SIX PRINCIPLES FOR WEATHERING A CRISIS

The presentation that drew most comment at our Global Soft Drinks Congress in March was from PepsiCo Germany chief Oswald Barckhahn. He set out six guidelines for dealing with the current economic downturn.

1. Declare a crisis
2. Hold on to your key talent
3. Maintain gross margins
4. Preserve assets by stock and cash management
5. Invest in brands to drive market share growth
6. Develop government, trade and media communications.

For more information on this and other Congress presentations, please go to www.zenithinternational.com/events.

PET LIGHTWEIGHTING

Also from our Global Soft Drinks Congress earlier in March came some useful bottle weight benchmarks for companies to compare their own efficiency.

	Size in litres	Grams of PET	Grams per litre
For bottled water	0.3	7.9	26.3
	0.5	9.9	19.8
	0.6	12.0	20.0
	1.5	25.5	17.0
	2.0	33.0	16.5
	10.0	115.0	11.5
For carbonated soft drinks,	0.4	17.0	42.5
Based on Coca-Cola	0.6	20.5	34.2
	1.0	33.5	33.5
	1.5	42.5	28.3
	2.0	46.5	23.2
	2.5	52.5	21.0
	3.0	54.5	18.2
For hot fill still drinks	0.35	20.0	57.1
	0.5	22.0	44.0

These figures were kindly provided by Sipa Plastic Packaging Systems.

For further information on the Congress presentations, please go to www.zenithinternational.com/events.

MASSIVE COST SAVINGS FROM NEW TECHNOLOGY

I don’t really do technology. My focus is primarily on society and consumers, brands and producers. But at our Global Soft Drinks Congress a fortnight ago in Germany, I was particularly impressed by six supplier presentations that showed how much can be saved in operating costs by pushing to the limits of new technology.

• Water usage can be reduced by 70% using Sidel’s dry sterilisation process, along with numerous other efficiency improvements in energy, cleaning and compressed air.
• Integrated energy production facilities from ContourGlobal can increase bottling efficiency by over 40%, accompanied by other benefits for energy and CO2, carbon and air emissions.
• 50% PET weight reductions in bottle neck threads were demonstrated by Sipa.
• Further 35% lightweighting opportunities for caps were presented by Bericap.
• A 74% carbon footprint reduction was offered by CCL through switching to super stretch sleeve labels instead of shrink sleeves.
• Up to 50% sales increases have been achieved by use of Frigoglass ice cold merchandisers.

For more information on the Congress presentations, go to www.zenithinternational.com/events. If you have other significant cost saving examples, please do send them to me.

CONSUMER POWER

PepsiCo did something extraordinary at the end of last year. At a time when everyone else was erring on the side of caution in the face of an impending financial meltdown, it decided on a radical redesign for all its main US beverage brands simultaneously. This would have been bold at the best of times. It had the extra appeal of being highly positive when so much other news was negative. So Pepsi acquired a new smile emblem, Gatorade aimed for the G spot and Tropicana looked beyond its fruit core. Within weeks, however, the company had to promise a return to the old Tropicana design. Consumers had protested. Tropicana had tripped. The lessons from this are salutary for us all.

• The most important is that individual consumers remain more powerful than mighty multinationals.
• Brand managers have to understand and respect the heritage they nurture so briefly.
• Business managers must weigh their instincts alongside their research and agencies.

Praise, though, should also be given for two aspects of this episode which might otherwise not be fully appreciated.

• PepsiCo did at least use its imagination in taking a lead.
• It also responded swiftly to its customers’ concerns.

As a result, Tropicana may emerge stronger rather than weaker.

ZENITH GAINS TOP 100 GROWTH RANKING

Accolades and awards are always inspiring, but they often involve significant time and effort. So it was a particular pleasure to see Zenith listed this month as one of the top 100 growth companies in South West England – as we didn’t even know we were being considered. Our annual average sales growth was recorded as 26.5% over the past five years. This is a testament to the talents and energy of the Zenith team, for which I am naturally most appreciative. It will be extremely difficult for us to achieve any growth in the current economic climate, but it remains our longer term aim to continue expanding our services.

25 ACQUISITIONS YOU MAY HAVE MISSED

Popular myth would have it that acquisitions activity must be slowing down in the new economic climate. Yet I find new announcements almost every day, many gaining very little coverage and some of real significance. Often they involve companies stretching out into new geographies or market sectors in very enterprising ways. Here is a selection I have noted in the past three months. The Japanese seem particularly active. Feb 09

• Water - Coca-Cola and Coca-Cola FEMSA buy Agua Brisa from SABMiller in Colombia $92m
• Beer - SABMiller and China Resources to buy 3 breweries in China
• Water - UAE Jeema buys Aquafina plant
• Beer - Kirin from Japan buys 43% of San Miguel in Philippines
• Food - Otsuka from Japan to buy Nardobel in France

Jan 09

• Spirits - Access from US to buy 50% of Diamond Wodka in Benelux
• Beer - SABMiller buys 71% of Bere Azuga in Romania $25m assets
• Dairy - Japan’s Snow Brand to merge with Nippon Milk $5.7bn combined sales
• Beer - Asahi from Japan buys 20% of Tsingtao in China from Anheuser-Busch in US $666m
• Water - UK Lomond Hills buys Nestlé Waters Powwow
• Ingredients - Danisco from Denmark buys stake in GraceLinc of New Zealand
• Dairy - Germany’s Uckermarker buys plant from FrieslandCampina
• Dairy - Emmi from Switzerland buys Roth Kase in US Est $45m
• Nutrition - Otsuka from Japan to buy Nutrition & Santé in France €260m sales
• Ingredients - Frutarom from Israel to buy Oxford Chemicals in UK $12m
• Spirits - South Korea’s Lotte Chilsung buys spirits arm of Doosan $386m

Dec 08

• Soft drinks - Asahi from Japan to buy Cadbury soft drinks business in Australia $809m
• Dairy - Australia’s Bega Cheese to buy Strathmerton plant from Kraft
• Water - US DS Waters buys Blue Ridge
• Wine - Campari from Italy to buy 99% of Odessa in Ukraine
• Dairy - Agropur from Canada to buy Schroeder in US $120m sales
• Water - Nestlé buys Santa Barbara in Brazil €31m investment
• Soft drinks - Coca-Cola Hellenic from Greece completes purchase of SOCIB in Italy €264m
• Juice - PepsiCo buys additional 18% of Lebedyansky in Russia $285m
• Soft drinks - France’s La Martiniquaise buys Sirop Sport brand from Orangina Schweppes

STEVIA WONDER

As with the singer, the new sweetener has other names too. Reb-A doesn’t sound very natural, but it is. So – at last, some say – the soft drinks industry has an all natural no calorie sweetener. Many hopes are being pinned on it. • Since December, Pepsi has come out with no calorie SoBe Lifewater 0. • Coke has developed low calorie Sprite Green and Vitaminwater 10 along with new Odwalla juice drinks. • Skinny Nutritional has a no calorie line extension. • Dr Pepper Snapple has made a declaration of intent. Such is the interest that Sprite Green is already heading for Britain. The cost, though, is greater than other intense sweeteners. The taste is apparently by no means straightforward, especially for colas. And it takes quite a sophisticated consumer to go for Lifewater 0 or Vitaminwater 10. So my take is that stevia is a major step in the right direction, but it will require many more launches and successes to make a major impact.