The information on the Adviser and Institutional areas of this site have been tailored for investment professionals. Appropriate product, fund and service information
for private investors can be accessed on the Personal area of our site. Terms & conditions.
By Olof Bergh, 13 August 2013
Pioneer is a formidable FMCG company with great brands, highly qualified people and good depth of talent. The business is complex at a corporate portfolio level, which must be reviewed. Multiple joint ventures, partnerships and category groupings clutter the business. It is highly decentralised and hasn’t capitalised on the cost-synergy benefits associated with ‘parenting advantage’.
The manufacturing assets and disciplines are good, and the soft commodity systems and processes are excellent. The company can, however, enhance its capabilities in corporate strategy, resetting its cost base and gaining a more intimate understanding of the consumer-need state and the consequent implication for brand strategy. I would like to see a transition from simple selling to more a strategic customer-management system.
This is a complex topic and can only be dealt with category by category. In general, brand strength value is not fully optimised; the operating business model is sub-optimal and costly; and the price/volume/margin management needs work. In some categories, we lack pricing power, being the challenger brand, and here we must adopt cost leadership. As regards our Power Brands, we must invest appropriately and differentiate clearly.
Since the financial crisis in 2008 the Federal Reserve Bank has implemented three quantitative easing programmes. The last announcement was on 12 December 2012 when the Federal Open Market Committee (FOMC) announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month. The strong performance of US equities year to date is now history.
We have a strong export-led business with small assets in Botswana, Namibia, Uganda and Zambia. We want to ramp up these sales across the group. We are attentive to acquisition opportunities on the continent but have a few caveats: there must be a strategic fit; we must have exportable competence; and we must have solid local partners with consumer branded companies – and avoid overpaying!