The FTC is seeking public comment by Dec. 21 on its plan to gather data from 50 major food companies on how they market food to children and how much they spend. Products likely will include quick-service restaurant items, breakfast cereals, snack foods, candy and gum, carbonated and noncarbonated beverages, frozen and chilled desserts, prepared meals, and dairy products, including milk and yogurt. After taking the comments into account, the FTC will send the plan to the White House Office of Management and Budget for review. Jackie Dizdul, an FTC spokesperson, said there is no timetable set for the data collection. The requests would be the equivalent of subpoenas. Starting in 2007, Britain is banning ads for foods that are high in fat, salt and sugar from TV programs targeted to the under-16 crowd. It is fear of such a move in the United States that earlier this month led the Children's Food and Beverage Advertising Initiative--which includes 10 of the largest food and beverage companies as charter sponsors--to launch a new initiative designed to strengthen self-regulation and to include messages to children about healthier choices and lifestyles. The Institute of Medicine has estimated the food industry spends up to $12 billion annually to reach children through media and advertising. And, it linked the flood of junk-food ads to growing waistlines. But advertising and grocery industries say that ad spending aimed at children dropped from 1993 to 2003, and questioned whether such a link is valid.
Survey after survey shows gift cards growing in popularity, particularly among younger consumers. Cashing in on that trend is American Express, which yesterday said it will offer personalized lines of gift cards and cheques specifically for kids and teens as well as special occasions, such as weddings and birthdays. In addition to their custom design, these gift cards and cheques come with another twist--special offers from participating retailers and restaurants--such as free dessert, two games of bowling for the price of one, and discounts of up to 20 percent on purchases. "Gift cards are more popular than ever, and American Express is constantly looking to make giving and receiving our Gift Card a more enjoyable experience," said Valerie Soranno Keating, president, American Express Travelers Cheques and Prepaid Services. "Our new lines of personalized Gift Cards and our special offers for recipients give people more reasons to give and more reasons to look forward to receiving the American Express Gift Card and Gift Cheque this holiday season." Meanwhile, consumers are putting gift cards on their holiday wish lists, and plan to spend more than a gift card's value when they redeem, according to the findings of an Accenture survey of 545 consumers in the U.S. A second larger study by First Data Prepaid Services found that on average American consumers purchased five gift cards in the last year and spent an average of $281 on those cards. Moreover, recipients of those cards spent an average of $39 over the original value of their gift. Data for First Data Prepaid Services 2006 Consumer Insights Survey was based on interviews with 2,013 adult consumers ages 18 and over, who purchased or received a gift card in the past 12 months. "The results of our study indicate that American consumers understand gift cards, set out to buy them and typically spend more than the initial value of the card when it comes time to redeem them," said Kevin Grieve, president of First Data Prepaid Services. Other survey findings:
While Nintendo Corp. yesterday triumphantly announced that it sold 600,000 units in the first eight days of the Wii's release, generating $190 million in sales, it turns out that figuring out who's winning the game-console wars is going to take some patience. By the end of the year, Sony's new PlayStation 3, which launched Nov. 17, is expected to have about 1 million PS3 systems in North America, while Nintendo is expected to ship 4 million units. "But real traction doesn't happen until 10 million units are sold, and that will probably take a year and a bit," said John Davison, editorial director for the 1Up Network, the gaming properties of Ziff Davis Media.* Microsoft's Xbox, introduced a year ago, has reportedly shipped 6 million units of its Xbox 360, launched a year ago. "Anecdotally, people seem happier with Wii," he said, "but we think PS3 will continue to sell out for the foreseeable future." PS3 may be hard to buy now, but diehard consumers have played long enough to discover plenty of quirks and problems with the $599 game system--including issues with using it on certain high-definition TVs. "That's the kind of stuff consumers just shouldn't have to worry about," he said. "People have been punished for being early adopters." Both marketers have tried hard to expand the appeal of the consoles beyond the core gaming audience. But the lack of gotta-have-'em games right now underscores just how tricky an endeavor that will be. The closest thing to a must-have game for PS3, for example, is a shooter title called Resistance: Fall of Man, with a "mature" rating, that invites participants to fight a full-fledged war in Europe. Ironically, Sony has reportedly begun advertising its PlayStationPortable, or PSP, which has interconnectivity with the PS3, on marthastewart.com--not exactly the war-games demographic. The same disconnect is happening with Nintendo, Davison said: "The idea is that people will buy this so Grandma can play the bowling game, but right now, the hot game is The Legend of Zelda: Twilight Princess, which will only appeal to young gamers." There's also a fair amount of consumer frustration at the way the new systems don't follow through on their promise to connect with other entertainment products. "You can plug your iPod into some of these devices and it will read some of your music, but not what you bought on iTunes. The PS3 will read photos off any memory stick, or play music, but it does it a slightly different way," he said. Throw in other new hybrid devices, like Zune, Microsoft's new iPod competitor, which can read music wirelessly, and there's a great deal of consumer confusion. "Now, it seems like every device you look at it does everything, but doesn't do it with each other," he said. That's why the real success of both PS3 and Wii will depend on the games that come out in the months ahead, not just what other electronics it can connect with. "They have to win on games," he said. "Everything else is just gravy." * This title was changed after the article was posted.
Anheuser-Busch expects to capitalize on a Chinese market that is growing more sophisticated in its tastes and stronger in its purchasing power as the brewer continues to expand distribution in Asia with a focus on its Budweiser brand. CFO Randy Baker told investors yesterday the company will invest over the next two years to expand its "geographic footprint" in China as part of a long-term expansion strategy, but entirely within its operating budget. Global brewers such as A-B, Carlsberg and SABMiller are eager to grow market share in the world's biggest market as demand slows in the U.S. and Europe. Carlsberg forecasts about 80 percent of global market growth in beer sales by 2010 will come from Asia, with China being the biggest driver. It plans to invest as much as $880 million in Asia in the next three years and is seeking acquisitions in eastern China to help it narrow the gap with A-B and SABMiller. Baker said A-B will go up against other brewers in image, quality of product, and packaging. A-B will focus on the super premium category with its Budweiser brand. In China, where 87 percent of beer is sold at a very low profit, A-B is still optimistic. "If local beer is selling at a quarter," Baker said, "a domestic premium beer would be selling at, say, 50 cents. There you start having reasonably good profit margins." Anheuser-Busch is also expanding its Harbin premium brands outside their traditional territory in China, and is looking to grow through a strategic alliance with Tsing Tao, in which it owns 29 percent. The Chinese beer market is huge. Eric Shepard, executive editor of "Beer Marketer's Insights," said in 2005 the volume of beer sold in China was 256 million barrels, compared to 206 million barrels in the U.S. "It's just not as consolidated as it is here," he said of the market. A-B has 50 percent of U.S. market share, while in the more fragmented China, the largest market share held by any brewer is 15 percent. Ten years ago, brewers rushed into a new China. "Some pulled out and then returned," Shepard said. It is hard to make money in China, because beer sells so cheaply, but it continues to be the largest-volume market in the world and is growing quickly. "You want to be positioning yourself there for long-term play," he said. Meanwhile, A-B this week lost a copyright battle with Czech brewer Budejovicky Budvar, which entered China in 1997. The High People's Court in Beijing ruled that the Czech brewer may remain in the Chinese beer market, thereby safeguarding the company's position there. A-B had objected to the Czech company's trademark, saying the name was too similar to Budweiser.
When single-serve "pod" coffeemakers were introduced in the U.S. two years ago, marketers had robust hopes for the futuristic machines and their circular packets of joe. But despite strong ad spending, sales are mild for brands such as Senseo, Tassimo, Flavia and their ilk. "It seemed like an obvious winning product because it's so big in Europe. But there are issues in the U.S.," said David Lockwood, director of research reports at Mintel International, Chicago. Why are sales so cold? Research from NPD Group indicates pod customers are dissatisfied with unreliable machines, pricey refills, the limited selection of blends, and lack of availability of the pods. Since many refills are not compatible with other machines, and supermarket shelf space is so competitive, it's hard to find a wide selection of pod brands in grocery stores. On top of all that, many consumers complain the beverages violate the creed of American coffee consumption: the drinks are too cold and the serving sizes too small. (Do marketers not realize Americans like things super hot and extra grande?) According to TNS Media Intelligence, Philips spent $25.3 million from January 2005 through August 2006 to market the Senseo appliance, while Braun spent $15 million on the Tassimo Hot Beverage system during that same time period. These figures are likely to increase after this year's fourth-quarter holiday push. At this time of year, ads for the appliances are as ubiquitous as inflatable Grinches, and several Web sites have sprouted to sell the machines and their pods. Tassimo even contracted with Harris International to do a survey on the issue of regifting, a common occurrence among the givers and recipients of kitchen appliances. In fact, the NPD study found that 17 percent of single-serve machines were either returned, thrown out, or given away. While the appliance makers are putting out ads for the machines, food marketers are trying to enlighten consumers to the actual beverages, which come in plastic "pods" that are about the size of a single-serve package of cream cheese. Mintel found that ad spending in 2005 came to about $100 million for just two of the pod brands, Sara Lee Corp.'s Senseo and Kraft Foods' Tassimo. "The year it started, 2004, Senseo had $1.7 million in sales. In 2005, it went to $10.3 million, which sounds like a great bump, but for the amount of marketing they put into it, it would need to go to $100 million this year to be considered a success," Lockwood says.
Freed from the distraction of its retail business, Alberto-Culver is the hair care marketer to watch, says Bill Schmitz, equity analyst at Deutsche Bank. "Alberto-Culver ... has been flying below the radar screen of its much larger rivals," Schmitz wrote in a research report last week. Now that it has spun off its Sally Beauty Supply stores, Alberto will be able to focus better on its increasingly popular hair care brands--including Tresemme and Nexxus.* The company has been aggressively revamping dated products such as St. Ives under the leadership of a former Procter & Gamble marketing executive, and may have a restructuring plan and future acquisitions in the making. Alberto-Culver reported an 11.7 percent increase in net profits in the last quarter. Sales in the U.S. reveal the company is gaining ground on its much larger rivals P&G, L'Oreal and Unilever, especially in the fast-growing hair styling aids categories. In the hair spritz/spray category for example, Alberto-Culver has become the top vendor, with sales up 14 percent to $53 million, for the year ended Oct. 8, per IRI. By comparison, the number two in the category--Unilever's old Helene Curtis brands--are down 14 percent to $44 million in sales. These brands include Salon Selectives, Rave and Finesse. Similarly, P&G's Pantene brands and the Clairol brands, ranking three and four, saw sales sink 3 percent and 6 percent, respectively, in the same period. Another bright spot has been Alberto-Culver's higher-priced Nexxus brand. Earlier this year, Alberto launched the previously salon-only line in retail stores, including Target. That helped Nexxus bring in more than $100 million in sales in the current fiscal year, making it "one of the most successful high gross margin products launched in the industry this year," said Schmitz. In recent years, the Sally Beauty business had become especially troublesome for Alberto, due to increased retail consolidation and channel conflicts. With Alberto in the unique position of being both manufacturer and retailer, it found itself in the situation of competing with other Sally vendors in its stores along with the brands sold at other retailers. Earlier this fall, the company revamped its St. Ives skin care brand--an effort overseen by Alberto's chief marketing officer Richard Gerstein, an ex P&G marketer brought on in April 2005. Its decades-old St. Ives label has been one of Alberto's few brands with sliding sales. The total brand is down 12 percent to $87 million for the year ended Aug. 13, per IRI. Trying to turn that situation around, in addition to new packaging and fragrances, Alberto launched a new St. Ives line, Mineral Therapy, which includes a body wash and moisturizer. That line is meant to further drive home the "natural" positioning of St. Ives, and pick up on the beauty-products-with-minerals craze. TV ads, via Campbell-Mithun, Minneapolis, began earlier this fall, while print broke in November issues of beauty monthlies. * This sentence was corrected after the original story was posted.
Bear Rock Cafe, a Cary, N.C.-based fast-casual sandwich chain, announced yesterday that Strategic Restaurant Acquisitions Corp. has invested in the company, and the money will be used to build its dinner business. SRAC, based in San Ramon, Calif., is the country's second-largest Burger King franchisee, with 233 units. SRAC's president, Jerry Comstock, is a well-known retail and restaurant executive whose resume includes a stint as president and COO of Bennigan's, the casual-dining chain, from 1998 to 2002. The cash infusion will enable Bear Rock Café to focus on building its dinner business, said Deneen Nethercutt, vice president of marketing for 27-unit Bear Rock. Dinner currently accounts for 25 percent to 31 percent of sales, and the company would like that figure to hover around 40 percent, Nethercutt said. Bear Rock made its first dinner-building move in August, when it introduced Pizzetas, personal-size pizzas made with flatbread. The pizzetas ($7.49 to $7.89), account for about 6% of total sales. The next step: A new Hot Off the Grill line of five sandwiches that premieres Monday, Dec. 4. The sandwiches--blackened mahi mahi with Cajun seasoning, grilled mahi mahi, a Black Angus melt, a Black Angus burger and a crab cake--represent "a new realm for us," Nethercutt said. The crab cake offering will be priced at $7.99, with the other four at $6.89--prices in line with Bear Rock's current offerings, Nethercutt said. Finally, in January, Bear Rock will open a new corporate store near its headquarters in Cary, N.C. During the first and second quarters of 2007, the chain will experiment with dinner-related tactics. Among them: Delivering meals to tables once customers have placed their order at the counter, offering starters and more hot entrees, and serving wines by the glass and beer. Nethercutt did not have details on the menu offerings or on any dinner-centered marketing strategies. "We'll have to test some different approaches," she said. When asked if she thought that an investment from a Burger King franchisee was an interesting fit, Nethercutt referred to Comstock's restaurant experience. "It's a great culture fit," she said. "They're strong operators and they have great experience in the restaurant business."