Tuesday 10 August 2010

Marmite now costs more than a gallon of petrol

Much has been made of the fact that the price of Marmite has risen by 25 per cent in five years, and is now more expensive than rump steak or a gallon of petrol. However, whilst specific cases can grab headlines, most NAMs/KAMs realise that the game is about demand-based portfolio management of both brands and customers. In other words, starting with planned corporate ROCE, this breaks down to Margin x Capital turn, large margins with slow stockturn, or high margins with fast stockturn. Overall ROCE performance drives share price, so as long as suppliers and retailers are meeting stockmarket expectations, they are usually left to play the 'margin x stockturn' game as appropriate, being 'experts' in market need. Thus a supplier can juggle a portfolio mix of brands (or customers ) to optimise total company ROCE.

In the same way headline performance figures i.e. 'green shoots', are averages, hiding not only negative performance, but also 'above-average' growth opportunities in individual categories or retail sectors.
Hence, many growth opportunities already exist, for those able to see though the averages….
....as indeed, misjudging market-price tolerance can cause consumers to vote with their feet..?

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