Wednesday, 16 December 2015

Nurofen pain

The Nurofen scandal seems brought upon themselves. It's quite outrageous using the same painkiller application - and not just in different packaging and prices - but supposedly for different uses such as migraines or period pains. What were they thinking? They may as well have claimed added water? Pharma companies have to be especially careful of not just their brand but how the product is actually used. Brand magic - customers prefer branded Nurofen to the same unbranded commodity painkiller - seems to have been stretched beyond credibility to mere brand pixie dust. It raises another interesting point with the kick-off of the SDG Sustainable Development Goals in January 2016 for completion before 2030. One of the goals is delivering sustainable consumption - to some extent that's fairly easy now with recycled packaging or solar energy becoming far more mainstream. The days of capitalism in effect being subsidised by the environment are over. But without advocating some sort of Stalinist central planning control how far can advertisers - and retailers - deliver the same or very similar products and brands and claim sustainability? Do we really need - and can the planet cope with - 20 different washing powders or 20 different dog food brands for 7BN people? Is it ultimately irrelevant anyway in the next few years if recycling and zero emission delivery trucks remove the Climate factor from consumption? Certainly with the EU spending as much on the various dog food brands as it does on Third World aid there are also questions around both sustainability and prioritisation of resources. But certainly Nurofen as with VW and the emissions scandals (the later losing 20% of share value already) will certainly face consumer and industry backlash over their ethics in prioritizing their customers. Sincerely yours,

Thursday, 3 December 2015

FCO able to boost UK exports?

The Economist and Chatham House calling for a 0.2% GDP target for FCO diplomacy – perhaps useful given aid target, current spend lower than a city council and reorganisation of UK military. But certainly UK foreign policy in the Middle East has bene unbelievably weak from Libya to Yemen to Sudan to Iraq and Afghanistan. But the BBC today cites UK foreign investment is, despite all the efforts, at its lowest level for a decade: While criticism of a mercantilism strategy for the FCO and UK exports eg for the first time emphasising Creative Industries belies the weak performance of UK in the past – and the current target likely to be overdue by some 34 years. And of course the Commonwealth even after the latest Heads of State meeting last week still somewhat adrift in terms of a role for the nations and UK. Even jaw-jaw has its limits. Sincerely yours

Tuesday, 1 December 2015

WPP £43M Sorrell pay and houses and hotels

Some strange points from Martin Sorrell of WPP’s £43M pay package yesterday: • Claiming £50k because he was using his houses in NY etc rather than staying in a hotel for WPP meetings? Is he serious? He has a house in a town where there’s a WPP meeting and he uses that to stay in? And then issues an invoice his shareholders for the notional cost as if he was using a hotel? Presumably a rate based on The Four Seasons rather than a Travellodge too! • Justifying the salary on the basis he created and built WPP? Eh? Without downplaying his Master of the Universe scenario too much WPP was hardly built the way say Ogilvy founded and built O&M from scratch. Sorrell bought existing companies with bank loans. It’s a holding company of existing businesses. They happen to be advertising and PR and design firms but could be any widget manufacturer. Hence WPP originally being a supermarket trolley company. To paraphrase the Gates and Buffett scenarios, Gates built Microsoft into a computer company while Buffett invested in already existing companies. The financial yield may be similar but the effort is qualitatively and quantitavley different and not really comparable at all unless say with venture capital or finance firms. Indeed as a business owner I wonder if Ogilvy or Gates would have considered staying at their own house and rebilling it to their company? Will Martin be having a cup of tea in his kitchen and rebilling the cost of a cup of tea in the Ritz? Paying himself the hotel doorman’s salary because he opened his own front door? Bizarre. And on top of a £43M pay package. As a shareholder I would be rather miffed. And after the Great Crash of 2008 it makes companies seem focused on greed. With over 50 FTSE CEO’s earning over £1M perhaps there is a need for a maximum salary of say £500k or £1M and a cap on bonuses/benefits and certainly bonuses linked to share price for what are very well paid managers of huge and existing companies? Sincerely yours, Tim PS: • Good news that a soda/sugar tax is on the cards to be introduced and banning fast food ads before the 9pm watershed. Why not? More room then for advertisers of healthier foods as well as other industries. And certainly the smoking ban on television has had no effect on the advertising industries – and the sooner the UK follows Eire and Australia to plain cigarette packs the better.