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Innovation:Innovation:

Some Holistic ThoughtsSome Holistic Thoughts

Colin Gordon, CEO

Glanbia Consumer Foods Ireland

12th May 2009

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Who in this room hasn’t spent time thinking about…..

qHealth and wellbeing

qLifestage (kids and older people)

qIndulgence

qConvenience

qOn the go

qOrganic

qFair trade

qSustainability

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Innovation

Product

Idea

Model

Comms

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Innovation is all about

•Change

•The Future

•A Dynamic

It’s proactive …… and

reactive

• Innovation is necessary:

consumers/trade

changing anyway (cause

and effect?)

Innovation in “Food”

essential

> val. +3.1% CAGR

1998-2008

> vol. +0/4% CAGR

1998-2008.

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Source: Millward Brown Optimor (including

data from BrandZ, Datamonitor and

Bloomberg)

Global Top 10

By value

Rank Brand Value ($m)

1 Google 100,039

2 Microsoft 76,249

3 Coca-Cola* 67,625

4 IBM 66,622

5 McDonalds 66,575

6 Apple 63,113

7 China Mobile 61,283

8 GE 59,793

9 Vodafone 53,727

10 Marlboro 49,460

*includes Diet Coke, Coke Light and Coke

Zero. Source: Millward Brown Optimor

(including data from BrandZ, Datamonitor

and Bloomberg)

Same-old, same-old?

Top 10 Risers

by brand value growth, (year-on-year)

Brand

Brand value

growth (%)

China Merchants Bank 168

Blackberry 100

Amazon 85

Wendy's 72

AT&T 67

Aldi 49

Auchan 48

Vodafone 45

Johnnie Walker 42

Kronenbourg 1664 41

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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”

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A few food industry basics!

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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!

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Know your customers!

0

20

40

60

80

100

Tesco Safway

(USA)

Carrefaur Aldi

% PL

PL quality – largely not an issue; better?

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Innovation

Product

Idea

Model

Comms

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Product

Innovation

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It tends to be a ‘Rocky Road’

OPTIMISM

PESSIMISMThe Dark Night of

the Innovator

Weeks or months Up to two years

ScepticalSceptical

EnthusiasmEnthusiasm

Beer &

Fireworks

Beer &

Fireworks

This is taking timeThis is taking time

Results aren’t

visible

Results aren’t

visible

Existing business

is suffering

Existing business

is suffering

Is it worth it?Is it worth it?Start to see

pay-offs

Start to see

pay-offs

Maybe not a bad ideaMaybe not a bad idea

It works!It works!

It pays!It pays!

Product

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With varying influence between Innovation and Operational teams

Innovation Operation

OperationInnovation

Innovation Operation

How the text books see it

More like reality

But what it needs to be

Product

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And the hurdle rates are very highProduct

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With particular challenges for FMCG

q Increasing/Decreasing the pace of Innovation

q In 2003 our NPD pipeline x 12

q In 2007 our pipeline x 76

q In 2009 our pipeline x 12

q Success of New Product Launches Falling

q Competitors & Retailers will copy – 6 weeks!

q Shelf Space Squeeze – 1 in 1 out

- US multiple 41,000 skus (+50% in 5 yrs)

- UK multiple +8% skus chasing +2% space

Product

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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?

Product

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Success of course ….it is not about the quantity but it is about the numbers

q Fail fast …. Fail cheap

q Have a variety of innovation initiatives from the

more certain to the uncertain

q Evaluate them differently …… don’t use business

case thinking where uncertainty is high

q Innovation is not just about products but should

impact all functions…. is there a better way?

Product

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Idea

Innovation

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Existing products/brands can be

‘innovated’

Usage, positioning, focus

Idea

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Idea

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Model

Innovation

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Model

• What’s your business model?

• Where can you add value?

• Where can you avoid ‘cost’?

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Innov. Prod. Ops. Sales Mktg Margin

R&D

?%€

Copy/licence

Produce/

Outsource

Distribute/

Agency

All Channels

DBM

AH

BH

%€

Cash/%

ROI

Model

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Comms

Innovation

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New Ways of Connecting

Comms

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Functional Emotional

Comms

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Comms

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Comms

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Innovation

Product

Idea

Model

Comms

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“Future is here today; it’s just not proportionately spread”

(yet!)

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Thanks!And remember, entrepreneurs (and innovators) don’t know

their limitations

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Innovation:Innovation:

Some Holistic ThoughtsSome Holistic Thoughts

Colin Gordon, CEO

Glanbia Consumer Foods Ireland

12th May 2009