The Grocer – 10 August 2019

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higgins

Lois Vallely

F

ew pet owners know

Mars makes more pet

products than it does

chocolate. As well as owning

multiple confectionery brands,

the company owns well-known

petfood brands Pedigree,

Whiskas, Sheba and Royal

Canin. It also provides animal

care services.

A new documentary on

Channel 4 – Britain’s Giant Pet

Food Factory (1 August, 9pm) –

took a look inside Mars’ giant

petfood factory at Melton

Mowbray, where “changing

the world for pets” is, it claims,

the shared goal of the 250 sta

who work there. The 104-acre

facility is home to 204 cats, 148

dogs and around 800  sh, all of

which help carry out research

into pet nutrition.

The plant runs 24/7,

producing around a million

petfood pouches a day. There is

a common misconception that

petfood manufacturers put any

old rubbish into their product,

but the factory’s quality

manager Joe Leveridge insisted

this couldn’t be further from

the truth.

Sta in the o ce are

encouraged to regularly bring

in their own pets. To ensure

this doesn’t descend into

mayhem, they have adopted

something called “petiquette”

• a series of rules that include
  keeping dogs on leads, placing
  a  ag at the end of your desk
  that reads ‘my dog is with me
  today’, and ensuring your dog
  doesn’t pee on the carpet and/
  or bark incessantly. Break
  these rules and you are out (or,
  rather, your pet is).
  This light-hearted
  documentary didn’t really
  teach viewers much, but it
  certainly made the Mars factory
  look like a fun place to work –
  especially if you love pets.

CRITICAL EYE

Fightback of the new CEOs

second opinion

Warren Ackerman is head of

European consumer staples

research at Barclays

Y

ear to date, the share
prices of AB InBev,
Nestlé and P&G are up
50%, 30% and 25% respectively.
The superficial explanation is
that in a world where interest
rates are negative in Europe,
and low and likely to be cut fur-
ther in the US, bond proxies that
o er predictable dividends out-
perform. While true, this misses
what’s going on bottom-up with
the staples titans.
A er years of losing share to
smaller brands more alert to
local trends, the empire is strik-
ing back. The genesis of the  ght-
back is driven by a generation of
new CEOs (we count 25 across
staples since the start of 2017),
who are more willing to embrace
consumer change. They are look-
ing to constructively reinvent the
fmcg model, taking more risks,
especially around innovation

and beating the disruptors at

their own game.

The focus is on speed to mar-

ket, which requires wholesale

organisational change, smaller,

agile teams, less red tape and

more accountability. This shi is

being enabled by big data to drive

di erentiated insights through

precision marketing, which

smaller companies find hard

to replicate. More money being

ploughed into in-house venture

capital makes it less likely the

staples giants will be blindsided.

In Q2-19, Nestlé delivered 3%

volume growth, its best perfor-

mance in three years – with US

growth at the highest rate for

seven years.

P&G’s impressive 7% group

organic growth in Q4 was driven

by 10% growth in fabric, home

and healthcare. It is winning

again via premium innovation

rather than discounting and pro-

moting. These strong results are

the culmination of a lot of hard

work to reboot organisations.

What is this improved perfor-

mance worth? While valuations

of these mega caps re ect bet-

ter operational performance,

when these supertankers turn

history tells us they can run and

run. Selling perceived ‘expensive

defensives’ might seem logical

but may end up being the wrong

decision.

Given rising trade tensions

between the US and China and

with bond yields plummeting,

it’s hard to see why the staples

mega caps shouldn’t continue to

go from strength to strength.

“A new generation

is more willing

to embrace

consumer change”

Warren Ackerman