Superfood Confusion

We all have seen an increase in the popularity of antioxidants as sought after food nutrient. These are miracle molecules that arrest the oxidation of cells that and theoretically slow the decay of cells in the body. The implied impact being is to slow aging, improve health - and maybe reduce risk of cancer.

All manner of beverages have benefited from these observations..

First Green Tea benefited from the growth, then all manner of high-antioxiant fruits including Pomegranates, Blueberries and Acai berries.

Brands like POM Wonderful have established themselves making grandiose promises, and multi-level marketers (like Mona Vie) are selling superfuits as panaceas.

Today though, the New York Times ran a really interesting piece on Acai - one of the superfruits that has benefited from the trend. In short, the article is skeptical of acai's functionality - and ultimately poses the big question - are anti-oxidants snake oil, or do they have a tangible benefit?

There is little doubt that antioxidants can have a positive impact, but precisely what impact from what product form is the big question. For beverages much is at risk, and as the marketing claims get more aggressive, the risks increase.

Recession Hits Food Part 2

The month to month comparison for Food (retail and restaurant) doubled its decline in the fourth quarter down 152 basis points Vs the 75 bpts decline in the third quarter.

What should we make of this?

The initial headlines have been the same this quarter as the third quarter... close to panic.

But again you have to say that it has been a roller coaster of a year with input and transportation costs cycling high in the first six months then sharply declining in the balance of the year. And these costs have declined, the ability of food businesses to pass along these savings has increased.

Now, there are some big tectonic changes underway. Declines in premium foods, expensive restaurants, increases in couponing and private label. But the biggest news to me is that on a full year basis, there was only a 2% decline Vs 2007.

Here Comes The Death Match: CPG Manufacturers Vs Retailers

Way back in college, I spent a lot of time analyzing the cold war, deterrence theory and MAD - Mutually Assured Destruction. The net result being that the interest in status quo between two competing interests outweighed the desire to go to war with them.

CPG brands and their retailers have their own version of MAD, played out in the promotions and profits each exacts upon the other. Today the WSJ wrote about the Safeway earnings call where the Safeway CEO called for CPG manufacturers to reduce their pricing to retailers so they can reduce their costs to consumers. If CPG manufacturers do not comply Safeway use its own private label offerings to target branded products.

While all this sounds quite logical, the experience of the CPG manufacturer is that there is a rarely a direct line between a drop in wholesale pricing and retail pricing. Once the new margin structure is established it is far easier to manage a lower price through Temporary Price Reduction promotions (that can also get end cap displays and in-ad features) rather than hope the retailer does not soak the manufacturer for additional margin.

Thus the standoff is created, and the retailer has its private label as a weapon of last resort.

So, what is the MAD situation? Retailers and manufacturers increasing margins to offset lower volumes, resulting in higher food prices and accelerated inflation. And the winner? Walmart - which has a simple value strategy that has not changed in the down market.

Another reason to buy HANS stock...

Apparently researchers have identified that caffeine can help kill skin cancer cells. Seems like its pretty flimsy right now based on mouse and empirical tests, but you never know - we may all be bathing in Monster or Red Bull at some point!

A Pound To Take Leak?

I really enjoy finding value offerings that use value as a brand as opposed to a simple pricing strategy. In airlines, this is led by Ryan Air.

Ryan Air have an interesting model that uses passengers to get airport slots, while making their profits off air freight. Hence you will often see airfares at Ryanair.com for a few Euros. While Ryan Air has the reputation for surly service and terrible on time records, consumers are fine with it because the costs are so cheap.

This model has come under pressure as other low cost carriers have used the same idea (Jet2, Easyjet etc). So Ryan Air has introduced the ultimate a la carte approach to travel... extra charges for checking bags, checking in at the airport etc etc.

This has reached a new extreme with Ryan Air considering a $1.40 charge for using the toilet on a flight.

Wow.

The fundamental value strategy of Ryan Air is strong, but there is only so far that you can push the consumer. Most of their charges are something you manage and opt into. But charging for toilet use on a flight is extortion, and different to every other a la carte charge.

Will this take the carrier down? Probably not. Consumers will pay the pee charge and be happy to fly cheaply. But it may be that on some flights, it will cost more to use the facilities than book the flight...

When Consumers Truly Own A Brand

It takes a big marketer to listen to its consumers and admit a mistake.

So Tropicana is to be applauded for returning to its iconic "straw in orange" design.

But underneath this is the growing power if social media, and the need for businesses to stay close to their consumer base.

This move will have the effect of making Trop's consumers feel even closer to their brand But - oh the upheaval to the business... two repackages in 4 months, lots of sleepless nights in Chicago.

Recession Hits Foods Too... But How Much?

This article in the Wall Street Journal panics about the declines in spending on Foods. The headline is that third quarter consumer spending on food declines at -3.7% "The steepest decline in the 62 years" that records have been kept.

At face value, really terrible news... "Markets and Restaurants Feel the Pinch as People Purchase Generic Brands and Stay Home" is the subhead. But let's think about the macro environment. The second quarter of 08 saw the price of food was the highest it has ever been: By the 3rd quarter, that had changed.

In the late second and through the third quarter, food suppliers started to see a significant fall in their costs (packaging, ingredients, transportation etc). Suppliers and retailers then began to pass along the savings in price promotions.

2008 was a wacky year... and the data from it will require intense analysis to provide real insight and explanation.