Posts from — February 2007

Glaxo & Ranbaxy

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 28, 2007   Comments

Project Apollo

By linking the media people consume to the products they actually buy, Arbitron and Nielsen believe they are bridging the gap between advertising and sales, reports Sarah McBride in The Wall Street Journal (2/27/07). “This is high definition for market research,” says Linda Dupree, evp of Arbitron, in announcing the results of Project Apollo, as the Arbitron-Nielsen joint-venture is called. Project Apollo armed some 11,000 consumers with Arbitron’s Portable People Meter, which tracks their media consumption on radio and television, as well as Nielsen’s HomeScan, which tracks their product purchases at retail.

The result is, “people exposed to several months’ worth of advertising for 13 mid-to-large brands spent five percent to eight percent more on the brands compared with spending before the ads ran. Consumers in the brands’ target demographic boosted their purchases eight percent to 12 percent.” This trial run specifically analyzed the effectiveness of a “cable-TV ad campaign for an unidentified painkiller,” and was able to pinpoint which “ads on which cable networks and at what times of the day would reach more buyers.” That type of result impresses Don Gloeckler of Procter & Gamble.

"We’re able to better deliver messages to people who are interested in the product and the category," says Don. That’s good news for Arbitron and Nielsen who "have sunk tens of millions of dollars" into Project Apollo. If they decide to continue with the test, they might enhance their methodology by "installing monitoring software on participants’ computers" (currently, participants simply fill out surveys about their online activities). They would also expand "the sample group to as many as 45,000 people." In the meantime, "Nielsen and Arbitron plan to release more Project Apollo data over the next few months in a series of papers scheduled for presentation at various conferences." ~ Tim Manners, editor

February 28, 2007   Comments

Bottle Rocket

"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 27, 2007   Comments

Belgian Selling

No free waffles to be had at the car dealerships in Brussels — Belgian waffles or any other kind. No free hot dogs, either. In fact, no free-kin’ salesmen breathing down your neck to buy a car, reports Kyle Wingfield in The Wall Street Journal (2/23/07). For an American in Brussels, steeped in the American ways of haggling at your local car dealership, shopping for wheels is just plain shocking, says Kyle. At the local Volkswagen dealership, the sales team was too busy ordering lunch to notice him and his wife. “Apparently, we were … rendered invisible upon walking inside,” he writes.

Kyle’s experience was slightly more comforting at the Toyota lot, where a “smarmy” salesman tried to “up-sell … to a larger model … This was more like it,” writes Kyle. “I felt a shot of adrenaline as I warmed up for the negotiations.” Negotiations? When Kyle made his offer, the salesman just shrugged, and gave Kyle “the kind of look you’d expect from a cashier at Wal-Mart if you tried to haggle over the price of chewing gum.” It seems that in Brussels, a standard discount is applied, and negotiations just aren’t a part of the car-buying experience. In part this is because it’s not necessarily customary for salespeople in Brussels to work on commission.

It’s also because many of the car dealerships base their businesses on bulk sales to rental car companies or corporations — not individuals. Reason is, so many ex-pats get company cars in Brussels that there’s not much margin in catering to individual consumers. Kyle finally did find the car he wanted at a Citroen dealer, but he had to make an appointment for a test-drive and then wait a week for license plates. Curiously, the salesman turned on the charm only after the sale was made, "even willing to vouchsafe his cellphone number and offer his help should anything come up." And even though Kyle never got any waffles or hot dogs, he came away impressed. "Maybe the Belgians know what they’re doing after all," he says. ~ Tim Manners, editor

February 27, 2007   Comments

The Innovation Index

Peter Temes, ILO Institute

Corporate enthusiasm for innovation is rising but consumers don’t always care.  By Dr. Peter Temes. (more)

February 26, 2007   Comments

Cultural Imperialism

"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 26, 2007   Comments

Casa de Fado

fado

It can be sung off key, always in mournful tones, sometimes by singers who can’t really sing, in tiny Portuguese cafes where the signs say "no smoking" but there are ashtrays on every table, reports Elaine Sciolino in The New York Times (1/21/07). It’s a genre local to Lisbon, known as fado, and although it is “reviled by some as backward looking and morose” it “has been reinvented to become Portugal’s most successful cultural export.” But fado — which means “fate” — certainly is not for everyone. “Fado is about nostalgia, a sadness that is very intimate,” explains Jose Socrates, Portugal’s prime minister.

The prime minister says he’s “not a fan,” but recognizes that fado is an important part of his country’s heritage. Fado is believed to have been inspired “by African slave and Moorish songs” and “transformed by Portuguese sailors in the early 19th century into a vehicle to express the pain of loneliness and danger of a life at sea.” Later, when Portugal was under a 40-year-long dictatorship, fado became “associated with the government’s rigid values and was used to promote nationalism.” That’s why the current prime minister has a problem with fado, but still recognizes its importance to the local culture.

“Fado must have the right environment, and the singers must be very special, to give it both beauty and high standing,” he says. About 10 years ago, a new generation of singers, one known as Mariza and another named Katia Guerreiro, “began to take over and revolutionize fado.” In Mariza’s case that meant adding different instruments, “cellos, pianos and trumpets, a positive attitude and designer gowns to her performances.” Traditional fado is “unadorned,” with singers dressed in black and accompanied only “by a 12-string Portugese guitar.” The one thing that doesn’t change is the way fado is sung: “You have to have a voice with scars, close to life,” says Misia, one such singer. "This is not the Virgin Mary," she says. "It’s Mary Magdelene." ~ Tim Manners, editor

February 26, 2007   1 Comment

Pink Champagne

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 23, 2007   Comments

Red Velvet Cake

red velvet cake

“It’s the Dolly Parton of cakes: a little bit tacky, but you love her,” says food writer Angie Mosier, in a New York Times article about Red Velvet Cake by Florence Fabricant (2/14/07). If you’ve never tasted, or even seen, a Red Velvet Cake, that’s probably about to change because “it’s all the rage … In New York City, more than 20 bakeries now sell Red Velvet Cake, threatening to end the long reign of the city’s traditional favorites, cheesecake and dark chocolate blackout.” Just five years ago, you basically couldn’t find it anywhere except the fabled Magnolia bakery down in Greenwich Village.

But if you’ve ever seen a Red Velvet Cake, you’re not likely to forget it: “The layers are an improbable red that can vary from a fluorescent pink to a dark ruddy mahogany. The color, often enhanced by buckets of food coloring, becomes even more eye-catching set against clouds of snowy icing.” Some chefs have a problem with all that food coloring, and try to substitute beets or cherries, usually with mixed results. The key to authenticity, however, is a little bit of cocoa, which when “combined with some other traditional layer cake ingredients … takes on a red tinge.”

Down South, where the recipe originated, some bakers decided you couldn’t have too much of a good thing, and dumped in more food coloring to get that color to a brighter shade of red. Red Velvet’s growing popularity up North is sometimes attributed to the 1989 film, Steel Magnolias, and more recently, Jessica Simpson’s 2002 wedding cake, “a towering hexagonal version.” Jessica, who is from Texas, “talked about it all over television.” Lisa Hall, owner of Kitchenette, an N.Y.C. bakery and cafe, says she doesn’t quite know what to make of Red Velvet’s appeal: "It’s neither chocolate nor vanilla," she says. "It’s Southern and moist and comfort food. People love it, and I don’t understand why." ~ Tim Manners, editor

February 23, 2007   Comments

Washington Whiskey

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 22, 2007   Comments