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Culture hands out a Blind Side Hit – No. 1: Unilever and Slim-Fast

Indy Neogy

This is the first in an occasional series where we record examples of companies getting caught out by cultural shifts. For readers not from the USA, a “blind side hit” is where a defender tackles from one side an quarterback who is looking to make a pass in the other direction. The quarterback never sees the tackle coming. Grant McCracken started the use of the phrase for situations where companies make a big mistake that cultural awareness could have helped them avoid.


Today’s example: Unilever and Slim-Fast  

Businessweek reports:

In 2000, Unilever (UL) acquired diet-drink maker Slim-Fast for $2.4 billion and had ambitions to increase its new unit’s revenue fivefold in three years. Unfortunately for the Anglo-Dutch consumer-products giant, Slim-Fast’s sales in the U.S., its biggest market, started to decline in 2003. Revenue has fallen 40 percent to $196 million since 2008, according to data trackers SymphonyIRI Group. Over the same four-year period, the global meal-replacement category has grown 27 percent, researcher Euromonitor International reports, with rivals including Kellogg’s Special K line picking up the slack.

“The quick crash diet is a thing of the past,” says Mark Baynes, Kellogg’s global chief marketing officer. “People are happy to be seen eating Special K. People might not be so happy to be seen walking around with Slim-Fast.”

Nowadays, even the word “diet” is becoming passé, Mintel has found, as consumers shift their focus from plan-in-a-can weight loss toward lifestyle changes that include eating fewer processed foods, exercising more, and getting more sleep. “It’s a quick fix and not the right thing for me,” says Melissa Wood, a 42-year-old marketing executive in Marlow, England, who has been on the diet twice. “The fake flavoring and sugar are not part of healthy living in the 21st century.”

Given the 2005 writedowns and sales since, the Slim-Fast business today is worth a fraction of what Unilever paid for it, figures Sanford C. Bernstein (AB) analyst Andrew Wood. “Perhaps they are just letting it die quietly,” Wood says.

Unilever bought an engineered powder in the year 2000 – a product about as far away from natural food as you can imagine. And here, a decade down the track, we can see a lot of value was destroyed.

Artisanal food is one of Grant McCracken’s favourite examples of how culture shifts. He traces its rise in the USA from “hippie beginnings” in 1960s Berkeley to the ultimate seal of mainstream approval: Michelle Obama planting a vegetable garden in the White House in 2009. Were there signs in 2000 that a shift was on the way?

I could talk about the way pictures of food were changing in advertising, or how “organic food” has started to take off as a term (there’s a Google N-gram link for those who are interested) but here’s a couple of business data points: By 2000, Whole Foods had developed from a Texas startup to a national presence through expansion and acquisitions in a number of major markets, including both East and West coasts, although they wouldn’t conquer Manhatten until 2001.

Also in 2000, newspapers reported that McDonalds were in negotiations to buy a stake in Pret a Manger – whose food is made fresh every day and emphasises the role of natural ingredients. (The deal was completed in early 2001.)

I’m sure some of this data was available to Unilever when they were making the Slim-Fast decision, but they weren’t able to put it into context, because they didn’t see that cultural trends underlie how consumers make choices – and they didn’t have any way to process all this data from a cultural perspective.

So what are 4 things you can do to help your company avoid a blind-side hit?

1) Read CCO by Grant McCracken.

2) Start paying attention to the world beyond your corporate desk.

3) Contact KILN to have Indy Neogy give you some advice on improving the cultural awareness of your foresight and strategy teams.

4) Subscribe to KILN’s IdeaKeg – you’ll recieve a box of 7 objects symbolising important cultural trends twice a quarter and it comes with FuseTrail – a process that will help you generate the ideas you’ll need to take advantage of the trends you encounter.