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Innovation Some Holistic Thoughts   Colin Gordon Glanbia Consumer Foods

Innovation Some Holistic Thoughts Colin Gordon Glanbia Consumer Foods







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    Innovation Some Holistic Thoughts   Colin Gordon Glanbia Consumer Foods Innovation Some Holistic Thoughts Colin Gordon Glanbia Consumer Foods Presentation Transcript

    • Innovation: Some Holistic Thoughts Colin Gordon, CEO Glanbia Consumer Foods Ireland 12th May 2009 Page 1
    • Who in this room hasn’t spent time thinking about….. Health and wellbeing Lifestage (kids and older people) Indulgence Convenience On the go Organic Fair trade Sustainability Page 2
    • Innovation Product Idea Model Comms Page 3
    • Innovation is all about It’s proactive …… and •Change reactive •The Future •A Dynamic • Innovation is necessary: Innovation in “Food” consumers/trade essential changing anyway (cause > val. +3.1% CAGR and effect?) 1998-2008 > vol. +0/4% CAGR 1998-2008. Page 4
    • Same-old, same-old? Global Top 10 Top 10 Risers By value by brand value growth, (year-on-year) Rank Brand Value ($m) Brand value 1 Google 100,039 Brand growth (%) 2 Microsoft 76,249 China Merchants Bank 168 3 Coca-Cola* 67,625 Blackberry 100 4 IBM 66,622 Amazon 85 5 McDonalds 66,575 Wendy's 72 6 Apple 63,113 AT&T 67 7 China Mobile 61,283 Aldi 49 8 GE 59,793 Auchan 48 Vodafone 45 9 Vodafone 53,727 Johnnie Walker 42 10 Marlboro 49,460 Kronenbourg 1664 41 *includes Diet Coke, Coke Light and Coke Source: Millward Brown Optimor (including Zero. Source: Millward Brown Optimor data from BrandZ, Datamonitor and (including data from BrandZ, Datamonitor Bloomberg) and Bloomberg) Page 5
    • Old = New? The Retro Brandwagon – Financial Times, May 2009 Andy Bond of Asda, comments: “At a time when people are having to watch the pennies, many are reverting back to doing things like their parents did…. we’re seeing the sales of brands like Kellogg’s, Bird’s custard and Vimto rising faster than others, as people hark back to their youth.” “The brands that do best manage to balance evoking memories with innovating” Page 6
    • A few food industry basics! Page 7
    • What is right investment %? Unilever 2.4% (2005 data) Danone 1.2% (est.) Nestle 1.79% (est.) • Ireland – small • Breakthrough vs. Adoption? • Activity ≠ Success! • Approx. 30% activity in cheese Everyone’s at it…… so Everyone has to be at it! Page 8
    • Know your customers! 100 80 60 40 % PL 20 0 Tesco Safway Carrefaur Aldi (USA) PL quality – largely not an issue; better? Page 9
    • Innovation Product Idea Model Comms Page 10
    • Product Innovation Page 11
    • Product It tends to be a ‘Rocky Road’ Beer & Beer & It pays! It pays! Fireworks Fireworks It works! It works! OPTIMISM Enthusiasm Enthusiasm This is taking time This is taking time Maybe not a bad idea Maybe not a bad idea Sceptical Sceptical Existing business Existing business Results aren’t is suffering is suffering Results aren’t visible visible Is it worth it? Is it worth it? Start to see Start to see PESSIMISM pay-offs pay-offs The Dark Night of the Innovator Weeks or months Up to two years Page 12
    • Product With varying influence between Innovation and Operational teams How the text books see it Innovation Operation Innovation Operation More like reality Innovation Operation But what it needs to be Page 13
    • Product And the hurdle rates are very high Page 14
    • Product With particular challenges for FMCG Increasing/Decreasing the pace of Innovation In 2003 our NPD pipeline x 12 In 2007 our pipeline x 76 In 2009 our pipeline x 12 Success of New Product Launches Falling Competitors & Retailers will copy – 6 weeks! Shelf Space Squeeze – 1 in 1 out - US multiple 41,000 skus (+50% in 5 yrs) - UK multiple +8% skus chasing +2% space Page 15
    • Product A new approach needed…. Investment banker invests in 10 start-ups Invests €100k into each Result at end Year 1 7 of the 10 go out of business 2 of the 10 break even 1 is spectacular and returns 1200% Is this success or failure? Page 16
    • Product Success of course ….it is not about the quantity but it is about the numbers Fail fast …. Fail cheap Have a variety of innovation initiatives from the more certain to the uncertain Evaluate them differently …… don’t use business case thinking where uncertainty is high Innovation is not just about products but should impact all functions…. is there a better way? Page 17
    • Idea Innovation Page 18
    • Idea Existing products/brands can be ‘innovated’ Usage, positioning, focus Page 19
    • Idea Page 20
    • Page 21
    • Model Innovation Page 22
    • Model • What’s your business model? • Where can you add value? • Where can you avoid ‘cost’? Page 23
    • Model R&D ?%€ Distribute/ DBM Copy/licence Agency AH BH %€ Innov. Prod. Ops. Sales Mktg Margin Produce/ Cash/% All Channels Outsource ROI Page 24
    • Comms Innovation Page 25
    • Comms New Ways of Connecting Page 26
    • Comms Functional Emotional Page 27
    • Comms Page 28
    • Comms Page 29
    • Innovation Product Idea Model Comms Page 30
    • “Future is here today; it’s just not proportionately spread” (yet!) Page 31
    • Thanks! And remember, entrepreneurs (and innovators) don’t know their limitations Page 32
    • Innovation: Some Holistic Thoughts Colin Gordon, CEO Glanbia Consumer Foods Ireland 12th May 2009 Page 33