February 28, 2007
February 27, 2007
GlaxoSmithKline and Ranbaxy Laboratories may be locked in a death match over generic knockoffs, but that isn’t stopping them from working together to find a cure for cancer, reports Peter Loftus in The Wall Street Journal (2/21/07). “Both friend and foe of the same company — that’s exactly right,” says Ranbaxy spokesman Charles Caprariello. The two companies are foes because Ranbaxy wants to start selling "copycat versions of blockbuster medications years before patents expire." Says Charles: "Our job is to challenge patents we feel are superfluous or not well grounded."
But they are friends because Glaxo wants to use Ranbaxy’s, low-cost "stable of scientists in India" to come up with "compounds to potentially treat infections, cancer" and other conditions. "In India they have some of the best chemists in the world," explains Glaxo ceo Jean-Pierre Garnier. But he adds: "Next to that is the generic division, whose sole purpose in life is to beat us up on patents, so we’re going to fight them."
As unlikely as this “love-hate” relationship sounds, it actually “embodies some paradoxical trends in the industry, and could signal a greater melding of branded and generic business models.” As Hussain Mooraj of AMR Research explains: "The opportunity for reinventing the relationship between branded pharmaceutical an generics companies, which has historically been very adversarial, is there," he says. The two companies actually have been working together since 2003, and Ranbaxy currently stands "to receive more than $100 million in potential milestone payments for products" they develop and Glaxo launches. ~ Tim Manners, editor
February 26, 2007
"The traditional store does nothing to help the consumer buy intelligently and learn, other than provide a knowledgeable salesperson," says Tom Geniesse of Bottle Rocket, in a Wall Street Journal story by Dorothy J. Gaiter and John Brecher (2/23/07). Bottle Rocket is a wine shop in N.Y.C. that features “365 wines … one for every day of the year. All are lined up on the right side of the store, alphabetically by country, from Argentina to the U.S. Then, down the middle of the store, the same wines are organized around kiosks by theme. “There’s wine to have with seafood, for instance, which is then broken down into heavier and lighter fish dishes. There’s even a kiosk marked ‘Gifts,’ with subheadings including ‘Third Date.'”
Says Tom: “Wine is such a confusing but very rewarding subject. So I thought, gee, there must be a way that this complex world can be presented to folks in such a way that they can be intelligent and learn and grow confident.” Tom also provides a play area for kids, which might sound like an odd thing at a wine shop, but Tom doesn’t think so. “I think that all retail is really, on some level, a neighborhood phenomenon,” he says, “and it just seemed so logical to provide for the little people, too, so they can enjoy the experience and then their parents can enjoy their own experience.” Bottle Rocket is actually one of several wine stores taking so experiential a view.
Moore Brothers offers its customers coats because it keeps its stores at 56 degrees, the ideal temperature for storing wine. Vino 100 helps its customers feel less intimidated by offering a tightly edited selection of just 120 wines. Greene Grape keeps a record of every wine you buy, so you can find it again easily. Seventh Street Wine in Ft. Lauderdale has an Enomatic machine, where you can use a debit card to dispense one-ounce samples of any of 96 wines. And Cova, in Houston, puts its customers in "a rock star motor coach the size of a Greyhound Bus," for a tasting tour of 3-4 fine restaurants, including up to 20 wines — "an appropriate symbol of wine getting on the road to modern, clever retailing." ~ Tim Manners, editor
February 23, 2007
"The poorer a country, the more likely it will listen to its own music," writes Tyler Cowen in The New York Times, and that’s bad news for the future of American pop-culture exports (2/22/07). American movies and music still do well in “countries like Sweden” and much of Europe because their cultures are relatively less hierarchical. That’s the key, because most people tend to signal their social status by the music they listen to and the movies they watch. For example: “An Indian Muslim might listen to religious Qawwali music to set himself apart from local Hindus, or a native of Calcutta might favor songs from Bengali cinema.”
That’s a problem for America’s “cultural goods” because, these days “economic growth is booming in countries where American popular culture does not dominate, namely India and China.” Brazil, Mexico, Egypt and Indonesia, too. Not only that, but also “population growth is strong in many Islamic countries, which typically prefer local music and get their news from sources like … Al Jazeera.” Not coincidentally, “‘American cultural products rely increasingly on non-American talent and international symbols and settings.” For example, the movie Babel “has a Mexican director, and is set in Morocco, Japan and Mexico, mostly with non-English dialogue.”
The good news for Americans, perhaps, is that they might become less criticized for “cultural imperialism.’ The bad news, obviously, is that the market for their cultural products is shrinking. The irony is, it’s America’s influence that’s helping to fuel this trend! As Tyler Cowen noted in his book, Creative Destruction, “the funk of James Brown helped shape the music of West Africa," for example. He observes: "Western cultural exports are as likely to refresh foreign art forms as to destroy them." And maybe most important: "Western technologies — from the metal carving knife to acrylic paint to digital filmmaking — have spurred creativity worldwide." And he concludes: "American popular culture will continue to make money, but the 21st century will bring a broad melange of influences with no clear world cultural leader." ~ Tim Manners, editor
February 22, 2007
Interest in “all things pink” and a perception that rose wine is “young and extroverted” is propelling a growing market for nonvintage rose champagne, reports Sarah Nassauer in The Wall Street Journal (2/15/07). This trend, which “most producers believe … is a structure shift, not just a trend” — a new category, in fact — is being promoted most notably by Moet & Chandon, which made a decision that pink champagne made sense about six years ago. Part of their thinking was pure economics. It’s less expensive to produce a bottle of nonvintage rose champagne than nonvintage white champagne (nonvintage wines mix “grapes from different harvests”). The margins on the pink stuff are also better, with bottles of nonvintage rose priced “15 percent to 20 percent higher than a bottle of nonvintage white champagne.”
That’s not to say the move into rose champagne wasn’t risky for Moet & Chandon. Their decision meant “transferring valuable grapes to rose production years before any actual sales while the bottles aged.” They couldn’t just plant more grapes because of “a 1927 French law, aimed at maintaining quality, that fixed France’s Champagne region at about 84,000 acres, most of which is already planted.” But Moet figured if they got the marketing right, they should have a hit on their hands. The marketing began with “rose-petal covered Valentine’s Day ads in glossy magazines and special packaging in the late 1990s.” But the real focus has been the fashion industry. For three years running, Moet & Chandon has hosted the Moet Rose Lounge in New York’s Bryant Park during fashion week.
The events cost “hundreds of thousands of dollars” but when Paris Sheraton‘s publicist calls and asks for a VIP pass, Moet assumes it’s getting the right kind of buzz. Next up are Moet Rose "picnic bags, complete with magnums of Rose Imperial. Only 10 will be available for sale in the U.S., priced at $1,500 apiece." Other champagne houses balk at that kind of marketing, but Moet brand manager Franklin D. Isacson says it’s what’s required: "They’re so jaded," he says of the fashion crowd, "We have to do something to stand out." So far, so good: "For decades, rose’s share of the French champagne export market hovered around two percent to three percent. But since 2000, rose champagne’s share has climbed to more than seven percent, with exports soaring 37 percent in the first nine months of 2006," versus a year ago. ~ Tim Manners, editor
February 21, 2007
You’ve probably heard that today would have been George Washington’s 275th birthday, but you may not know that the father of our country was also in the whiskey business, reports John Fund in The Wall Street Journal. Shortly after retiring as America’s first president, Washington was pitched on the idea of starting his own distillery. Taxes on imported rum had made domestic “hootch” more popular, and this wasn’t lost on Mr. Washington: “At the time, the average American consumed five gallons of distilled spirits every year, compared with only 1.8 gallons today.” Now, it’s not that Mr. Washington was a big drinker — in fact “he was a light drinker who refused to tolerate alcohol abuse among his employees or his soldiers.”
Nor did he know anything about the whiskey business — but he did understand whiskey’s benefits. During the war, he had seen how moderate alcohol consumption had kept his troops feeling warmer and happier, and less prone to desertion. In politics, Mr. Washington actually lost an election to the Virginia House in 1755 “because he didn’t treat prospective supporters to a drink. Two years later, he rolled out 144 gallons of refreshment. He won with 307 votes, a return on his investment of better than two votes per gallon. He never lost another campaign.” His whiskey business did well, too, but died with the former president, in 1799. New owners took over, but by 1814, his distillery “had been dismantled to provide construction materials for nearby homes.”
Had Washington lived a bit longer (he was just 67 when he died), his whiskey might have survived to the present day. Imagine that! His recipe — which was a bit closer to moonshine than modern whiskey — would certainly have been updated: “In Washington’s time ‘quality’ was a term that referred to the alcohol content far more than the complexity of the distilling process.” His distillery actually has been re-constructed, but only a few bottles will be made and sold to raise money for educational programs at Mount Vernon, Washington’s estate. The real legacy of Washington and his whiskey business actually is this: "He was a true disciple of the free enterprise system, and he sense that our new system of government would encourage people to think creatively, take chances and invest." ~ Tim Manners, editor
February 20, 2007
Dockers looked dead, pretty much, when John Goodman got to Levis, but three years later the khakis are back, thanks to a so-called “lifestyle marketing” strategy, reports Ray A. Smith in The Wall Street Journal (2/14/07). John arrived at Levi Strauss with the right kind of experience, having “helped oversee the transformation of Gap’s Banana Republic from a brand known for safari-inspired clothes to an upscale line for men and women.” As John explains: “I’m a merchant, a product guy through and through … So it’s been about making sure our product is the best quality, the most relevant, and in some cases, the most fashion-forward that we can be.”
That relevance is largely a result of surrounding Dockers’ khakis with a complete line of complementary apparel — “shirts, sweaters and blazers, as well as more fashionable women’s clothing … The company also started designing Dockers men’s apparel specifically for four occasions — work, weekend wear, dressing up and golf — and marketing it that way.” This was a departure from the past, where khakis were mainly positioned as “the dot-com uniform of choice.” That positioning was damaged as competitors edged into that marketplace, and then basically popped along with the dot-com bubble.
The new Dockers image also involves a name adjustment — the brand is now known as “Dockers San Francisco, to emphasize the lifestyle component and the brand’s roots.” It also includes a shift to “more expensive, more fashion-forward khaki,” which had threatened “to do to Dockers what premium jeans did to the company’s core Levi’s brand. Instead, Dockers is now driving “most of the growth” for Levi’s, according to analyst Carla Casella. She adds: "it just shows that a little bit of focus goes a long way. They found a way to add some edge and differentiate the brand." The Dockers brand had declined 21 percent in the fiscal year ending in November 2004, but has grown every quarter since late 2005. ~ Tim Manners, editor
February 16, 2007
A startling correlation between chubbiness, charity and happiness has been revealed in research by University of Michigan and Indiana University, according to an essay by Arthur C. Brooks in The Wall Street Journal (2/17/07). First of all, the research found that “people in the overweight category in 2001 were 11 percent less likely than those in the normal range to say they felt inconsolable over the past month. They were also 18 percent less likely to have felt worthless, or to say that ‘everything was an effort.'” In addition, “while 68 percent of men in the overweight category gave money to charities in 2001, only 62 percent of men in the normal range” made contributions.
“Overweight men were also the most likely to volunteer their time for various causes and charities.” Arthur doesn’t cite any figures for women, but does note that the spirit of charity does tend to recede among those who are not just overweight, but qualify as obese. However, he goes on to report that, “on average, the heavier man will give about five percent more money away than the thinner man each year.” Despite these stats, Arthur says he doesn’t think that there actually is a cause-and-effect relationship between one’s weight, one’s happiness or one’s charity.
Instead, he points out that very few people meet the definition of "normal" weight anymore. "There is no disputing that thinner is healthier," he writes, "but between cheap food, long work hours, supersized restaurant portions and a ban on the delights of nicotine, thin is simply no longer how most ‘normal,’ well-adjusted people look." Arthur also says most normal, American lives involve "foursquare virtues like charity and a good deal of happiness." He concludes by suggesting that the real issue may be a "tradeoff between focusing on oneself and thinking of others … When it comes to dessert," writes Arthur, "today’s abstainer may tend to be the person who denies the rest of us a smile or donation." ~ Tim Manners, editor
February 15, 2007
The 1,700 shareholders of the Mad River Glen ski area never agree on anything (except maybe beer) but they do agree that the fabled mountain should restore “its historic, signature single-chair lift, that vision of quirky skiing solitude,” reports Bill Pennington in The New York Times (2/9/07). Nevermind that it would cost $300,000 less simply to replace the lift with “a modern double-chair.” The shareholders, each of whom pays $1,800 a year to be part of the ski area’s cooperative, are intent on raising the $1.5 million required to refurbish the old lift.
What else might we have expected? Unlike so many other mountains, Mad River Glen today “is not substantively different from what it was when it opened in 1948.” Snowboarders are not allowed. Grooming is off limits on the mountain’s best trails. “Snowmaking? We think it’s a fad,” says Eric Friedman, the mountain’s marketing director. Some snowmaking does happen in the early part of the season, but after New Year’s, if there’s not enough snow, the mountain closes. As of early February, all 45 trails were open. At Mad River Glen, the parking lot is still dirt, real estate development has been denied and corporations are not running things.
To raise money, shareholders will bid at auction on 140 of the 158 original chairs, there will be a $5-a-ticket raffle to give away five chairs and an essay contest to win another three chairs (if you’d like to enter, email email@example.com). At least one chair will be sold on eBay and another will “made into a bar stool inside the lodge.” After the restoration, the lift will run on electricity instead of a diesel engine. Most important, the experience will be pretty much as it was in the 1940’s, a 12-minute ride to the top, “a rise of 2,037 feet" above the "twisting, narrow trails, unlike any you have probably ever seen." All by yourself. ~ Tim Manners, editor
February 14, 2007
Boeing is hoping to streamline airline design with a showroom where its customers can experience everything from the seats to the windowshades to the microwave ovens, reports J. Lynn Lunsford in The Wall Street Journal (2/14/07). The concept is based somewhat on automobile showrooms, but also builds on a “mock-up center” established by Boeing’s chief rival, Airbus, back in the late 1970s, which former Boeing ceo Alan Mulally visited “a couple of years ago.” The difference is, the Dreamliner Gallery, as it’s called, “is conceived more as a true design center,” and Boeing is promoting it as “the next step in designing and building jetliners.”
It is also intended to shorten design time, simply by putting all of the options under one roof: “Until recently, putting together the interior of an airplane was an 18-month shopping marathon that required airline officials to visit dozens of individual suppliers.” By first creating an online catalog and then gathering “the various choices of interior items … near the company’s widebody airplane factory in Everett, Washington,” Boeing hopes both to shorten the design cycle to just four months, as well as cut costs. Perhaps ironically, Dreamliner Gallery also is designed to limit choices and actually “discourage airlines from going crazy with options.”
Like a good boutique, Boeing edits what it offers. “It got to the point that all of the customization was getting out of control,” says Boeing’s Randy Atkins. “Boeing says it will still allow customers to choose equipment not on the approved list, but airlines that stray from the standard catalog will be required to pay any extra cost.” Dreamliner Gallery is also said to be a boon to smaller airlines that typically don’t have “relationships with some of the bigger suppliers.” As for Airbus, well, let’s just say they are looking on with interest. Says John Leahy of Airbus: “I knew this was going to happen when we let Alan Mulally look at our mock-up center." ~ Tim Manners, editor
Sensing weakness within the department stores, Walgreens is making a bid to capture upscale cosmetics customers, reports Amy Merrick in The Wall Street Journal (2/8/07). Walgreens, at $47 billion in annual sales “the nation’s largest drugstore chain,” is introducing “seven skin-care lines from five countries — France, Spain, Greece, Germany and Switzerland — at nearly 1,000 of its stores.” The move by Walgreens follows that of CVS, which “has been expanding its successful partnership with Lumene, a high-end Finnish skin-care and cosmetics brand,” and with Boots, a British brand. Target also sells “about 20 lines from countries including New Zealand and Portugal.”
Walgreens says its goal is to increase the average number of items purchased per trip to four items from 3.3 items. The question is “whether shoppers will pay $10 to $60 for creams, scrubs and lotions, some of which are sold in upscale department stores and in Europe.” Hopefully, shoppers like Debora Pitlik, who usually buys Clinique at department stores, isn’t typical. Debora says she’s not opposed to the idea of buying expensive cosmetics at Walgreens, but says she “always walks right by the new cleansers, lotions and creams” simply because she usually buys them “somewhere else.”
Walgreens hopes it can change Debora’s behavior by offering up exotic alternatives that can’t be found “somewhere else.” For example, a brand called Red Water, from Greece, “uses thermal spring water from Pella, the birthplace of Alexander the Great, while Artdeco, the top-selling color-cosmetics brand in Germany, includes caviar and silk in its face creams." Part of the Walgreens plan involves promoting the relatively less expensive ($20-$25) items first to get shoppers hooked. Walgreens is also investing in training in-store "beauty advisors," seen as critical to persuading time-strapped shoppers to try the new offerings. Walgreens "says it expects to roll out about 13 of the 137 items to nearly all its roughly 5,500 U.S. stores beginning this summer." ~ Tim Manners, editor