food and agribusiness
Strategically sound
Franchising option
Expanding range
Architectural range
Chinese check-outs
Talking shop
Superwomen
What's NewS Issue 9 October/November 1999
If the first section of the conference ex-
plored to some extent the issue of who,
especially from the perspective of well-
established brand names, the second -
globalizaton strategy - looked more at
how the industry can cross borders. Three
speakers drawn from three different
sectors in the food chain offered their in-
sights. Asking the intriguing question:
Does glohalization pay off, Pierre Bouchut
of France's food retailer Casino was first
up. He argued that food retailers had been
well behind other industries, hut now the
glohalization trend was clearly underway.
Offering overviews of very recent develop-
ments, especially intercontinental and
European, he demonstrated that already a
few truly global players are beginning to
emerge, including US giant Wal-Mart,
France's Carrefour, Ahold and Tesco of
the UK. Pressure to globalize, he said, is
strong. An absence of new growth options
in domestic markets, the fact that the food
business is an increasingly capital inten
sive industry and the existence of strong
global suppliers, such as Nestlé, Unilever,
Danone - all combine to fuel the glohal
ization thrust. Add to this opportunities
to reduce costs through cross-border
synergies, and the trend is both explained
and strategically sound.
Dairy giant Sodiaal is pursuing glohaliza
tion by different means. This huge French
cooperative was established more than
30 years ago to create a single brand
which is now marketed throughout the
world. Yoplait has achieved success
worldwide, not least through Sodiaal's ap-
proach to marketing. 'Franchising was a
logical choice for a cooperative whose
product is by definition short-lived,'
explained Nicolas Le Chatelier. Today, the
brand is a household name in 48 countries
and has top positions through franchising
in many of them, including the US, Aus-
tralia and Canada. In contrast, the French
company has opted to go the way of joint
ventures and acquisitions in Europe. This
is in part because of possible competition
factors in the 'domestic' market as well
as consistent management of the brand in
a single market.
The second day of conference got off to a
musical start as Asda Stores' Tony
Campbell persuaded participants to sing
Asda's corporate song. Amidst good-na-
tured laughter, Campbell then got down
to the serious business of explaining the
fundamental concept underlying Asda's
success in the UK market. He had taken
as title: Should full-service supermarkets
expand their range of low-priced prod-
ucts? The answer for the UK's number
three supermarket is clearly yes, although
with some reservations. Asda has focused
on offering best value for the lowest price.
This has won the chain a loyal customer
following for its broad-range of products,
including a proprietory brand of clothing.
A fashion range which Campbell was
quick to point out was high quality - this
in contrast to most supermarket clothing.
The range of 'other' products is seen as a
differentiation in a market which is domi-
nated by huge, strong and well-established
chains. Yet, noted Campbell, the key de
terminant in customers' choice of store is
still fresh foods.
But to return to Campbell's theme. He
took issue with Van der Hoeven's asser-
tion that discounters were on the decline.
No hard discounters operated in the UK
market until 1990. When they moved in,
the food retail sector estimated they
would gain around 10% of market share.
They were wrong. 'We found they were
taking our customers,' he recalls. 'You
cannot ignore that, you have to compete.'
For Asda that meant introducing its own
range of permanently low-priced prod
ucts, a range that has been consistently
successful, although it by no means over-
whelms the existing range of private and
branded products. This, said Campbell,
was due to the right kind of architecture
in the range. One positive effect of
this price war has been that the battle
has been instrumental in anchoring
prices in the market place that has long
been saturated.
For Wong Zong Nan of China's Lian Hua
Supermarkets the concept of saturation is
a long way ahead. More urgent is the
right retail format for emerging markets.
Yet, his observations on developments in
China were familiar to the conference in
that changing demographics are increas
ingly changing consumer demands - also
in the People's Republic. Smaller families
replacing the traditional extended familv,
a need for convenience and more health(y)
food are equally valid for China. As a re-
sult, Wong argued, the average consumer's
food basket will increasingly contain im-
ported and foreign branded foods. 'This
means,' Wong stated, 'that the Chinese
food industry will have to confront struc-
tural adjustments to meet these changes.'
Asked in the Q&A what advice he would
give to Western food companies looking
to enter the Chinese market, Wong re-
sponded in detail: the potential is huge,
but corporates are advised to do their
homework. They should aim to deliver
value at low cost. Compared to industrial-
ized countries, the Standard of living is
still quite low, so consumers are extreme!^
Customer contacts - all part of the event
price conscious. At the same time, they
want quality. Finally, he noted, you
should have a solid marketing campaign if
you want to compete. According to Won»
winning market share for new products,
which are evolving very rapidly, requires
careful pricing. It was only a matter of
time, but finally someone asked Tony
Campbell about Wal-Mart and what it
will mean for Asda. Campbell's response
was positive because 'it will give us access
to a greater range of general merchandise.
Essentially, they are general merchan-dis-
ers, we are more specialized in food. So
we have a lot to offer each other.'
Dramatic changes in US demographics has
led to a boom in the so-called home meal
replacement (HMR) market and filling
that need was the subject of Christine
Hartmann of the Campbell Soup
Company. More and more (married)
women with children are working outside
the home, a change which has fuelled
the growth of fast-food and other conve-
