet who, after reducing costs at Heinz faster than sales have fallen, are proving their model for extracting value out of underperforming assets, works (at least in the short run) and moving it onto more assets
- Good if you’ve got brand management responsibilities for some of these iconic American brands in international markets
- A good demo of survival-of-the-fittest capitalism at its best — when the beast gets a little old and slow, it rightfully becomes fuel for the strong
On the “bad” side;
- Bad if you’re a senior executive at either of these firms who has spent the better part of a career trying to grow the firm’s brands. This merger is about cost cutting, not investing in attempts to grow mature brands, at least not in the United States. Did that single spot for Heinz ketchup in the Super Bowl convince anyone of 3G’s commitment to invest in marketing?
- Bad if you’re a worker at any of the many factories processing Kraft’s foods who will undoubtedly lose their jobs due to cost-cutting closures
- Bad, if as part of the growing middle class in many international markets, you start adopting a highly processed, American diet (see Colin Campbell’s The China Study).
There’s plenty to like, and hate, about these deals. People get hurt. People get rich. So it kind of comes down to the side of the political spectrum on which you tend to sit. If you’re a hard-boiled capitalist, you see this kind of “creative destruction” as an example of laissez-faire capitalism working its magic — breaking up under-performing assets and reallocating them to some more efficient and more profitable investment. If you’re more of a “safety net” believer, you hate the way people get ground up and spit out in this kind of merger, and want to see some softer landing for folks.
In a dog-eat-dog world, the model wielded by 3G and backed by Buffet is ruthlessly efficient. It strips a slow-growth enterprise of its excess baggage and makes a lot of money doing it. We don’t know yet what the end game is. Do they ultimately sell off the remaining assets and move onto another bloated organization, or do they eventually change the model and start focusing on growth? The purchase of Kraft suggests that they are not about to change the model, but rather port it over to other assets. It’s the model they know how to wield better than anyone else right now. The chum is in the water. Expect more mega food and beverage mergers now that 3G has set a new benchmark and shown a way for generating higher value from Big Food brands. It’s free market capitalism at its efficient best — as long as you’re not caught in the middle of it.
Each month I write a feature for Media Post:CPG, an integrated publishing and content company whose mission is to provide a complete array of resources for media, marketing and advertising professionals. This article first appeared on Media Post: CPG in March 2015.
Article Link (http://www.mediapost.com/publications/article/245411/big-foods-insatiable-appetite-for-good-food.html)
“Eat what you want – just make sure it’s actually food.” – Mark Bittman
What is “real food”? How do you define “natural”? And does a snack = a meal? These were just some of the questions on the minds of the 71,000+ attendees and 2,700 exhibitors at the 2015 Natural Products Expo West – the world’s largest natural and organic products tradeshow – which took place March 5-8th at the Anaheim Convention Center.
A Beer With: Cliff Rankin
Facebook has undergone massive change in its brief 11-year history. What started as a closed platform to connect university classmates is now a global company with 1.4 billion active monthly users and market capitalization of $212B.
Brands have long coveted Facebook’s captive audience – particularly because the cost of engagement was extremely low (if not free). But with organic reach all but gone for the majority of brand pages, we’ve undoubtedly entered into the new era Facebook: one in which you must pay for your content to be visible to your fans, and where that space comes at a premium.
Yes, I am on Facebook right now. It’s for work.
We are very happy to welcome Chelsey McGrogan to the Smith Brothers Family! Chelsey is joining our expanding Production Team as an Associate Producer. Chelsey will be supporting the production team on a variety of different projects and accounts.
Chelsey McGrogan joins Smith Brothers as an associate producer with more than two years of project management experience in supervising advertising projects, maintaining client relationships and supporting editorial writing. Previously, Ms. McGrogan managed the editorial content and project management responsibilities for B2B clients in the trucking, transportation, logistics and machine-to-machine industries. Her previous brand experience includes: TMW Systems, ORBCOMM and Cowan Systems.
Chelsey is a graduate of Kent State University with Bachelor of Science in Advertising and minor in Marketing.
Last month Google sent administrators of non mobile-friendly websites a message titled “Fix Mobile Usability Issues” through their Webmaster Tools. It contained a report of items Google now sees as “errors”, along with a guideline of how to build for the mobile web.
A Beer With: April Tantalo