Tuesday, February 23, 2016

“When you are out of Vanilla, you are out of business!”

Well to start with, this is not an essay focused on ice cream, or for that matter specifically whether you do or do not like vanilla ice cream.   This story is about understanding what your core product/flavor/sku is in the eyes of your consumers, and working hard to NEVER be “out of stock” (oos) on that item.

This story emanates from the late 80’s, when I was working for Kraft foods and had been promoted to the role of brand manager, Breyers Ice Cream.  A “sweet” role to be certain, tasting plant samples, competitive offerings, and new flavor formulations were a tough daily routine.  Other than driving my cholesterol through the roof, the job/role was awesome.  Breyers’ was the flagship brand of our division, a historic ice cream brand from the 1860’s and I had the chance to work on its expansion into the western states and to launch Breyers Light, the first premium low-fat ice cream; a great role as I said, and a spot where I learned a lot early in my career.

Early in the job, I went on a “market visit” into New England where I toured grocery stores with our sales manager in that region.  Bob was a veteran of the ice cream business, having worked for Kraft and its predecessor National Dairies fro over 20 years.  Here I was, 3-4 years out of business school, heading into the market with the “old time sales guy.”  Again, a scene ripe for insights and lessons for sure!

I remember distinctly being with Bob on a Monday morning in Boston, hitting a Stop & Shop grocery store early that day.  As we got to the freezer case, heavily picked over after a weekend sale, he asked me what I saw and “what it meant.”  After a few meaningless mumbles on my end, he jumped in to note that the weekend sale had driven a lot of sales, but at that moment we were “out of business.”  Clearly I didn’t have a clue what he meant.  While the freezer case was a mess, I saw plenty of chocolate, strawberry, mint chocolate chip, cherry vanilla, and mint chocolate chip (a personal fave) to name just a few.  This was the moment where he shared, without a lot of critique for you’re truly, that “when you are out strawberry, you are out of stock, but when you are out of Vanilla, you are out of business.”

While a “light bulb moment,” I clearly needed a bit more explanation.  He shared that with vanilla being 30+% of the overall ice cream category, and 40+% for Breyers at that time, not having enough vanilla on hand was a big deal.  Where you ran oos on other flavors, shoppers may switch their choice, and possibly “fill in” with good old Breyers vanilla.  The trouble is the opposite isn’t true!  When you ran oos on Breyers vanilla, shoppers wouldn't substitute with another flavor, they would shift brands and grab their “next favorite” vanilla.  Being oos on vanilla meant being out of business!

This lesson has stuck with me now for almost 30 years and has come up a lot lately in discussions with friends & clients in other businesses.  In the consumer goods landscape, we have seen a wild explosion of flavors / line extensions across a typical grocery store.  In a recent conversation with a client and friend, we were talking about a situation where when they ran an ad/promotion on their products, the best selling flavor/sku would sell out first, with the slower selling flavors “clogging up the shelves” and really not moving.  I blurted out the Breyers Vanilla story and reminded them that when they were out of some crazy flavor they were just oos, but when they were out of their core flavor/sku they were “out of business.”  Whether your business is juices, soups, salsas, dressings, cookies, hummus, or ice cream, this concept is fundamental across the board.

All of this focus on your core item/flavor/sku does not mean to abandon innovation.  Quite the contrary!  Innovation is the lifeblood of any business, and I do believe the adage to “innovate or die.”  Work tirelessly and stay committed to a innovation process, exploring “over the horizon” and creating what might be your best seller in the future!  With that commitment to innovation in place, NEVER lose track of where you are today.

Here are a few suggestions on how to take action on this concept. Regardless of your business/industry/category, work hard to see your product line through the eyes and the wallets of your consumers.  What is your central item/sku/flavor and just how “substitutable” is it really?? .  Insure that you have a broad offering of your items/skus/flavors available for consumers but don't sacrifice your core franchise. 

Be certain that you still have a few packages of your core item, your “Breyers Vanilla,” on hand on the Monday morning after a wildly successful weekend sale.