Just the Answer – GlaxoSmithKline
In the wake of a scandal in Australia and New Zealand where GlaxoSmithKline (GSK) was fined for misrepresenting the Vitamin C level of its Ribena brand, Graham Neale, general manager at Nutritional Healthcare UK, the GSK subsidiary that produces Lucozade, Ribena and Horlicks, takes the opportunity of this month's Just the Answer interview to put his company's side of the story and outline future plans for both Ribena and Lucozade.
J-D: What lessons has your company learnt from the episode in Australia where misleading claims of Ribena's vitamin C content resulted in negative publicity and a fine?
Neale: UK media coverage on this issue was in many cases misleading so I'd like to set the record straight if I may. It was discovered that our method for testing vitamin C in the New Zealand and Australia markets was not sophisticated enough to accurately measure the deterioration of vitamin C levels (in blackcurrants) over shelf life. This meant that by the end of shelf life, some Ribena in those markets contained less vitamin C than stated on pack. We moved very quickly to amend our advertising, labelling and testing procedures when the issue came to light and have since apologised unreservedly to our consumers in those markets. The case did not affect the UK market - Ribena in the UK has a different formulation and thorough laboratory testing has confirmed that vitamin C levels in the UK are as stated on the label.
We were pleased the judge recognised this was an inadvertent action on our part but nevertheless we accept full responsibility for what happened. There are always important lessons to learn from an issue like this and we're committed to learning from what's happened.
J-D: How do you feel the restrictions placed on soft drinks companies advertising to children prevent you from getting your message across?
Neale: They don't. The restrictions recently introduced by Ofcom (in the UK) haven't affected our marketing plans. We introduced our own stringent and comprehensive guidelines on marketing to children in spring 2004, leading the way for other FMCG brands.
For instance, we don't make advertising that targets children or buy space in children's media - by children we mean the under-16s.
Another reason Ofcom doesn't impact us is that the core consumer group for all of our brands is adults - and our marketing activity reflects this.
J-D: Ribena is being given a makeover to spread its appeal to a young adult audience. Why are you taking this tack, and what does this involve?
Neale: Ribena has always been consumed by adults as well as families. In fact the majority of Ribena Concentrates are purchased by households without kids. Key demographic shifts and soft drink consumption trends clearly indicate the biggest growth potential for Ribena is primarily amongst a young adult audience.
We're executing a credible, engaging communications strategy including an adult tone of voice and tongue in cheek humour - manifested in an advertising campaign in which we tell the stories of the various fruits that make it /don't make it - we've also introduced a more adult pack design.
It also involves building relevancy amongst adults generally, including development of the right product propositions and packs. For example, we've just launched a 1.25L ready-to-drink share pack for the 'Big Night In' occasion - just in time for summer barbeques. While our marketing strategy has shifted what's stayed the same is that we're remaining authentic to the values which have always made Ribena unique.
J-D: Is the soft drinks industry ripe for consolidation, and what part does GSK expect to play in such developments?
Neale: It depends on your definition of a consolidated market. Clearly the UK market is not as consolidated as some markets around the world. However, the top eight branded players have a combined market share of 56% reflecting some of the M&A activity in the market over recent years. GSK has enjoyed great success from focusing on three core brands. It's our intention to continue with this winning formula.
J-D: Is the size of GSK a help or a hindrance in bringing niche drinks to market? Both Coke and Pepsi seem to get round this by buying small companies and not advertising their names on products - is this a direction you're heading in, or would consider?
Neale: Our strategy is to stretch our brand assets into new areas. We have done this successfully over the years with, for example, Lucozade Sport and Hydro Active.
J-D: Turning to Lucozade, what plans do you have to improve the brand's performance in 2007?
Neale: The Lucozade brand had a fantastic 2006 and this high performance is continuing into 2007, with all of the sub-brands (Sport, Energy and Hydro Active) delivering strong year on year growth in Q1. Our brands continue to fuel the overall growth of the Sports and Energy drink category.
In 2007, we have strong plans across the brands. Lucozade Sport, Energy and HydroActive each has specific activation and communication plans focused on meeting our audience needs. Our three brands deliver proven, functional benefits for sporting performance, everyday energy and exercise rehydration respectively and we focus on bringing these benefits to life across the sales and marketing mix.
Lucozade Sport has an equally busy year with the launch of two new flavours within the core Sport range: Lucozade Sport Raspberry and Lucozade Sport Tropical and there's further exciting innovation to come this summer.
Lastly, Hydro Active will be continuing to focus its communication on regular exercisers, those who want to get the most from their workouts and training sessions.
So the 2007 calendar for the Lucozade brand family is full of drinker-focused, engaging activity with consistency of messages from pack to press to instore promotion. We look forward to another hugely successful year for the brand.
J-D: Where do you think growth generally in soft drinks is to come from over the next five years?
Neale: We expect the water, 'Good for Me' and 'Energy Replenish' categories to continue to fuel soft drinks growth over the next five years.
J-D: How important do you feel ethical and environmental issues will play a part in that growth?
Neale: Over the last few years ethical and environmental issues have grown significantly in importance, with increasing consumer awareness and interest. A snapshot of recent research shows that 52% of people consider themselves ethical shoppers (Source: IGD), 74% of people prefer to buy products that are produced or grown locally (Source: ACNielsen Homescan Survey, October 2006) and 75% of consumers believe we have a duty to recycle, up from 65% in 2002 (Source: fair-trade Foundation / Mintel 2006).
When combined with high-profile retailer initiatives and media coverage this means that these issues are no longer niche considerations for manufacturers. In this context having a clear understanding of, and position on, these areas can only help support brands in an increasingly competitive marketplace, especially as they become more of an expectation from consumers.
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