IT'S A CLEANSING MOMENT OF CLARITY

I had the wonderful opportunity to meet with several chain restaurant operators recently. IFMA (International Foodservice Manufacturers Association) puts on an annual event called COEX (Chain Operators EXchange Forum).

COEX is a great way to meet and network with lots of industry personnel. Whether or not you successfully pitch a product, the chance to start a dialog and have a conversation with someone (not just a company), is worth the price of admission.

Of course there are the Keynote speakers, the white paper discussions, the industry panel discussions and an awards ceremony, but the real value of COEX (for me) was getting to talk with other manufacturers and operators about the industry.

The foodservice industry faces several large, looming obstacles. Ever increasing requirements under “Food Safety” have several manufacturers scrambling to hire new personnel just to handle the required paperwork.

On the operator side of the industry, new menu disclosure requirements, including caloric content and sodium levels, threaten to disrupt a chef’s creative ability in the kitchen. Instead of creating dishes based on overall taste, or flavor integration, chef’s stand to be limited to certain calorie ranges and sodium content. To me, this is just plain silly…anyone who’s ever cooked knows that salt (whether for good or bad) just makes stuff taste BETTER.

Another hot topic of discussion was the use of social media in our industry. If you’ve read any of my previous posts, you know that I could talk for HOURS about why the foodservice manufacturing industry should embrace social media more than it has to date.

Operators, for the most part, have figured out social media. Better said, operators have figured out that “investing” in a social media marketing campaign is a relatively inexpensive way to reach and connect with your customers. More than once, I heard one operator ask another about Groupon…was it a worthwhile campaign. Not being an operator, or someone who has used Groupon to try and “sell” anything, I can’t personally attest to the effectiveness of a Groupon campaign. What I can say is, after hearing some of the stories being told, I would never utilize them as part of my overall social media marketing strategy.

Over the course of a few days, I got to talk to some great restaurant operators. As my travels allow, I will be dining in their establishments. Why? Because thru the art of communication, I now feel connected to them on a personal level. It has nothing to do with a supplier/purchaser relationship. We talked; we shared stories; we started a “relationship.”

This industry, like most businesses, is about relationships. And relationships can only be formed if you take the time to talk to someone. In a recent post, Seth Godin talked about attending the TED conference and not remembering a single presentation. The reason why? He didn’t attend any. His most memorable moments were the one-on-one conversations with people. (Want to read his entire post, click here)

For me, COEX (like other industry trade events) is about the conversations that take place during the beverage breaks, at lunch, or even during the cocktail hour. These chats can foster new relationships and strengthen existing ones. They allow you to connect with other individuals without the 140-character limit of Twitter or text messages.

Unlike Seth, I am not suggesting you skip the speeches, seminars or break out sessions. The speakers and panelists are sharing some important information, and even if you only glean a few salient points, this “insider” information could help your organization save (or earn) money…usually far more money than the cost of the event.

The foodservice industry is not the social media industry.

There are several foodservice “experts” who can legitimately claim the title of expert. The information they share during their presentations may not change the face of my business, but I have learned from their insight.

For example, Jon Luther (Dunkin Brands), at an IFMA President’s Conference, shared personal insight on rebuilding a brand…taking Dunkin’ Donuts from “It’s time to make the donuts” to “America runs on Dunkin’”. We don’t have the budget he had, but we face a lot of the same issues. I took away some great ideas from his speech, but more importantly it gave me an opportunity to approach him and talk to him one-on-one afterwards.

Do I hold any aspirations that Mr. Luther remembers me? No. But not only do I remember him, I learned from his experience and knowledge. I can’t say I started a “relationship” with him, but I am inclined to frequent his stores more often.

I guess my point is, regardless of your industry, take advantage of the industry conferences and use the networking time to do just that…network.

BONUS QUESTION:

What 1976 movie featured Faye Dunaway, William Holden, Robert Duvall, and Ned Beatty? Hint: The blog title is taken from one of the movie's useless quotes. This should be a gimme, but if not…click here for the answer.

BOOK REVIEW: THE NOW REVOLUTION BY JAY BAER AND AMBER NASLUND

First, since I am sure there are going to be a slew of reviews for this book from the 75 individuals who were given the book in exchange for a review, let me say I am not one of those people.

Yes, I submitted my name in the hopes of becoming one of the “chosen” few. But in all fairness, I had already pre-ordered my book from Amazon so I wasn’t TOO disappointed.

I read and reviewed this book based on two factors: the usefulness of the content and how easily I could implement some of the tips, tactics and strategies that were provided.

For those who don’t know me, I am not a social media “guru”. I don’t market myself for speaking engagements. I don’t have a book (e-book or otherwise) to promote. And, I don’t offer services to individuals and/or companies.

I own and run a foodservice beverage manufacturing company. We make and sell iced tea concentrates (and some other flavors) to the hotel, restaurant and healthcare community. I’m over 40 (which makes me a digital immigrant) but I firmly believe in social media marketing as a tool in an overall marketing strategy. I encourage my employees to utilize social media during work hours even though as a B2B Foodservice company we haven’t quite figured out the best way to incorporate social media into our strategy. But, we keep trying.

The NOW Revolution is a book I will recommend as a “reference” book to my peers. First, this book is an easy read. By that I mean the language reads like an everyday conversation. Jay and Amber wrote this to make the reader feel like an equal. They didn’t “dumb” down their delivery, nor did they make the reader (me) feel inferior just because I still have to ask questions on how to set up my Google reader dashboard.

Although there is some good information in the beginning of the book, my interest didn’t really get captured until they started their discussion on setting up and administering a social media policy. My company is a small company. We have 11 employees, and although I encourage everyone to participate in social media, we really only have two or three people (including myself) actively participating. So far, because of our numbers, we have not had to worry about a “formal” social media policy. But, as we continue to add additional employees, a formal policy (including crisis management) is something we have started discussing. The NOW Revolution provides great content and resources for us to start our development process.

Another instantly implementable strategy I learned from the book is how to set up listening stations. Right now, we do the basics. We have Google “alerts” and RSS feeds on key words. But, as Jay and Amber point out, there are some missed opportunities and delays if you ONLY use those tools. Thankfully, the authors provide a detailed blueprint on setting up a listening dashboard.

Another item I found incredibly interesting was the internal social media channels. Here is probably where I show my immigrance (immigrant/ignorance: if nobody’s created this word yet, I claim it as mine). I was aware of the instant messaging ability of Skype, AOL chat, even Facebook chat but I didn’t know we could set up internal social media platforms. I can totally see the benefits once an organization reaches a certain size. Our organization doesn’t warrant it at this point, but it is definitely something I will remember as our company grows.

There’s good information on metrics and ROI. They’ve included one of my all-time favorite social media stories – Taylor Guitars. And they offer up lots of tools to use, both free and paid content.

The NOW Revolution is a good purchase and should be in your library. It is not the “holy grail” book of social media for small businesses, but I don’t think that is what the authors were trying to accomplish. Personally, I will use this book as a reference to go back and review new strategies to implement as my organization grows.

If I had one complaint, it would have to be the book jacket. The design used on the jacket immediately brought to mind a religious book. I was sent to a catholic school from kindergarten thru 6^th grade, so I have read my share of religious books. Maybe that predisposed me to my association, I don’t know.

But don’t let the cover fool you. Jay and Amber have done a good job of presenting lots of useful information in a way that is easy to understand and implement. If you run a business that uses or plans on using social media as part of your overall strategy, you should read this book.

If the authors read this review, and I am 99% sure Amber will, please let me know how I can get you guys to send me an autographed copy to add to my personal library.

Again, no bonus questions on book reviews. I PROMISE the Arnold question is coming up next entry, so come back.

I'M IN PASADENA AND YOU'RE NOT...

I am in Pasadena, California. Actually, as I type this entry I am winging my way across Texas en-route to Pasadena. I wish I could say I was there to sell some iced tea concentrates (and indirectly I guess I could say that), but the truth is…

I’m here attending an industry conference called Top 2 Top. The Foodservice Marketers Association, or FSMA, hosts the conference, which takes place over a couple of days…this year in the VERY beautiful Langham Huntington Hotel, Pasadena.

Top 2 Top is a networking event designed to bring foodservice manufacturers (me) and foodservice marketers (we call them brokers) together to discuss challenges and opportunities facing our industry.

This is the first time I have been invited to the event, so I am not quite sure what to expect. All I can say is that spending a few days in Pasadena with foodservice industry veterans is a pretty good gig, and I consider myself very lucky.

Of course, one of the items I am most interested in discussing is the use of social media in our industry. More and more of the foodservice industry is heading online, which I believe is a good thing. But are we heading online simply to BE online? Or, are we being effective in our social media efforts?

Obviously, there are some foodservice companies and brands that are doing well in the social media universe. And of course there are some that maintain an online presence and do nothing with it.

My company (ThirsTea Corp) has only scratched the surface on our social media strategy. There is a lot we still need to do to try and engage our customers online. Eventually we will get there, but I am cautious to make sure our online efforts support our traditional marketing efforts.

Top 2 Top is about more than just industry networking and my social media queries. It is yet another chance for the foodservice industry to meet and discuss the challenges and opportunities facing our industry.

It’s no secret that the foodservice industry has been hit hard by the country’s economic situation. The industry has been affected by rising ingredient and packaging costs, high labor costs, and relatively low margins.

Manufacturers have had to absorb rising ingredient and packaging costs over the last two years, afraid to pass those costs on for fear of losing portions of our client base. We have had to deal with rising distribution costs in the form of higher outbound freight. And, our cost to market our products to foodservice operators has increased as well.

As a result, manufacturers have had to get creative in finding ways to reduce costs and/or become more efficient in our ordering, warehousing and manufacturing processes.

In our very specific niche of the foodservice beverage industry, we have started seeing signs of economic improvement…slow, small signs that the financial health of our industry (and also that of the country) is starting to improve.

Over the next few days it will be interesting to see if others in my industry have seen similar improvements in their segments, or maybe my optimism is just filtering my perception like light thru a prism.

In any event…I’m in Pasadena and you’re not.

Bonus question:

I promised an Arnold question, but the fact that I am in Pasadena could not be overlooked…so…

“The Little Old Lady from Pasadena” was recorded in 1964, by Jan and Dean. How high up did it get on the charts? Don’t know the answer? No worries. Just click here for the answer.

WHAT CLINT BARTON TAUGHT ME ABOUT B2B AND SOCIAL MEDIA

Let me pose this question to the social media “experts” out there…how many times have you been told, “We are a B2B company and just don’t see the need, or benefit, from a social media program”? Well, I am about to give you some tips on how to sell me.

Yesterday, thanks to Twitter, my “understanding” of why social media is important to B2B grew significantly.

If you are a foodservice manufacturer, pay very close attention. If you’re a consultant, pay even closer attention. What I am about to reveal is not only cool, but also relevant to our industry…and for the consultants, THIS is how you sell someone like me on social media.

Like other foodservice manufacturers, we participate in food shows across the country. We participate in state restaurant association shows, like the Florida Hotel and Lodging Association show or the Texas Restaurant Association show. We also support our distributor partners by participating in their individual shows.

Yesterday, in Des Moines, Iowa, one of our distributor partners (Hawkeye Foodservice) held their seasonal show. While we try to stay on top of what shows are occurring and when, the sheer volume of shows tends to prohibit (or at least impede) that flow of knowledge. There have been instances where we have not found out about a food show until after it occurred.

Yesterday, if not for one of our standard twitter searches, we might not have known about the Hawkeye food show in Iowa.

I personally use TweetDeck because I like the layout and functionality of the application. As one of my standard Twitter searches, I keep a lookout for the term “foodservice”. Yesterday, while sifting through the tweets regarding “foodservice job postings” I came across a tweet from Michael Leaders.

Michael is the manager of sales training and development for Hawkeye Foodservice. Through his Twitter account, he was letting people know the Hawkeye food show was kicking off at 9am.

We sell Hawkeye some iced tea and beverage concentrates, so I was VERY interested in our participation at the show. I contacted my VP of Sales and asked him to check with our sales rep and broker to make sure we had a presence at the show. He contacted the sales rep and confirmed our participation at the show. We then contacted everyone we knew in the Hawkeye distribution coverage area to let them know we would be at the show, and to please stop by and say “hello”. We did not try to sell them anything. We did not offer any discounts. We invited them to come by and share a glass of iced tea.

The show finished late in the afternoon and I have not had a chance to review the post-show report to see how successful our efforts were. Hopefully I will get those numbers later today.

Because of an integrated marketing plan that does include social media and email marketing, we were able to generate a few more “touches” on our end-user client base. We attempted, on relatively short notice, to get more people to attend the show…even if they were not regular Hawkeye customers. We did not pitch the email as “hey come visit us so we can sell you more of our product”. We informed our foodservice customers that a foodservice operator was having a show…we know our customers buy more than just iced tea and beverage concentrates and might just need the services of a distributor like Hawkeye Foodservice.

My one regret is we only found out a few hours before the show. If we had more time, we could have done a much better job of marketing in that area. Michael and I are now following each other on Twitter so I will be sure to catch all his updates, ensuring I know about their food shows well in advance from now on.

How can B2B companies utilize social media into their marketing strategy, and why is it important? The “how” is easy…(to borrow a phrase from Nike) “Just Do It”.

“Why” should you do it? Ultimately the company is going to have to figure that reason out on their own. But, having a social media presence allowed us to: KNOW about a food show; ensure we were AT the food show; strengthen the relationship with our distributor; get another “touch” with our clients; and hopefully sell more products.

Today’s bonus question: How does “Clint Barton” relate to ANYTHING in my post? Can you figure it out without cheating by clicking here?

Reflection and Resolutions

It’s a few days early, I understand, but Happy New Year!

As I have oft been reminded these last few days, this time of the year is perfect for reflection and resolutions.  There are several people who should take credit for my “jumping on the bandwagon” and posting about my reflections on this past year, and my resolutions for 2011.

In no particular order, these three authors and posts were the catalyst for my content this week.  If you’re reading this post, please click on the links and read the ones that inspired me.

Amber Naslund | Brass Tack Thinking | The Brass Tacks of Resolutions | 

Rick Stilwell | Over Coffee | Just Doing It in 2011| 

C.C. Chapman | ccchapman.com | End of a Decade | 

This past year has been a challenging year for me.  In addition to the commitment I made when I created this blog, I also run a beverage manufacturing company.  My partners and I bought a 33 year-old company almost 2 years ago.   The transition period took almost 14 months to complete, and during that time we weren’t able to focus on much marketing or brand building.

During the past 12 months, we launched new products, a new website, and, a new on-line store.  We doubled our marketing spend, developing new sales materials, attending more tradeshows, and developing strategic partnerships.  We also hired new personnel.  In an economy where other companies were cutting budgets and people, we went in the opposite direction…we spent.

As anyone can tell you, when you ramp up your spending like we did, you simultaneously ramp up your stress level.  Thankfully, a lot of the programs we initiated have paid dividends, and should continue to benefit us in 2011.

My new year’s resolutions, at least for this blog, are to write more consistently (but always focused on providing valuable content, right C.C?).

In order to do that, in addition to my normal posts I am resolved to read more social media, marketing, and/or business management books.  I’ll post a review of the books, and offer up practical information I can implement in my own businesses.

I am also going to add an interview category.  I’ve been involved in foodservice beverages for over 15 years.  Over that time, I have networked with several FnB industry leaders.  Their views and opinions of industry trends are not only insightful, but also relevant.  I’ll be asking them about their views for the industry, current trends, future predictions, and best-practice examples.

As we head into the new year, what are some of the things you will do differently to make 2011 better than 2010?

Social Media Sniper School - HOORAH!

“One Shot. One Kill.”

That’s the motto for the US Army Sniper School.

What does that have to do with social media marketing and/or foodservice beverages? Read on. I’ll tell you.

“How can you incorporate social media into a foodservice manufacturing company’s marketing plan? We are B2B, not B2C?”

I wish I had a nickel for every time I heard that question (or some variation thereof) from one of my peers.

Wait, I do. But that’s only because my circle of influence is pretty small. The foodservice beverage industry is enormous from a revenue perspective, but pretty small from a company/personnel perspective. I think that’s one of the reasons I love this industry…it has a “small-community” feel about it. But I digress.

I follow quite a few blog authors. My RSS feed looks like a “who’s who” of social media. The content shared on these blogs has been instrumental in my understanding of social media marketing.

If you haven’t done so already, check out the infinite blogs out there and sign up for a few of the good ones. You can start with this one if you’d like. (Any of my foodservice peeps that don’t know what a blog is, or how to subscribe to one, have no fear. Send me an email, or call me on the phone…I’ll walk you thru the process. We non-natives need to look out for one another.)

Generally the blogs offer suggestions on how to increase your twitter following, or talk about the steps you should take to build an effective social media campaign. But this week, whether planned or not, a common thread has been to focus on “content, content, content.” The message is: nobody wants to write just for the sake of writing. And surely as readers you don’t want to read something that isn’t a 10/10 in content.

So, today, I am posting a real-life example of how my company has started to use social media for lead generation.

Yes, this information is going public, which means any of our competitors can use the information to compete against us. But, I’m confident in our employees. I’m confident in our strategic partners. And, I’m confident in the uniqueness of our products. Besides, I have always liked competition.

One of the social media sites I have used for some time is Yelp! When I’m at industry events (foodservice industry, not social media) talking about the benefits of social media, one of the first apps I show is Yelp! To truly “wow” my fellow digital immigrants, I show them the monocle widget within the app.

I can’t quite describe the looks and/or reactions when one of my industry peers holds my phone and walks around in a circle, looking at the interactive “head’s up display” which shows all the restaurants in a 360degree fashion. It never fails to bring a smile to my face.

But Yelp! is more than just an app to find nearby restaurants, bars, nightclubs, etc. For me, it is an awesome lead generation system.

How, you ask?

One of our target markets is the catering industry. We have a line of iced tea concentrates that are perfect for the catering industry. And, we spend a small fortune on traditional marketing to make sure the industry knows about our products. But, traditional marketing is more of a “shot gun” approach. You throw it out there and hope you hit something.

Yelp! allows us to be marketing “snipers”.

What do I mean? Go to the yelp! website. At the top is their search header. Search for “caterer” and plug in a city “Austin, TX”.

What happens when you hit the enter key?

I’ll save you the effort and tell you. You get 196 entries, all complete with addresses and telephone numbers. Do you want to know a secret? These contact numbers are more up-to-date than any list we have purchased.

You can filter your search by type of foodservice operator too. Have a product you want to pitch to sports bars in Columbus, OH? There are 184 listed.

If you are a sales manager for a foodservice distributor or manufacturer, and I told you I’ve got a sales tool that will filter out the specific type of operator you desired, gave you the operator’s contact information, was capable of mapping the locations and providing you directions to the location, and would constantly update itself so your information was never stale, how much would you be willing to pay me?

How much more effective can your sales organization become if it can achieve the same level of concentrated focus as the US Army sniper? One targeted shot. One confirmed hit.

Social media IS changing the way our company does business. We can embrace the change and learn how to make it work for us, or we can ignore the change and hope to stay in business.

I’ve made my decision. How about you?

Social Media for OLD people

Anyone who has followed my blogs knows that Chris Brogan has had a significant impact on my social media education. The amazing thing is, he and I have never met nor have we even talked on the phone to each other.

I was sent a link to one of his blog posts. I read the post, liked it, and then searched his archives. Some of the suggestions and tips he offered were useful in our “everyday” business of selling iced tea concentrate to foodservice operators. Some of his ideas and postings were completely new revelations to me.

You see…I am old. Well, I’m older than Chris. I learned spreadsheets on Lotus 1-2-3. I did not have online access to research sites and news archives. I had to look stuff up in encyclopedias (real books) that required you to correctly spell the thing you wanted to research. For news archives, we would sift through hundreds of microfilms looking for a particular picture or quote. It was tedious and sometimes painful.

I love what the Internet has developed into so far. With news apps, search engines and alerts, we can filter information to specific key words so we don’t have to read the “fluff” until we get to something that is personally useful and/or relevant.

As a marketer and brand owner, I really love that social media is reshaping how business gets done. We have heard the term “social media marketing” so often that we blindly accept the phrase without really understanding what it actually means.

The concept of social media marketing is not an easy one to understand. (At least not for my age group.) We can define it as “marketing strategies utilizing the Internet and social/community websites”, which sounds pretty, but what does it mean?

Initially I looked at it in the context of traditional marketing. I tried to figure out how our print and word of mouth marketing campaigns would fit within the social sphere. To put it simply, I tried to fit a square peg (traditional marketing) in a round hole (social media).

It wasn’t until after reading Chris’ book (co-authored by Julien Smith) Trust Agents and then the book Socialnomics by Eric Qualman that the proverbial light bulb went off.

Social media marketing is not so much about marketing as it is about communication.

Reading those words now, I feel pretty silly. And I am sure a few of you out there (Chris, Julien and Eric most likely) are probably in disbelief that I didn’t just KNOW this simple truth.

Facebook, Twitter and the like are not about forcing a brand or product upon the consumer. For the companies who DO employ that strategy, IT IS SIMILAR TO WRITING AN EMAIL IN CAPS…it’s just not very professional.

Social media sites are about communicating. Sometimes you communicate with your clients and consumers. Sometimes you communicate with your peers. Every once in awhile you may even communicate with your competitors.

The marketing aspect comes from keeping your brand and/or product in front of consumers. By engaging in conversations about your product/company/ brand/ or even personal interests, you develop (or enhance) a relationship with your customer. You get to know more about the people using your product, and they get to know more about the people making the products they use.

I still have a lot to learn about social media marketing.

Thankfully, BECAUSE of social media, I have an almost unlimited supply of reference material and expert advice available to me.

Is social media viable?

Every once in awhile a question comes up on LinkedIn and I feel compelled to add my two cents worth. Most recently it was a question that came up in a food manufacturers forum. There were about 10 other answers before I added my thoughts. If you’d like to read the entire discussion, here’s the LINK.

How do you feel about the potential viability of "social media" communications in the food service channel?

The fact that we can have this discussion on a social media site IS pretty promising. And yes, I agree with the comments about it being more difficult to figure out the B2B strategy as opposed to the B2C one. But, I believe our industry needs to figure out an overall social media strategy (and soon) because consumers (both operators and ultimate end-users) are getting information differently than they did a few years ago.

As manufacturers, what we need to understand is social media is about communication. People are having conversations about our company, our industry, and our brands. They're talking about us 140 characters at a time. Some of the talk may be good. Some of the talk may not be as positive. But the talk is happening.

One of the questions I am asked by my peers is, "how do you monetize social media?" Since you can't measure the ROI on an investment in social media the same way you can measure the investment in a new piece of manufacturing equipment, most manufacturers seem hesitant to commit.

Personally, I think it is because they don't fully understand the dramatic changes in communication that have taken place over the last few years. And of course, there is always the comment about, "why would I care that you are standing in line at the grocery store waiting to check out? Do I really need to know that much about your life?"

10 years ago I would have answered, "absolutely not!" But today, yes, I want to know that you are in a grocery store. Not only that, but I want to know WHICH grocery store you are in, and if you geo-tag your tweets, even better because I will then know in what state and city you're currently located. And, if I have a coupon going with that particular grocery store where you are standing in line to check out, I can send you a quick little note to remind you to purchase my item and take advantage of the coupon.

Communication.

We, as an industry, need to figure out how to communicate more effectively with the actual people who are purchasing and using our products. Then, we will see the monetization of social media and the more traditional return on our investment dollars.

I ended my response there, but I apparently I had more to say on the issue. Here is what I haven't added to my LinkedIn response...yet.

The foodservice manufacturing industry consists mostly (if not entirely) of digital immigrants. We, myself included, grew up without instant access to information. My first computer had to be started with a 5 ¼” floppy disk, and I needed to know how to write DOS to get the computer to do ANYTHING.

The young men and women coming out of college today, our children, are digital natives. They have never known anything other than instant access to information. They embrace transparency in every aspect of their lives, because that is all they have known. The Internet has provided them a way to find out almost anything. Want to find out the annual sales revenue for a privately held company? It’s out there and available if you can ask the right question. Want to read classified communications between government agencies? You can find that too. Want to see how intoxicated “Jamie” was at last weekend’s house party? There are probably pictures and a written account of the actions online.

These “natives” live in total transparency and expect everyone (companies, brands, products and even government) to be just as transparent…just as honest…just as raw. If you want to know an opinion, just ask them. They won’t hesitate to tell you.

Over the years, I have spent small fortunes on market research…polling groups about a label design or a flavor combination. With the advent of social media and sites like Twitter and Flickr, I now have a much bigger audience to poll, and will have instant feedback from that audience. And, I will have access to this information at a minimal investment cost.

Social media is a tool. It’s a way for us to communicate. It can be used effectively by the foodservice manufacturing industry, for both B2C and B2B communications. But we as an industry need to understand the way we do business is changing...140 characters at a time.

Strategic Partners: For better or worse

Strategic alliances are not uncommon within the foodservice community, not even within the foodservice beverage division of the community. Sometimes, despite the best of intentions, strategic differences can occur between the two partners.

Over the next few weeks we will get to witness what is sure to become a very expensive dispute between two international foodservice brand powerhouses…Kraft Foods and Starbucks Corp.

According to an article on thestreet.com, Kraft has begun arbitration to challenge Starbucks’ attempt to end a 12-year agreement.

The dispute, it appears, is over the right to market Starbucks’ bagged coffee products. Starbucks has asserted that Kraft failed to meet certain provisions of their arrangement, including keeping Starbucks involved in major marketing initiatives, and has said those failures caused “the erosion of brand equity.”

In their defense, since executing the agreement in 1998, Kraft has taken the business from $50million to $500million in annual revenue. So there seems to be slightly more than “erosion of brand equity” behind Starbucks decision to terminate the agreement.

As the arbitration process evolves and more information becomes available, maybe we’ll get a more accurate picture of what is really at stake, and how much this dispute will cost.

In the meantime, the process has raised a question I feel is important. What is more important to a company/brand – maximum annual revenue or brand integrity and control?

Sure, my question is a somewhat loaded question. What company doesn’t want to achieve the maximum annual revenue possible? That’s what companies are designed for…annual revenue. If developing a strategic alliance with a partner is going to help you increase revenue (and/or decrease operating costs), then at the surface, it would be a wise decision.

However, decisions like that always come at a cost and usually that cost is brand control and/or brand integrity.

We don’t need to look any further than this past July when tensions arose between Honest Tea and Coca Cola over wording on the labels of the tea company’s product line. Honest Tea, in an attempt to retain brand integrity and brand control refused to change the wording. Coca Cola respectfully agreed with Honest Tea management, and no changes were made. Since Coke has a financial stake in Honest Tea, we can’t really define them as “strategic partners”, but even so, the importance of brand identity/control can be seen from this example.

A more likely dispute between strategic partners would arise when a decision is made to grow a product line thru new product offerings. The brand owner, after establishing brand recognition and value, decides they want to cash in on that exposure. The brand company develops some complimentary products to extend their product offerings only to find the synergies shared with their strategic partner on the original item(s) aren’t there on the new product offerings.

With the recent success of the Via line of instant coffee products, and the inevitable brand extensions to follow, the Starbucks decision to end their alliance with Kraft is a little easier to understand.

We’ll have to wait and see how much the decision costs Starbucks in terms of money and brand dilution.

Distribution 2.0

If the sign of a successful blog posting is an open and passionate discussion about your topic, I must have written the mother of all blog posts. After posting the 3^rd installment of Foodservice Outlook 2020, my phone started ringing.

The irony of having someone call me regarding an online posting was not lost on me at all.

Don’t get me wrong. I received several emails with comments and words of congratulations as well. But the phone call was one of the most interesting.

“Why did you write that stuff about the distributors and brokers?” I was asked. “What were you thinking?”

“What do you mean?” I responded. “All I did was write about a day dream I had describing a distribution model which was efficient from a manufacturers perspective. My model doesn’t exist, and in all reality probably never will exist.”

“That’s not the point. You’re a brand and a manufacturer who needs distributors to get your product to market. Your post could potentially cost you a relationship with a distributor.”

I usually try to think of how my words will be interpreted before I hit send. However, I did not even consider the scenario I was currently being presented. I mean, my post was written a little tongue-in-cheek. I had been presented with a scenario in a conference, which as a manufacturer seemed to be at one end of the spectrum. I offered the unorthodox and contrarian perspective as a means of illustrating the normalcy of our existing distribution model.

Sure, our distribution path has some potholes. We have some issues that need to be resolved. We, as an industry, have to figure out a better communication model so manufacturer, distributor and operator are all working towards the same goal. We need to develop transparency throughout our multiple channels to build trust and foster better partnerships.

BUT…our distribution model works. Foodservice Manufacturers build products. Operators purchase food products. Consumers consume food products. And distributors, well distributors are the important piece that makes the entire system work.

We aren’t interested in reengineering the distribution model. Foodservice Beverage Manufacturers like myself only want to figure out how to sell more foodservice beverage items, communicate with our operators and consumers, and maximize our profit margins by becoming more efficient.

So, from this beverage manufacturer and brand owner to all those distributors who help us get our products to market, thank you for doing what you do. We don't have the patience, the knowledge, or the vehicles to do what you do...so please keep doing it. And if you can add a few extra cases of mine on every delivery, I would surely appreciate it.

Foodservice Outlook, 2020 (3 of 3)

This is a continuation of my earlier posts, describing my thoughts and comments about the 2010 IFMA President's Conference. This post wraps up my discussions regarding FS-2020.

I was immediately brought back to reality when I subconsciously heard Bill say, “Costs and prices always go down.”

What? Huh?

Did I hear that correctly, or was I still working on my new distribution model? Thankfully, as if he heard the panic in my thoughts, he repeated himself…”Costs and prices always go down.”

Bill, I love you, but what the heck are you talking about? My ingredient costs have gone up. My warehousing costs have gone up. My labor costs have gone up. My freight and fuel costs have gone up. My packaging costs have gone up. The only thing that has gone down in the past year is my profit margin.

I looked up to find Bill moderating a panel of industry leaders, discussing the talking points from his presentation. Apparently the panel was back to discussing buying groups, and Bill was trying to make the point that as manufacturers (or distributors) once you lower your pricing, it is hard (if not impossible) to raise it again.

First, I need to offer some constructive criticism of the panel. We were at an IFMA conference - IFMA, as in the International Foodservice Manufacturers Association. Notice the Foodservice Manufacturer's portion of the name. Bill’s panel consisted of 3 operators and a distributor discussing the potential future and shape of the foodservice industry.

Personally, I thought a key component of the foodservice industry was missing from the panel…a foodservice MANUFACTURER. It would have been great to hear the thoughts from a global food manufacturer like Kellog’s or Nestle, but really any manufacturing perspective of the potential future of our industry would have been appreciated.

Despite the lack of a manufacturer on the panel, the panel offered some insightful comments. One sentiment repeated by all the panelists was - the sales process is changing.

Let me repeat that because I think it's important...THE SALES PROCESS IS CHANGING.

Consumers are not interacting with brands in traditional fashion. They are talking about our brands in social spaces like Facebook and Twitter. They are finding foodservice operators on sites (and mobile apps) like OpenTable, Yelp!, and FourSquare.

Conversations ARE happening, and people ARE talking about our brands. The "new" sales process needs to focus on engaging those customers and participating in the conversations.

If our industry of foodservice manufacturing is going to survive (and succeed), we need to figure out how to engage with the customers. If we can figure out how to engage with the customer and operator in the same conversation, even better.

Foodservice Outlook, 2020 (2 of 3)

This is a continuation of my earlier post, describing my thoughts and comments about the IFMA 2010 President's Conference.

I left off the first post describing Bill Hale's discussion of cost controls and efficiency...as relevant to the foodservice distributor. Bill had posed the question on whether it was more or less cost effective to have more trucks on the road distributing from fewer distribution centers.

Although my first instinct when I heard the question was to check my email, Twitter and Facebook accounts…I decided to listen instead. Actually, I couldn't get a strong wi-fi signal inside the conference room, so really the decision was made for me.

It turned out that listening was the better option. Even though I didn’t hear an answer that directly addressed concerns from the manufacturers standpoint, the ensuing discussion did get me thinking about the issue from our perspective.

As a manufacturer, I would much rather ship into 6, 12 or even 20 distribution points rather than say 82 individual distributor houses. I can manage my freight costs with more certainty. I can achieve better economies of scale by shipping (and thereby producing) more products at one time. And, it is easier on my receivables and cash flow.

The problem with my "solution" occurs from the distributor level, as far as I could predict. By having fewer distribution points, distributors will be shipping over longer distances. This means relatively more trucks with higher fuel costs and considerably more logistics planning.

But, could it work?

As Bill continued to speak about FS2020, my mind began building a distribution network that worked from a manufacturer’s perspective.

First, the organization would have a much leaner employee base with an increased focus on logistics instead of management. There would be a core group of personnel at each of the distribution points whose main focus was to facilitate the inbound and outbound shipments. Orders and AR/AP could be handled at a corporate location and delivered electronically to the few distribution centers and supplier partners, again minimizing the work force, preventing duplicate efforts and increasing efficiency.

Every distributor needs a sales force, but why not outsource it?

Instead of foodservice brokers working for manufacturers, why not have them handle the sales for the distributor? I mean, brokers maintain relationships with operators anyway. I would assume the cost for a distributor to reach an operator would decrease dramatically by utilizing a broker with existing relationships. As for chain account business, manufacturers already have people focused on selling the chain accounts. Why duplicate the efforts at the distribution level?

Plus, unlike the current manufacturer/broker relationship, a distributor would not necessarily have to exclusively align themselves with particular broker. A distributor could open up the marketplace to competition, and competition should help sell more items. If you’re a broker authorized to sell for a distributor, you can sell anything in the distributor book, and, you’ll get paid on everything you sell. Sales could be tracked by broker codes, making it easy to track commissions.

From a manufacturing perspective, since our broker fees were eliminated, we would be able to offer more distributor programming monies...which, since those monies would now be spread over a smaller executive base would translate into larger profits for distributor shareholders.

Yes, my mind wandered for a few minutes, and I am positive I missed the entire focus of Bill’s point. And yes, I know my scenario requires manufacturers and distributors to develop real partnerships, working openly to financially benefit these two sides of our industry and become more efficient.

But I couldn’t help wondering…what if??

--To be continued-- (Part 3 will post on Friday, November 19th)

Foodservice, beverages and Social Media

The foodservice industry is best described as a "mature" or "seasoned" industry. The leader's, and I count myself among those, are almost (if not completely) digital immigrants. Information flow in the foodservice industry happens at snail pace, and sometimes even slower.

Social Media is a MUCH younger industry, inhabited by much younger people, and information flows at real-time speed. To me, that is one of the benefits of social media...instant feedback.

This week, I attended a trade conference in Chicago. It was a joint program of the Foodservice Manufacturers Association (IFMA) and the Foodservice Distributors Association (IFDA). It was the first time both sides had formally met as a single conference.

I personally thought the conference, as an initial attempt, was a success. There was an educational component, with real life case studies from both sides, and the format fostered an open dialog between us all. In future events, I hope they place more emphasis on the open dialog portion, because many of us felt that was the biggest benefit, and where most of the learning happened.

One of the educational sections of the conference, on the second day, was devoted to "Social Media Marketing for Independent Operators." The 40 min block opened with Erik Qualman's video "Socialnomics" which led into a discussion from two distributors having success with social media. For those not in attendance, the two distributors are BenEKeith Foods and Shamrock Foods Corp.

First, I love Erik's video. I loved it the first time I saw it. If you haven't seen it yet, click on the link above. This video was so personally moving, it got me to buy his book...not once, but several times. I own a hard copy, which I will have him sign for me next time I see him. I own a digital version which permanently resides on my iPad. And, I bought several hard copies to give to peers for them to read.

In simplistic terms, one of the important messages Erik delivers is, "consumers are talking, are you listening?" My industry, or at least a large portion of it, isn't listening. Perhaps it would be more accurate to say we are not communicating efficiently, at least not by today's standards.

How do I know? What's my basis for making a statement like that one? Easy. If you have a twitter account, search for #iismc10. That was the hash-tag assigned to the conference. Scroll thru the conversations, not so much for the content but for the participants IN the conversation. You'll notice only a select few (@ThirsTeaCorp for one) participating in the online conversation.

But it's not all doom and gloom for the industry. One of the manufacturing leaders has embarked on a new (for them) social media marketing campaign. The concept, as I understand it, is for this manufacturer to offer coupons on Facebook. The coupons would be for a local, cooperating eatery and would offer a discount on one of the manufacturer's menu items. Coupons, set up as a click-thru ad, would be geographically filtered to a specified area around the restaurant.

To me, this seems like a "safe" way for foodservice to stick their toes in the waters of social media marketing. The manufacturer is running a campaign that has been done before, in other market segments, to varying degrees of success. It will help build strategic partnerships between manufacturer and operator. It will have quantifiable results. And, it will eventually evolve into much more creative ways to communicate with and engage consumers.

The "buzzwords" bandied about at our conference were "transparency", "efficiency", "open communication", "trust"...we used these words to describe what we felt would make our channel (manufacturer - broker - distributor - operator - consumer) more effective. It's fitting that those are the same words used to describe the benefits of social media.

Social media is not a fad. It's here to stay. It is changing the way people communicate and listen. It is not conducive to secrecy, so we are forced to become more transparent and open. These things will lead to trust. And trust, from supplier to broker to distributor to operator to consumer, will lead to better products...better offerings...better efficiency...and better relationships.

Since our industry is built on relationships, we should start participating in the conversations and work on building better, stronger ones.