The Yogurt Wars Heat Up and YOPLAIT Appears One Step Behind . . . AGAIN

The US yogurt wars are heating up again and about to become even more intense...and Yoplait appears to be one step behind again.

For years the US yogurt market was dominated by Yoplait and Dannon. However, five years ago the US market was fundamentally changed with the emergence of Chobani, which helped usher in the Greek yogurt revolution.

As Greek yogurt mainstreamed growing from 4% of the US yogurt market in 2008 to nearly 45% in 2012, Chobani was transformed a small challenger brands into a $1 billion power-player that is giving Yoplait and Dannon a run for their money.

Dannon reacted with the 2011 launch of its Greek yogurt sub-brand Oikos. Oikos growth has been tremendous, surpassing over $400 million 2012, which is a ~45% growth from its first year sales. Not only was Dannon able to leverage the brand to grow the overall Greek Yogurt segment, but also start winning back some share from Chobani by advertising its superior taste behind a claim that Oikos is preferred 2 to 1 over the leading brand.

On the other hand, more than 2 years later Yoplait is still trying to figure out how to win in Greek yogurt.  Yoplait's initial entry into Greek Yogurt was a bust...as was its first relaunch attempt in 2011. Now Yoplait, which is owned by General Mills, is hoping to make up for lost ground by relaunching its Yoplait Greek yogurt again, this time behind a new formula, packaging and advertising. In it's new TV ads, Yoplait declares that "it's time healthy gets a dose of happy" and carry the tag line "it's time to lick the lid again."

The insight Yoplait is basing its bet on is that American consumers will prefer a less sour Greek yogurt and fruit pre-blended into the yogurt, as opposed to being on the bottom of the container.  I personally, don't buy that this positioning will be enough to catch up to Chobani and Dannon, but it will likely be sufficient to remain relevant in the category.

Meanwhile, as Yoplait focuses on and invests in getting its base Greek yogurt offering right, the yogurt market is about to take its next major transformation - adult yogurts with flavor enhancing add-in. 

• First Pepsi's Quaker unit launched Muller (a new joint venture with a European based yogurt company) that features an extensive line of flavor add-ins.  Expect major marketing pushes behind this product over the next several months

• Chobani's answer was to launch  "Flip" and "Bite" sub-lines.

• Now Dannon is jumping into the game via its recent acquisition of YoCrunch, the market leader in yogurt mix-ins.  YoCrunch features 27 different varieties of mix-ins (though most are geared at kids).  Not only does the YoCrunch acquisition give Dannon instant market share in this segment, but more importantly instant access to critical packaging capabilities that will eventually allow Dannon to bring this innovation to their Dannon brands.

While Yoplait does have a mix-in granola offering...

...its already a step or two behind and is going to have to quickly invest in major innovation to keep its offering competitive. But in all likelihood, Yoplait will be spending the the next few years playing catch up again.  Proof a market leader can never stop innovating or it risks being surpassed.

Nike's "Just Do It" Turns 25

Twenty-five years ago, Nike unveiled one of the greatest tag line's in advertising history: "Just Do It".

Dan Wieden, the co-founder of Wieden+Kennedy advertising agency, coined "Just Do It" for a 1988 Nike ad campaign. Wieden evidently received his inspiration for "Just Do It" from Gary Gilmore, a convicted murder, who uttered "Let's do it" as his last words before he was executed.

Nike's first "Just Do It" advertisement debuted on July 1, 1988 featuring a then 80 year old runner named Walt Stack who had reached iconic stature in the running community at that time for having run over 60,000 miles over the course of his lifetime.

Now, Nike is celebrating the tag line's twenty-fifth birthday with the release of an new inspirational commercial, narrated by Bradley Copper and featuring Serena Williams and Lebron James.



"Just Do It" is still as amazing, relevant and powerful tag line today as it was 25 years ago.  

Does Taco Bell hate kids?

Taco Bell recently announced it plans to stop selling kids meals and toys in its restaurants at the beginning of 2014, making it the first national U.S. fast-food restaurant to kill kids meals (although west coast based Jack-in-the Box did eliminate kids meals back in 2011).


Why would Taco Bell risk alienating moms and kids?

The short answer is Taco Bell is doing a smart job of tightly targeting their consumer (the edgy millennial) and positioning its marketing and product offering to best serve that consumer. "The future of Taco Bell is not about kids meals . . . This is about positioning the brand for millennials" according to Taco Bell CEO Greg Creed.

The longer answer also includes the fact there is likely a sizable benefit to cost payout by removing the kids meals:

• Benefit:
• Remove operational complexity and inventory costs
• Trade-up to a higher ticket. A kids meal with a Crunchy Taco, Cinnamon Twists and a small beverage currently costs ~$2.84 vs. $3.17 when purchased a la carte from the full menu
• The menu space and signage can be better utilized for higher margin items
• Marketing can be better focused on core target
• Removes risk of lawsuits or negative PR around child obesity

• Cost:
• Limited as kids meals only account for half of 1% of Taco Bell's overall sales (Unlike McDonald’s where Happy Meals likely account for ~10% of sales)

So, no, Taco Bell doesn't hate kids it just loves 'edgy' millennials more and is willing to sacrifice a few consumers to do a better job targeting its core consumer.

Quest for Marketing Efficiency puts Market Share Growth at Risk

Procter & Gamble spent $9.3 billion on advertising last year,which helped generate $84.2 billion in global revenue. The company currently projects to increase its advertising spending on an absolute dollar basis, but is anticipating slightly reducing its advertising spending as a percentage of overall revenue while trying to win market share. This translates into a need to improve marketing return on investment.

To accomplish this objective, P&G is planning to  improved marketing efficiency by holding all of its brands to minimum success standards. CEO A.G. Lafley recently declared, "We are holding all of the businesses to a minimum ROI. . .We're pounding away on best media."

A.G. Lafley and Jon Moeller, CFO, explained on a recent earnings call that a significant portion of this ROI improvement will be achieved by continuing to shift traditional media dollars into digital marketing. Lafley indicated some brands are spending up to 35% of their marketing budget on digital, with plans to raise the bar on its other brands.

As a former P&G marketer, I understand why P&G management is making this push. P&G's marketing mix modeling analyses often indicate digital marketing has stronger ROI's than traditional advertising. That said, if my primary objective is winning market share over the next year versus maximizing profitability, the move starts to raise a caution flag in my mind.

It's very easy to overlook advertising effectiveness (volume impact) on a quest to maximize advertising efficiency (ROI). In other words, yes, digital is much cheaper and hence tends to produce a stronger ROI , but its reach is often limited and thus typically does not drive as many transactions as television ads. Additionally, you can only throw so much money at any one marketing vehicle before it reaches saturation and digital has a tendency to max out at a lower spend. The combination of these factors makes it difficult to drive market share, while also dramatically cutting back TV advertising. 

Lafley also indicated the next big wave of P&G product innovation may not arrive this coming year, meaning the business will have to rely on a high mix of commercial innovations creating another growth hurdle.

Net-net, if I was an investor, I'd be hard pressed to anticipate significant market share growth over the next year.

'KFC Eleven' a Branding Failure?

KFC, one of the world's largest fast food chains, is set to unveiled a new fast casual concept (think Chipotle or Panera Bread) called KFC Eleven, on August 5th in Louisville, Kentucky. 

The new concept will target more health conscious consumers by offer both higher-end food and a more modern, comfortable environment. 

• The menu includes sandwiches, flatbreads, salads, and rice bowls that are available in a mix of global flavors like Sweet Orange Ginger, Caribbean Tango and Southwestern Baja. All entrees are made with grilled or fried chicken, but unlike KFC, the menu does not feature a bucket of fried chicken, any bone-in chicken pieces, or biscuits.

• The experience emphasizes freshness utilizing an open kitchen so consumers can watch their food being assembled, is geared towards slower-paced dinning experiences, and features WiFi to encourage consumers to hangout.

On the surface, KFC Eleven may seem like an appealing solution to help KFC reach new consumers, but I'd suggest there are large branding barriers that will likely be impossible for the concept to overcome no matter how strong their in-store execution is. More specifically, the branding of the concept name has several fatal flaws in terms of generating strong trial conversion. 

KFC Eleven gets its name based on the 11 herbs and spices in the colonel's original recipe chicken. While its nice that the name connects back to the heritage of the brand, unfortunately, "KFC Eleven" sounds like the cross between "KFC" and the convenience store "7 Eleven". This combination makes the concept sound less premium than even a traditional KFC -  not an easy task.  Even the sign and logo look like they should belong to a convenience store.

Additionally, KFC has a larger negative halo surrounding freshness, health, and wellness. This negative halo will likely be very difficult for consumers to overcome. 

Creating the optimal brand image is key to any strong marketing strategy. To this end, I do not understand why YUM Brands!, the owner of KFC, did not launch the concept under a different name.