INTERNATIONAL January 2018 - LISBON 2017 CONFERENCE REVIEW - SPECIAL EDITION - Ceuta Group
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INTERNATIONAL January 2018 PROMOTING A WINNING CULTURE LISBON 2017 CONFERENCE REVIEW - SPECIAL EDITION
The magazine for the Ceuta International Alliance
Delivering a solution to your International
Market Management Support or Expansion Plans
This unique event brings together leading Health & Beauty, OTC and Diagnostics
Manufacturers, Key Industry Opinion Leaders, Retailers and Outsource Solution Distributors
from over 100 global markets, giving YOU the opportunity to meet like-minded individuals.
The International Alliance Conference has fast become an important and prestigious industry
event in the world of Health and Beauty. Register your interest now with
lorian.pitman@ceutagroup.com to secure your place for 2018.
2 Email: lorian.pitman@ceutagroup.com
PROMOTING A WINNING CULTURE
A NEW GENERATION OF INNOVATION AND SERVICE
EXCELLENCE FOR TOMORROW’S MARKET PLACE
W e hope you enjoy this supplement of our regular
International One Magazine which showcases
our 12th Ceuta International Alliance conference
held in Lisbon in November 2017.
The event was attended by leading manufacturers, key
industry opinion leaders and Alliance Partners representing
four continents.
The theme of this year’s conference was “Delivering a New
Generation of Innovation and Service Excellence for
Tomorrow’s Market Place, creating sustainable growth and
reach, increasing brand equity for manufacturers and
retailers”.
“Outsourcing is being taken in an exciting
new direction that has huge potential”
Our intention was to give examples of success, strategy,
principles, processes and trends with the help of our
distinguished speakers—highlighting specific areas of
opportunities, key learnings and market opportunities which
would allow us to deliver these thoughts and allow you to
potentially adopt them within your own organisations.
The desire amongst brand owners to expand their businesses
into new international or white space markets, along with to the Ceuta Alliance could deliver incremental sales and
moves to reduce costly local market infrastructure and a profit growth.
requirement for brand support, is taking outsourcing in an
exciting new direction that has huge potential. With the need to continually develop and innovate, the Ceuta
International Conference offers manufacturers the platform
Internationally, we are also seeing different types of to present and exhibit new product opportunities on day
companies responding to the need for brand fostering two. The growth and life blood of any organisation is new
support - including new market entrants who are acquiring business and this is always a highly anticipated session
consumer brands but who do not have local market human offering Alliance Partners the opportunity to review
resource, office or local market IP. These companies who are innovations and NPD from around the world.
actively acquiring OTC consumer medicines are typically
private equity acquirers or midmarket companies who are We also announced the venue for our next conference which
dominant in their home market and who are looking to will be held at the Millennium Gloucester Hotel in London on
expand into new markets and develop new businesses. the 13th—15th November 2018. We are also delighted to
report that the winner of our 2017 Feedback Form
This year’s conference agenda included a prestigious line up Competition for a free place at the 2018 conference was
of speakers covering topics such as the global economy, Solinest from France. Congratulations to them and we look
trends in OTC Health & Beauty, M&A activity and best forward to seeing you all in London where we will continue to
practice in outsourcing and influencing shopper/consumer drive, develop and build on the success of Lisbon.
behaviour to build brands. We also shared examples of the
significant latent potential that exists in many leading Keith Garrity
manufacturer’s portfolios and how outsourcing these brands Director of International Business Development
3 Website: www.ceutaalliance.com Editor : Lorian Pitman
3
The magazine for the Ceuta International Alliance
WELCOME RECEPTION - 28 November 2017
T
he Conference kicked off with the Welcome Reception Dinner at 7pm at the Hotel Cascais Miragem, attended
by over 120 delegates. Old friends caught up with each other and new delegates were quickly welcomed into
the Alliance family. A sumptuous spread of food and refreshments were available all evening and the event
was sponsored very generously by Pharma Medico.
Welcome Reception
dinner sponsored by
4 Email: lorian.pitman@ceutagroup.com
PROMOTING A WINNING CULTURE
CONFERENCE SESSION - 29 November 2017
Day One Conference
Session sponsored by
5 Website: www.ceutaalliance.com 5
The magazine for the Ceuta International Alliance
INDUSTRY SPEAKERS
Keith Garrity - Director of International Business Development at the Ceuta Group,
delivered a key note address highlighting developments within the Ceuta Alliance. With a key
focus on the new innovative form of outsourcing—”Brand Fostering” - emphasising the
numerous benefits of this solution to manufacturers, retailers, outsource service providers
and consumers. The brand fostering guardian will regenerate and inject new life into a brand
and deliver innovative and sustainable growth whilst increasing brand equity for both
manufacturers and retailers alike.
The Global Economic Outlook—are we at a turning point? During the past decade it
has often felt as if the global economy has lurched from one crisis to another. Have we now
turned the corner to a more sustained recovery? Stuart Bennett, Head of G10 FX Strategy at
Santander, gave his views on the global economic and market outlook.
Portfolio Management and Value Creation. Fuad Sawaya - Co-founder and Managing
Director at the New York based investment bankers gave an insightful presentation
highlighting the latent potential that exists in many leading organisation’s portfolios. Fuad
shared case studies of how non-core or orphan brands have been acquired by small to
medium-sized organisations and re-engineered to generate superior shareholder value. Fuad
also explored how retaining and outsourcing these brands to a service provider such as the
Ceuta Alliance could help companies maximise the potential of their entire portfolios.
6 Email: lorian.pitman@ceutagroup.com
PROMOTING A WINNING CULTURE
LISBON 2017
How to Maximise the Return on Investment. Ben Schubert, Senior VP at Nielsen’s
Innovation Practice, talked about how OTC manufacturers can get a better return for their
new product innovations. Success with innovation is neither luck nor magic but it follows a
process that can be analysed and optimised. The talk illustrated, with examples from Europe
and beyond, how manufacturers can make sure they maximise their return along all stages
of the innovation process from the first idea identification to in-store execution.
Global Retail Overview. IGD Retail Analysis covers more than 400 global grocery retailers,
giving valuable insight into retailers’ strategies, trading and marketing priorities and more.
IGD’s Liam Gilbert, Head of International Sales, delivered an impactful global retail overview
to the conference highlighting the significant changes and key developments from both bricks
and mortar retailers to the rapid development of e-tailing and possible scenarios for the
future.
Supplier Expectations and Global Strategy. Established in Hong Kong in 1841, A.S.
Watson Group is the largest international health and beauty retailer in Asia and Europe with
over 13,300 stores in 25 markets. Every year, over 3 billion customers and members shopped
with their 13 retail brands in stores and online. The Group has one of the world’s largest
portfolio of retail formats, retail brands and geographical presence and everyday works and
deals with global suppliers and manufacturers. Sachiv Patel, Healthcare Development
Manager, gave a brief insight into both AS Watson’s global strategy and their expectations of
what is involved in making a good supplier partnership.
7 Website: www.ceutaalliance.com 7
The magazine for the Ceuta International Alliance
INDUSTRY SPEAKERS
Direct to Consumer. Digital technologies enable consumer goods companies to
break with the traditional supplier/retailer model and deliver products direct to
consumers. A whole plethora of start-ups is addressing this trend, and larger
incumbents are also developing direct to consumers strategies. Siobhán Géhin
gave her view on these trends and their implications for consumer goods
companies and retailers.
Asian Opportunities—the Silk Road runs in both directions. Much of Asia has
developed as a manufacturing base for the western world. As wealth has increased Asian
markets have developed with a strong preference for premium western brands, but
increasingly local Asian brands have become stronger and are now looking to aggressively
expand into Europe and the United States. Luke Horton, Business Development Director,
DKSH (Asia), and Howard Hopkins, International Business Development Manager, Ceuta
(Asia), shared their perspectives on the opportunities and pitfalls of expansion east into
Asia, but also the opportunities and threats as Asian brands head west.
Retail 2020 and Beyond. At 1HQ, we like to explore the Hard Questions that have helped
to define brands and their relevance in the world we live. Look back no more than 15 years
and it’s not difficult to see that much of what shapes the way we now buy and sell didn't
even exist at the start of this bright new century. Guy Hepplewhite, 1HQ’s Creative
Communications Planning Director, looked forward at what the future might hold in store
and some of the developments and trends that could influence how we’ll shop and live our
lives five, ten, even fifteen years from now.
Portuguese Alliance Partner. Francisco Trocado, Managing Director at Pangiter, gave a
brief history of Portugal and its people and then talked about Pangiter, part of the Henri
Reynaud family group with over 80 years of experience as a distribution service provider into
mass market, pharmacy, professional haircare and other markets. Francisco also shared the
company’s experience of developing new business in an economically challenging
environment.
8 Email: lorian.pitman@ceutagroup.com
PROMOTING A WINNING CULTURE
Time to explore
the Silk Road
by Matt Stewart - Editor
Less than 20% of new consumer
A
modern-day Silk Road is emerging pointed out, with only one of the top-10 OTC
and providing opportunities not only for companies in Korea a western-based firm.
western brands to enter Asian
markets, but for eastern brands to penetrate “I’m in Korea every two months and DKSH works
the west, according to Luke Horton of market with a lot of these companies,” he continued,
entry specialist DKSH. “and the first topic on the agenda when I see
them is expansion.”
Speaking to delegates at the 12th Ceuta
International Alliance Conference in Lisbon, “There is a massive opportunity to engage
Portugal, Horton pointed out that trillions of with brands in Korea and other Asian
US dollars were being invested by a number of markets such as Japan that are a looking to
countries in the ‘Belt and Road Initiative’ to export into the west,” Horton stated.
create a modern day Silk Road using land
and sea routes that would link east and west and Taking two recent success stories, Horton
cover 4.5 billion people. noted that Japan’s Otsuka had taken its Pocari
Sweat energy drink into a host of new markets,
This initiative reflected the shift in economic first China then South-East Asia, before
power from west-to-east, he said, and following the Silk Road west and into the
western healthcare markets would be increasingly Middle East.
“disrupted by eastern brands that want to
export”. “In 2016, Otsuka sold over half a billion
bottles outside of Japan,” he noted. “Pocari Sweat
“There has been over the past few years,” “There is a massive opportunity to will eventually arrive in Europe and will disrupt
Horton explained, “an emphasis by Japanese and engage with brands in Korea and other the energy drink category.”
Asian markets such as Japan that are
Korean firms on expansion west.”
looking to export into the west,” says “If you can provide Otsuka with a route to
The Korean pharmaceutical manufacturers’ Luke Horton, business development market it is a massive opportunity,” Horton
director, DKSH (Asia) said.
association is targeting a compound annual
growth rate (CAGR) in exports of 45% between
2014 and 2020 (see Figure 1), “which is a rise in expansion of exports,” he insisted, “and not only Tiger Balm was a similar success story, Horton
export sales from US$2 billion (C1.7 billion) to into other Asian markets, but also Europe and the claimed, but one which was even further
US$20 billion in six years”, Horton revealed. US.” along the Silk Road.
“This represented an incredibly aggressive The companies looking to export already A traditional Chinese medicine (TCM) by origin,
dominate their home markets, Horton the reach of the liniment brand had been built up
by Haw Par and was now available in 100
countries, Horton said. Despite having already
successfully disrupted a number of markets, Haw
Par had “aggressive expansion plans”, he added.
“Every week,” Horton claimed, “I talk to
brands that are very successful in Indochina
and South-East Asia and I talk to them
primarily about how to expand not only into
markets in Asia, but Europe and the US.”
However, despite the ambitions of eastern
players to head west, Asia remained a land
of opportunities for western healthcare brands
too, according to Howard Hopkins of Ceuta
Asia.
(Continued on page 10)
9 Website: www.ceutaalliance.com 9
The magazine for the Ceuta International Alliance
(Continued from page 9) modern category management”, he noted.
But companies needed to be aware of the Yet the market was changing, Horton said,
vast differences between markets in the and rapidly.
region, he added, noting that healthcare
spending per head in Australia was US$100, Already around 10 pharmacy chains had
while in Thailand it was US$10. emerged, Horton said, with the top six chains
operating a total of 259 pharmacies primarily
In reality, Hopkins said, there were two types of in Ho Chi Minh City and Hanoi (see Figure 2).
Asian market, developed and emerging, which
required different approaches. “The number of chain stores,” he explained, “is
set to increase to 1,000 by the end of 2018.”
“In developed markets such as Hong Kong,
Singapore, China and others a sophisticated “Pharmacity is one of the most ambitious
key account management approach was chains,” Horton said. “Established by a US data
needed,” Hopkins explained, “while in less scientist called Chris Blank, the chain is set to
developed countries you need to rely on “There are two types of Asian market, open 10 stores a month over the next year.”
bigger salesforces, telesales and logistics.” developed and emerging, which required
“Blank gave me an interesting insight into the
different approaches,” stated Howard
A primary reason for the difference in Hopkins, International Business market,” Horton continued. “He pointed out that
approach, Hopkins said, was the distribution Development Manager, Ceuta (Asia) while he is opening all these stores, industry is
channels for healthcare products, especially the just continuing to sell products in Vietnam that
pharmacy channel. are geared towards traditional pharmacy
Noting that Vietnam had a population of 100 trade.”
In developed markets, he continued, you had million and was one of the fastest-growing
the presence of key international pharmacy economies in the world, Horton said that the Blank was laying out a challenge to industry,
chains, along with strong and organised local dynamics at play meant that the market was Horton claimed, urging it to keep up with
chains. ripe with opportunities for western healthcare retailers and consumers and provide the modern
firms. product portfolios that chains like Pharmacity
Furthermore, listings, prices and promotions can properly manage.
were all negotiated centrally, Hopkins noted, “In Vietnam, we are seeing a quickly
with key account management a crucial cog in urbanising population,” Horton stated, “and a One disruptive force that might outpace even
successfully penetrating this type of market. rapidly expanding middle class which is looking the rate of change in Vietnam’s pharmacy channel,
to take control of their health.” Horton said, was digital.
On the flip-side, he added, in emerging Asian
countries the presence of international “But, in terms of pharmacy it remains a very Already, Vietnam was a connected country with
pharmacy chains was limited and instead traditional country,” he noted. “With around 72% smartphone penetration, he said, so even in
manufacturers had to deal with fragmented and 22,000 licensed pharmacies it is an extremely rural areas people were connected.
small local chains. complex logistical mission to get products to
them.” “Around 61% of people are researching
In these developing markets, Hopkins said, healthcare online,” he added, “and with
sales function was the key driver of success. The majority of these pharmacies were also many people still not having easy access to
what Horton called “traditional counter healthcare professionals, digital is opening up
However, things were changing fast in certain pharmacies”, with products in white boxes healthcare to millions of people.”
emerging markets, Horton pointed out, stacked on shelves behind the counter. This
highlighting Vietnam as a prime example. offered “very little opportunity for complex “Already 8% of the population has purchased
some healthcare products online,” Horton
noted, “and 4% were interacting with
healthcare professionals using digital
technology.”
“The question to keep in mind,” Horton said,
“would digital disrupt the standard
development of the pharmacy channel as
seen in other markets and leapfrog modern
trade?”
It was crucial therefore, Horton said, to take an
omnichannel approach to these emerging
markets to ensure that you fully take advantage
of the opportunities they could offer.
10 Email: lorian.pitman@ceutagroup.comPROMOTING A WINNING CULTURE
Planning ahead in a
changing retail
landscape NEW IDEAS BETTER WAYS
by Deborah Wilkes Maximising your return on innovation
The retail landscape for consumer products for the Chinese market. McNamara said there was pricing pressure
healthcare companies is changing Mann has said in the past that industry in developed markets, and the US
rapidly as bricks-and-mortar stores needs to work with retailers more closely specifically, linked to growing e-commerce.
than ever before to make sure they can E-commerce was putting pressure on
evolve and e-commerce develops.
reach consumers whenever, wherever and pricing – especially as bricks-and-mortar
Deborah Wilkes, editor and publisher
however they choose to shop. retailers looked to compete with e-
of the OTCToolbox website, reports on commerce and get more foot traffic into the
some of the key global trends in Brian McNamara, chief executive officer of store – and that was depressing the value
retailing and topics such as the future GlaxoSmithKline Consumer Healthcare, has growth of the market, he commented.
of physical stores, e-commerce, the also commented on the changing retail
role of strategic partnerships, direct-to landscape. Meanwhile, Alan Main – executive vice
-consumer business models, and president Sanofi Consumer Healthcare and
internet-enabled subscription a member of Sanofi’s Executive Committee
– noted that one of the rationales given
strategies.
recently for a slowdown in the US market
R
was growth of the e-commerce channels.
etailing is a hot topic for the
“Although we are starting to see some
consumer healthcare industry.
growth from those channels,” he
Erica Mann, head of Bayer
commented, “it is off a relatively small
Consumer Health and a member of Bayer’s
base.”
Management Board, said recently that
there was a “very rapidly changing retail
Main said Sanofi Consumer Healthcare was
landscape” in the US. Speaking as the
aware of the impact that this would have on
German company announced its results for
the trading environment, particularly in the
the third quarter of 2017, Mann highlighted
US, and had built that into its strategic
store closures, inventory contractions, a
planning.
shift towards e-commerce – “the Amazon
effect” – and the way value retailers were
Dirk Ossenberg-Engels – Bayer Consumer
playing a greater role.
Health’s senior vice president and head
Brian McNamara, chief executive officer region Europe South, Central Eastern
“Consumer behaviour is shifting,” observed
at GlaxoSmithKline Consumer Europe and Middle East – noted recently
Mann, “and consumers are really moving
Healthcare, says e-commerce is still that many countries do not allow online
towards e-commerce channels as well as
“relatively small” in Consumer sales of medicines, but in those that do the
searching for value.”
Healthcare’s categories growth rates for e-commerce are
impressive.
Mann said Bayer Consumer Health had
accelerated the hiring of experienced Speaking as GlaxoSmithKline announced its
One effect of the differing approaches to
people from large e-commerce players. She financial results for the third quarter of
regulation of non-prescription medicines
also noted that the business had been 2017, McNamara noted that e-commerce
around the world is that manufacturers of
working hard on striking partnerships with e was “still relatively small” in Consumer
consumer healthcare products are faced
-commerce players. Healthcare’s categories. Nevertheless, it
with very different retail landscapes in
was “a key channel and a key focus area for
different countries. Some countries do not
Strategic partnership with Alibaba Health the business”, he said, adding that “we are
allow online sales of non-prescription
She pointed out that Bayer Consumer growing ahead of the category in those
medicines, and some countries do not allow
Health had recently formed a strategic channels”.
non-prescription medicines to be sold
partnership with Alibaba Health, part of
outside pharmacies.
Chinese e-commerce company Alibaba. The Significant impact on the overall market
agreement will enable Bayer to use Perhaps more important, he pointed out
The pace of change may be slower in some
Alibaba’s online data – big data – to that e-commerce was having a significant
countries but the consumer healthcare
generate insights in healthcare impact on the overall market.
retailing landscape is evolving as the
consumption trends and develop self-care
(Continued on page 12)
11Website: www.ceutaalliance.com 11The magazine for the Ceuta International Alliance
(Continued from page 11) towards fresh and better-for-you products in
Convenience is critical store,” he adds, “and the online channel will
existing bricks-and-mortar channels develop Another key global trend, according to Gilbert, offer more help and advice for shoppers.”
and the newer e-commerce channels emerge. is “convenience is critical”. “Shoppers’
expectations to be able to get what they want Instant ordering technology
Shopping Reinvented is a megatrend when they want are continuously being reset,” He also highlights the trend towards “instant
Euromonitor International refers to the he notes. “Over the past year, there has been a ordering technology”. “We live in an
changing retail landscape as “Shopping seismic shift in shoppers’ ability to get the increasingly on-demand world where
Reinvented”. It is one of the eight megatrends goods they want in an extremely convenient consumers expect a frictionless shopping
that the market research company believes way.” experience,” he says, “Currently, one-click
will have the “furthest-reaching impact” on ordering and voice ordering are helping answer
industries and consumers around the world “Convenience isn’t simply about small stores,” this shopping need.”
between now and 2030. says Gilbert, “it is increasingly about shopper
missions and being able to get products Gilbert notes that Amazon Echo, which
The way we buy goods and services is easily.” connects to the voice-controlled personal
constantly in flux, says Euromonitor, as assistant service Alexa, is one of Amazon’s
economic and technological realities change He advises suppliers to “keep track of most important lines and one of its “big bets”.
every day for businesses and consumers. emerging and evolving formats” and “assess
how your products remain relevant”. Companies that utilise one click and voice
“Consumers make purchases across many ordering, he says, can “lock shoppers in and
different platforms and merchants must be Noting that another trend is “fresh create loyalty”. Brands that are able to become
prepared to engage anytime and anywhere, perspective”, Gilbert says health and wellness the brand of choice, he adds, have the
especially as buying habits shift from goods to is a major factor determining how people “potential to eliminate competition”.
services,” notes the market research company. shop, where they shop and what they buy. This
“The ideal customer journey weaves a brand is especially the case for young people, he says, Commenting on the fifth key global trend –
into the entire experience, providing value adding that shoppers are “much more “pushing boundaries” – Gilbert notes that the
before, during, and after the purchase, and conscious about the stuff they put inside “future of retailing isn’t necessarily in a chain
converting a transaction into a relationship.” themselves” and there is a “massive focus on of bricks-and-mortar stores”. “The future of
fresh, and on health and wellness”. retailing is increasingly online and it is also
Euromonitor adds that consumers increasingly increasingly through partnerships,” he says.
expect retailers to engage with them in ways
that suit their interests and lifestyle. “Selling Walmart links up with JD.com
via social media and social messaging (s- He points out, for example, that US-based
commerce), internet-enabled subscription retailer Walmart has linked up with the
programmes, pop-up shops and other Chinese e-commerce retailer JD.com.
innovative methods offer ways to tailor the
transaction to the product being sold and the The aim, says Gilbert, is to get Walmart
consumer,” advises Euromonitor. products and brands into new markets where
Walmart doesn’t necessarily want to invest in a
Liam Gilbert – head of international sales at network of stores or an e-commerce set up. “It
IGD, the international grocery research can use a third-party operation to massively
organisation – says the pace of change will increase its distribution on a global basis,” he
“really start to accelerate as shoppers become adds, commenting that “we are going to see
more demanding and retailers and suppliers more of that”.
try to react and try to anticipate what is
coming down the line”. Noting that grocery e-commerce is growing at
Liam Gilbert, head of international sales at pace, Gilbert advises suppliers to “stay close to
Speaking at a recent Ceuta Healthcare IGD, urges suppliers to keep track of the different models that retailers are
International Alliance conference in Lisbon, emerging and evolving formats and assess deploying and the opportunities to engage
Portugal, Gilbert says one of the key global how their products remain relevant with them within the channel”. “Identify which
trends in retailing is “physical gets digital”. “As of their initiatives are relevant to your
the momentum of the online channel “Health and wellness for retailers and business, and use them to drive the reach of
continues to grow,” he explains, “the physical shoppers will continue to be of key your brand,” he adds.
store will need to embrace new digital importance,” he adds. “And with both lifestyle
technologies to ensure it remains relevant and and demographic trends continuing to support Creating a divergence in behaviour
competitive in an increasingly digital world.” further prominence, industry investment will Gilbert tells delegates attending the Ceuta
Gilbert urges suppliers to “consider how your accelerate in these areas.” Healthcare International Alliance conference
category and products can adapt to these that the way channels are evolving is creating a
changes”. Gilbert says suppliers must consider what this divergence in behaviour.
means for their products. “Space could shift (Continued on page 13)
12 Email: lorian.pitman@ceutagroup.comPROMOTING A WINNING CULTURE
(Continued from page 12)
He says physical stores will continue to be Moving on to e-commerce, Ossenberg-Engels
relevant but retailers will have to differentiate points out that worldwide e-commerce sales
Commenting on e-commerce/online channels, physical stores from online stores. of all products were USD1.9 trillion in 2016 and
he says, we are seeing the growth of are expected to rise to more than USD4.0
subscriptions, repeat purchase, and direct-to- Physical stores will stock smaller ranges, he trillion in 2020.
consumer. From a bricks-and-mortar says, adding that routine purchases will
perspective, he adds, it is about fresh, impulse, probably be done through a subscription Meanwhile, Clemens Oberhammer – partner
instant gratification and inspiration. service, and will almost become automated. and head of the Global CHC Practice at Simon-
He says suppliers need to ensure that their Kucher & Partners – says there is likely to be a
Guy Hepplewhite – creative communications products are part of this core range. huge increase in e-commerce sales of personal
planning director of 1HQ, which is part of the care products in the coming years. Quoting
Ceuta Group – refers to this divergence in There will be focused fixtures in store, he figures from Statista, Oberhammer says the
behaviour as the “bifurcation” of retail. continues, adding that the winning ranges will Compound Annual Growth Rate (CAGR)
be the ones that get people excited about the between now and 2021 is forecast to be 16%.
Hepplewhite points out that shopping with shopping experience.
online retailer Amazon, when it works best,
isn’t an experience but is rather a complete Price will decline as a determining factor, he
lack of an experience. It is about speed, adds, as it will be about differentiating through
efficiency and convenience, he says, adding experience and service.
that it is the world of buying.
Furthermore, loyal shoppers will be rewarded
Chance to create a brand experience by retailers, he says.
Digital can’t do everything, says Hepplewhite,
pointing out that physical stores provide According to Gilbert, technology will play an
brands and retailers with the chance to create increasing role in physical stores. He also notes
a brand experience that shoppers can’t get that physical stores will blend with the digital
online. world to enhance the shop and be more
convenient.
“Stores can engage all five senses,” he
remarks. “Brands will need to harness physical A seamless omnichannel experience
retail space by contributing to that sense of Gilbert points out that retailers are creating a
physical theatre and spaces where they can seamless omnichannel experience.
immerse their audiences in a curated and
increasingly personalised experience that He cites Walmart’s new hybrid Seiyu store in
drives serendipitous shopping behaviour.” Tokyo as an example. “The ground floor is a
typical convenience store,” he says. “However, A major factor when it comes to buying
the first floor is a warehouse serving online consumer healthcare products online is
orders, which means the range a small store delivery time and minimum order value,
Video-enabled shelf- layout can offer to its customers is greatly says Clemens Oberhammer, partner and
edge labelling enables enhanced.” head of the Global CHC Practice at Simon-
Kucher & Partners
retailers and brands to When it comes to in-store brand building,
tell a story to the Gilbert says retailers will increase customer Speaking at a recent conference in Munich,
shopper, which could engagement with brands but the approach will Germany, organised by Simon-Kucher &
vary by retailer. Video-enabled shelf-edge Partners, Oberhammer comments that a
be about pricing, labelling enables retailers and brands to tell a significant factor in the development of e-
promotional activity or story to the shopper, he points out, adding commerce through pharmacies could be
that the story could be about pricing, Amazon’s entry into the market.
associated products promotional activity or associated products.
There has been a huge amount of media
Gilbert says suppliers need to understand how speculation about Amazon’s entry into the
Gilbert points out that there are “numerous retailers are changing and the “new normal”. pharmacy market in the US and other key
opportunities and distinct advantages to “New ways of working need new key countries like Germany. Rumours have
physical stores”. “Nothing in the retail performance indicators (KPIs) and new joint circulated about acquisitions of e-commerce
environment,” he says, “can give a shopper business plans,” he comments, stressing that pharmacies as well partnerships with leading
instant gratification like being able to pick up suppliers “need to be as close to retailers as pharmacy chains.
the product and take it home there and then.” ever”. (Continued on page 14)
13Website: www.ceutaalliance.com 13The magazine for the Ceuta International Alliance
(Continued from page 13) healthcare companies that took part in the need to decide on the direction of their online
study were concerned about a number of risks strategy.
Delivery time and minimum order value associated with increasing e-commerce. The
Oberhammer points out that a major factor top five risks, he says, were price erosion, One concern raised by delegates attending the
when it comes to buying consumer healthcare international price management, consolidation Simon-Kucher & Partners conference was that
products online is delivery time and minimum of purchasing power, brand erosion and bricks-and-mortar pharmacies would punish
order value. He notes that Amazon is testing increased parallel trade. companies for venturing into e-commerce.
same day delivery in cooperation with
pharmacies in Munich. “If successful and A very different business One option is “opportunistic online”, says
rolled out,” says Oberhammer, “then this will Oberhammer says consumer healthcare Rebholz, with a commitment to bricks-and-
accelerate the trend towards e-commerce.” companies need to take on board that the e- mortar pharmacies.
commerce business is totally different from the
bricks-and-mortar business. This is especially A second option is “online light”, he continues,
true in markets where a supplier may have with a focus on availability and visibility with
independent pharmacy today but might have low resource effort and investments.
Amazon as a customer tomorrow.
A third option is “grow with online”, adds
“You need to quickly acquire or build e- Rebholz, which involves dedicated e-
commerce capabilities to succeed online,” he commerce and global key account
advises, adding that ideally you should get management, investment in campaigns,
“someone who has been working in e- integrated trade terms and clearly defined
commerce to help you build in this channel”. portfolio channel strategy.
Oberhammer stresses that you can’t just put The direct-to-consumer model
your current key account managers into the Siobhán Géhin – managing director of Kurt
online business. Salmon, which is part of Accenture Strategy –
tells the Ceuta Healthcare International
Furthermore, he notes that you need to think Alliance conference that the direct-to-
about what kind of product assortment you consumer model disrupts the traditional
want to sell online compared to your offering manufacturer-to-retailer-to-consumer
in bricks-and-mortar pharmacies. Key approach.
Companies need to decide on the questions include: “Is it really the same
direction of their online strategy, says product? Do I want to differentiate my Géhin describes direct-to-consumer as one of
Christian Rebholz, partner at Simon-
product? How do I want to set the trade terms the disruptive changes that are “kind of
Kucher & partners
for this product?” nibbling away” at the market share of
manufacturers, brands and retailers.
Christian Rebholz, partner at Simon-Kucher & “You need to define a specific assortment and
Partners, says e-commerce’s share of sales price/gross to net strategy for online which Noting that digital technology is changing
varies greatly across consumer healthcare enables you to grow online while keeping consumers’ expectations, she says consumers
categories in Germany, which has an advanced cannibalisation of the offline channel low,” he can now engage with brands through a range
online channel for consumer healthcare says. “You don’t just want to switch from one of touchpoints such as smartphones, the
products. channel to another, you want to grow.” Amazon Dash Button and the internet of
things.
He points out that e-commerce accounted for Oberhammer also urges consumer healthcare
around 39% of sales of weight-loss aids in 2016 companies to leverage big data to better She points out that disruptive models such as
but only 10% of sales of cough and cold understand your consumers”. “There is a lot of Airbnb, Birchbox, Cornerstone, Graze,
products. Improved delivery logistics could potential in using this data to optimise your HelloFresh, Netflix and Spotify are on the rise.
increase the importance of e-commerce for big product offering,” he says. One thing a lot of these start-ups and
categories such as cough and cold products, he disruptors have in common is that they focus
says. Rebholz says many instruments can be used by on one specific customer pain point, she
consumer healthcare companies and online observes, noting, for example, that it can be a
According to Oberhammer, most consumer pharmacies to spark growth. Subscriptions, re- “pain trying to get a taxi”.
healthcare companies regard e-commerce as purchasing reminders, customised offerings
an opportunity. A study carried out by Simon- and customised suggestions are some of the Examples of subscription services
Kucher & Partners found that 71% see e- options he mentions, along with exclusive Quite a few players are offering “really
commerce as an opportunity, with only 25% products for the online channel and cross- disruptive models like subscription services”,
viewing it as a threat. The remaining 4% are selling. He also notes that a “brand shop” could continues Géhin, adding that there is
undecided. be developed and maintained. “significant consumer interest” in these
models.
Oberhammer adds that the consumer Rebholz says consumer healthcare companies (Continued on page 15)
14 Email: lorian.pitman@ceutagroup.comPROMOTING A WINNING CULTURE
(Continued from page 14) brand with incredibly deep connections to its experience to shoppers. He adds that
diverse and highly-engaged consumers”. temporary pop-up stores, which allow
manufacturers and retailers to “roadshow”
One example cited by Géhin is the Dollar Shave Club was the category leader in their products, will be widespread and integral
“replenishment subscription” model of its direct-to-consumer space, said Kruythoff, to the retail experience.
HelloFresh, which delivers recipe boxes and had “unique consumer and data insights”.
containing fresh ingredients to consumers. She
also draws attention to the “surprise me Potential for profitability
subscription” model of Loot Crate, which According to Géhin, the direct-to-consumer
provides monthly subscription boxes for model is “incredibly challenging to get right”.
“gamers & nerds” such as Marvel or Minecraft Viability is based on two critical questions – “Is
fans. there potential to achieve profitability?” and
“Is the consumer value proposition sufficiently
Géhin also highlights the “smart re-ordering” distinctive to drive demand?”, she says, adding
model offered by office supplies company that many players are not profitable.
Staples. Your printer, for example, can
automatically order ink and toner when it is Géhin stresses that the assessment of
running low. potential should include a “customer lifetime
value analysis”. “The value of the shopper over
the lifetime must exceed the cost to acquire
the shopper,” she notes.
The costs of doing nothing
Furthermore, she emphasises the importance
of in-depth consumer research and prototype
testing, as well as weighing up the costs of
doing nothing.
Géhin also gives examples where physical
stores support the online channel. This is Online retailers are popping up on high
where “direct-to-consumer starts to blur a bit streets to offer an experience to shoppers,
with normal retail”, she says, adding that the says Guy Hepplewhite, creative
physical stores provide a huge advertising communications planning director of 1HQ,
part of the Ceuta Group
presence as well as sales.
One example cited by Géhin is Unilever’s The old rules are starting to get broken down,
Magnum Pleasure Stores in the UK. These pop- observes Hepplewhite, and new rules are
up stores, which open for limited periods of being created.
time, allow consumers to purchase
personalised ice creams freshly dipped in a Experiences versus fulfilment
The direct-to-consumer model is selection of toppings. “We will see retail move from an online versus
“incredibly challenging to get right”, says physical distinction to one that is determined
Siobhán Géhin, managing director of Kurt
Other examples include Nestlé’s Nespresso by the distinction between experiences on the
Salmon, which is part of Accenture
boutiques, and Dyson demo stores. one side and fulfilment on the other,” he says.
Strategy
1HQ’s Hepplewhite says it’s time to get “Only those brands that recognise the value of,
In addition, she notes the “do it for me” model “phygital”, as consumers now expect a and seamlessly connect, their digital and
offered by music and video streaming service seamless shopping experience across a range physical worlds will be left feeling good about
Spotify. of connected devices and outlets. the exciting, the scary, the challenging and the
connected times that lie ahead,” concludes
One high profile direct-to-consumer business – “It is becoming much more about blending Hepplewhite.
US-based Dollar Shave Club – was recently digital and physical experiences,” he tells the
acquired by Unilever. Announcing the deal in Ceuta Healthcare International Alliance
July 2016, Unilever said Dollar Shave Club had conference, “and delivering omnichannel
annual sales of USD152 million and 3.2 million experiences at every opportunity and point-of- This article was first published in Edition 13 of
members. brand experience.” the OTCToolbox Innovations magazine NEW
IDEAS BETTER WAYS. Visit the OTCToolbox
Kees Kruythoff, president of Unilever North Online retailers such as Made, Amazon and website at www.otctoolbox.com to find out
America, said Dollar Shave Club was an The Idle Man, points out Hepplewhite, are how publications from OTCToolbox can help
innovative and disruptive male grooming popping up on high streets to offer an your company make well-informed decisions.
15Website: www.ceutaalliance.com 15The magazine for the Ceuta International Alliance
Why you should
innovate
by Matt Stewart - Editor
Innovation is seen as the lifeblood of the without innovating (see Figure 2). innovations could do for your customers, your
OTC industry, yet many new products fail to end users.”
make an impact. Nielsen’s Ben Schubert A brand can be cruising along quite nicely, he
explains how to give your innovation the explained, but if no action is taken eventually “In healthcare, you have to remember that the
best shot. Matt Stewart reports. gravity would take hold and sales would start to things you produce and distribute, most
W
fall. people actually don’t want to own,” he noted.
hy is there a constant urge to innovate, “People don’t buy painkillers to pass down to
when the data shows that most their children, they buy them to get rid of their
innovations don’t sell very much?” headache.”
was the question Ben Schubert, senior vice
president of Nielsen’s Innovation Practice, “Essentially the product has to perform a job,”
asked delegates at the recent Ceuta Schubert stated. “For a consumer to bring a
International Alliance Conference in Lisbon, product into their life it has to perform a
Portugal. function.”
“If you look at the data, very few innovations This function must also, Schubert insisted,
that come to the market actually generate big solve an inefficiency in an existing product or
sales,” Schubert pointed out. “There is a huge replace an existing one with something better.
long tail where the return is minimal or more
likely negative,” he added (see Figure 1). “If you cannot identify what this innovation
will change or replace in people’s lives,” he
warned, “there is little chance of succeeding.”
There were quick fixes to this problem, such as
When people want a painkiller they want it
implementing an advertising campaign or a
now, but most painkillers needed water.
year-end promotion to create a spike in sales,
Making it easier to take a painkiller, by
Schubert pointed out, but these campaigns or
changing the format to granules that
promotions could not run forever and once again
dissolved without needing water, became
sales would start to decline.
very successful.
Innovation, Schubert claimed, had the potential to
“Write a job description for your brand, the
provide a solution to this rollercoaster cycle by
must haves, the must dos, what’s beneficial to
immediately pushing a brand to new sales heights.
have,” Schubert advised. “Write it all down and
“Without innovation it is very hard to grow a see if the innovation ticks these boxes.”
brand’s sales,” he insisted, “especially if the
This exercise could also change perspectives on
brand had maxed out distribution expansion. In-
category boundaries, he added, expanding
“It is this type of data that drives the novation is needed and it has the potential to
the reach of an innovation beyond a “certain
commentary that most innovations fail,” he bring dramatic returns.”
narrow category definition”.
stated.
Yet it remained a fact that most innovations
Take the example of baby wipes. Schubert
It would not be totally remise for firms to say failed to deliver, Schubert admitted, however
noted that when they were first introduced,
“why bother” when it came to innovation, there were ways to flip the odds and give an
they were marketed to clean babies’ bottoms.
Schubert claimed, noting that the odds were innovation the best chance possible.
stacked so highly against an innovation Now baby wipes and variations on them were
succeeding that a “marketing manager could Nielsen defined an innovation as “an offering that
used for many, many things, he pointed out,
take their marketing budget to a casino, put it resolves a circumstance of struggle or fulfils an
and there is a huge amount of “out-of-category
all on red, and statistically have a better unmet aspiration”, Schubert said.
consumption” because people within the
chance of getting a return”. consumer goods industry have a tendency to
This was key, he added, to make sure an
innovation was developed for the right always look narrowly.
So the question remained, he said, why
innovate? Nielsen decided to find out, reason.
Furthermore, if an innovation could push
Schubert revealed, and found that the number- category boundaries, retailers would be much
“Stop thinking about products,” Schubert
one reason given by its clients was that it was
urged, “and actually think about what these
not possible to grow the brand sustainably (Continued on page 17)
16 Email: lorian.pitman@ceutagroup.comPROMOTING A WINNING CULTURE
(Continued from page 16)
more interested in stocking it, Schubert promised,
as retailers only win when a category grows.
But, to ensure retailers understood what an
innovation could do for a category, it was vital
the innovation and its benefits could be explained
clearly, he pointed out, which is why the
product required a clear job description.
Having a great product is not enough, Schubert
cautioned. “Just because you build it does not
mean [consumers] will come.”
Breaking down innovation into three phases –
discovery, development, and deployment –
“Simply, if your product is unique and nails the “One year is not an optimal time to support an
Schubert claimed that most innovations failed
job it is meant to do, you can put the price up,” he innovation,” Schubert insisted, “if the brand is
in the deployment stage.
claimed. “If you really have something that not backed sufficiently in the second year
While the product could be a great idea, if the consumers want in their lives, they will pay.” sales will drop, retailers will notice the lack of
innovator ignored packaging design and in-store support and lose confidence.”
In-store execution was also vital, he said, and it
discovery the chances of failure were great, he
was crucial to fight for the right positioning. A three-year plan was much more realistic to
added, with most innovations failing because
help secure an innovation’s place on the
consumers simply didn’t see them, due to the The innovation should not be marooned in an market, he claimed, pointing out that a growing
poor execution of the product launch. area with low footfall or where it could not brand spends on average as much on
compete against adjacent products that it advertising in year two as in year one, while a
“Excellence in packaging design is vastly under-
wanted to overtake, Schubert insisted. declining brand spends just a fifth of what was
leveraged,” Schubert insisted. “While packaging
design might not be sexy, the right packaging spent in year one.
Citing the example of Chobani Greek yogurts
can be dramatically impactful.” in the US, Schubert said that while the brand “Innovation is needed to grow a brand,”
now had a claim to the number-one Greek Schubert concluded, “but do it right.”
“When consumers were asked how they became
yogurt brand in the country, initially it had been
aware of an innovation, the majority said
marooned in the health-food aisle due to its “The only way to make money is to conduct
through family and friends. The second most
high-protein content. research, identify the job, back the horse with
popular answer was ‘I saw it in the store’,”
Schubert revealed. “Seeing a product in-store highest chance of winning and get an excellent
While sales had been good, he argued, the
came above television advertising and social- company fought to be included in the standard trainer to run it.”
media posts (see Figure 3). Everyone wants to yogurt aisle. Once it had secured its positioning,
spend time in the television and social-media sales exploded.
arena and less time on packaging. Yet
packaging design creates the biggest return It was vital, Schubert said, that an innovative
on awareness.” product was positioned properly, in order to
maximise exposure.
“Nielsen’s research shows there is dramatic
impact between good packaging and bad Executing a launch well was crucial to a successful
packaging,” he claimed, “with the visibility take off, Schubert noted, but still many
gap at 70% on average.” innovations would not see their first birthdays.
“Awareness is linear to sales,” Schubert Yet even if an innovation did make it through
continued, “if you double the amount of that first year on the market, data showed
people who know something exists, all things that more than half of product launches saw
being equal, you double sales. If you have sales drop in the second year.
impactful packaging, a lot more people will
become aware, therefore you will sell a higher “Even if sales improve in year two,” Schubert said,
volume.” “70% of launches sell less in year three.”
“Packaging design is required anyway, so you This was primarily due to an ill-founded belief that
might as well make it good,” he stated. once through year one, consumers would
continually return to the product, he claimed.
Another “dramatically under-leveraged area” in Ben Schubert, Nielsen’s senior
“But consumers don’t always buy again. If you vice-president innovation
innovation execution was pricing, Schubert said. want loyalty get a dog,” Schubert stated.
17Website: www.ceutaalliance.com 17The magazine for the Ceuta International Alliance
DRINKS RECEPTION - 29 November 2017
A
drinks reception was held at the Oceanus Gallery Bar prior to the Delegate Dinner. This informal event
allows delegates to relax after a full day of presentations and many new friendships and business contacts
are forged here.
Drinks Reception
sponsored by
18 Email: lorian.pitman@ceutagroup.comPROMOTING A WINNING CULTURE
DELEGATE DINNER - 29 November 2017
T
he Delegate Dinner this year was held at the Monte Mar Lisboa restaurant situated on the River Tagus in the
city of Lisbon. On arrival guests were greeted with port and champagne downstairs and then ushered
upstairs for a private but relaxed dinner with views across the water to the 25de Abril Bridge and the
Monument to Christ.
Delegate Dinner sponsored by
19Website: www.ceutaalliance.com 19The magazine for the Ceuta International Alliance
HRA Pharma is
hungry for more
acquisitions 8 December 2017 • by Deborah Wilkes
F
rance's HRA Pharma is keen to necessarily just
make further consumer in Europe but
healthcare acquisitions also in the rest
following its recent purchase of the of the world,
Compeed brand, according to chief he said.
executive officer David Wright. "We are
on the acquisition trail quite Wright noted
aggressively," said Wright, adding that HRA
"watch this space". Pharma was
working with brand services representing a rise of 15% compared to
Wright told delegates attending the organisation Ceuta Group on shaping the same period a year earlier. The
recent Ceuta Healthcare International the go-to-market and innovation company said 62% of its sales in 2016
Alliance conference in Lisbon, Portugal, strategies for Compeed in Europe. were generated by its three OTC brands
that Johnson & Johnson's decision to – Clareva Gel, ellaOne and NorLevo.
divest Compeed had given HRA Pharma According to Wright, the days when big
an opportunity to acquire a "once in a companies had large sales
lifetime asset in Europe". organisations were numbered. “There
is a better and more efficient way of
HRA Pharma announced in July 2017 working very closely with external
that it was acquiring global rights to the partners to deliver the value within
Compeed range of blister-care and lip- categories,” he said.
care products from Johnson & Johnson
for an undisclosed sum. The brand is HRA Pharma appointed Wright –
available in 26 markets including former worldwide head of Boehringer
Australia, Austria, Belgium, Denmark, Ingelheim's Consumer Health Care
Finland, France, Germany, Ireland, Italy, business – as chief executive officer
the Netherlands, New Zealand, Norway, with effect from 3 April 2017.
Poland, Portugal, Spain, Sweden,
Switzerland, the UK and the US. The company's growth strategy
involves an "ambitious" combination of
Wright commented that Compeed was organic growth and targeted
a brand with “huge awareness” and acquisitions.
“lots of opportunities for
development". Commenting on the impact of the
Compeed deal, HRA Pharma said it
Double Compeed's sales would "double the size" of the
HRA Pharma could double the sales of company's existing business and create “We are on the acquisition
Compeed over the next four years, not a "robust global consumer healthcare trail quite aggressively,”
company with a strong European
focus". says HRA Pharma’s chief
executive officer David
HRA Pharma recorded sales of EUR102
million (USD119 million) in 2016, Wright.
20 Email: lorian.pitman@ceutagroup.comYou can also read
