Milling & Baking News - October 24, 2017 - 7

Editorial

Endorsing household penetration as goal

hat generating steady and sustained sales with long-term success," he said. "So increasing
growth has been a challenge for the food in- household penetration is a key measure, and if you
dustry is no mystery, and at the 2017 G.M.A. do that, all of a sudden people become interested
Leadership Forum, a number of prominent executives again, and you know who is using our brands and
from the packaged foods industry were strikingly who is not using our brands and why are they not
candid about changes they are making or considering using our brands and what innovation do we have
in order to adapt to a rapidly changing marketplace.
to deliver to get access to more households and it's
Michele Buck, who leads the Hershey Co., said changed everything. It's changed the way our marshe is spending "a lot of time thinking about the keting groups operate. It has changed the effectiveorganizational construct that will let us win." More ness, and ultimately it's changed the growth rates of
specifically, she said Hershey needs "shifts" in its our company."
talent pool "just to have the energy, the momentum,
While eking out a few extra percentage points of
the expansive thinking and people really approach- household penetration for dominant brands may seem
ing the business that way more than ever before."
basic or unexciting, Mr. Dorer said the mindset reInsights perhaps most gerquired is very much akin to that
Understanding what households
mane for the baking industry
of the start-up entrepreneur.
are and are not purchasing bread
came not from a food execu"We can learn from the
and other grain-based foods long
tive but from Benno O. Dorer,
single-minded obsession that
has been squarely within the radar
chairman and chief executive
start-ups have, which is around
screens
of the industry's executives. getting access to new houseofficer of The Clorox Co. With
roots dating to 1913, the household products maker holds," he said. "That's all they care about."
produces a number of popular, but not necessarily
For the company's top executives, 15 different
fast-growing, brands, with familiar names such as metrics help determine the company's short-term
Clorox, Kingsford, Pine-Sol and Tilex.
incentive pay, including a number of financial meaIn his three years as Clorox c.e.o., Mr. Dorer al- sures. But household penetration is part of the mix.
ready has made his mark, with the center-of-theUnderstanding what households are and are not
store company producing consistent top-line growth purchasing bread and other grain-based foods long
and impressive earnings gains each year. The com- has been squarely within the radar screens of the inpany's share price has appreciated about 40% since dustry's executives. In a recent presentation, Allen L.
he took the helm, and Mr. Dorer was named "the Shiver, c.e.o. of Flowers Foods, Inc., set the stage for
most beloved c.e.o. in the United States" earlier this his presentation by describing the bakery business as
year based on a survey using anonymous, voluntary a $31 billion market (retail and food service), adding
feedback conducted by Glassdoor, Inc., a job recruit- that "98.6% of households buy fresh bread." The ining company.
troduction of half loaves for baby boomers and new
Among steps taken to keep the Oakland, Calif.- brands targeted toward millennials are examples of
based business moving forward, Mr. Dorer said steps bakers have taken to maximize household penClorox has tried a range of metrics to reward those etration. Still, whether baking companies are mearesponsible for marketing.
suring household penetration rates as an incentive
"We would reward them for all kinds of different compensation metric is a different matter. Bakers
things, and you get what you measure," he told the who have concluded certain of their brands no lonaudience. In the end, Clorox settled on a metric that ger resonate with consumers should look no further
should resonate in grain-based foods.
than the "stodgy" category of bleach and household
"We have declared that for us, household pen- cleaners to see opportunities to breathe new life into
etration is through analysis most closely correlated aging brands. MBN
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