Reinventing Welch’s

Source: Technology Digital

Date :31/05/2007 16:18:35

The popular juice product maker undertakes a new branding campaign to promote its health benefits, and revamps its systems to be more lean in a growing competitive market.

By David Weldon

Welch’s has been a household name for generations, so one would expect the company to be living the good life when it comes to consumer sales. But these are challenging times for the natural juice industry, as flavored teas and energy drinks take a sizeable bite out of the market, and consumers look for reduced sugar products. Welch’s find itself in an especially challenging situation, since its signature ingredient — the Concord Grape — has the highest natural sugar concentration on the market. That has the company undertake a major new branding campaign to promote the benefits of its products. ExecDigital spoke with newly appointed CEO David Lukiewski, Vice President of Marketing Kathleen Mirani, R&D/CQA Vice President Judith Zaunbracker, and Director of ERP Solutions Ray Gosselin about changes underway with Welch’s product lines, brand marketing, and business systems.

Q. David, what attracted you to assume your new position as CEO at Welch’s?

LUKIEWSKI: I had worked for other well known, branded companies in my career, and the Welch’s brand name interested me when I first interviewed here in 1995. Once meeting with Welch’s, I was immediately struck with the culture of the company – the historical aspects sure, but also the high quality, long-tenured, very nice people here. Finally, I knew I could make a difference. These reasons are still true 12 years later, and why I accepted the position of CEO.

Q. David, what have you set as short term, and long term goals for yourself in the new CEO role?

LUKIEWSKI: In the short term, to make the brand more relevant to today’s moms and consumers. Concerns about calories, and the introduction of “new age” beverages have hurt sales of our flagship Purple and White 100 percent juice. Also, the needs of our owners/growers, in terms of payment for their grapes: With their operating costs souring last year — primarily for petroleum — it has hurt their profits for their crop.

In the long term, I believe we have the ability to become a great company. We have a wonderful product, wonderful brand, and great employees. Getting our cost structure competitive and being able to support the brand more and introduce innovative products will make a very good company even better.

Q. What are the biggest challenges in your marketplace, and how is the company responding to those challenges?

LUKIEWSKI: When I took over last fall, we all took upon ourselves a vision to be great. Our strategies will focus on 5 areas … areas where some of our biggest challenges lie: Developing a better dialogue with the consumer; continuing to bring value added activities to our trade customers and being recognized as a preferred supplier; continuing to focus on development of our great employees and creating an environment where they can thrive and add great value; more innovative items that meet consumer desires; developing an efficient and flexible supply chain system to eliminate costs and waste; and being more responsive to consumer needs.

Q. Ray, I know the company has made some major investments in technology to help it be more efficient. What is the status of the company’s ERP implementation project, and how long has the project been going on?

GOSSELIN: Our first two phases of implementation are complete. These phases centered on foundational modules, such as Financials and HR/Payroll. Our next wave of modules will go live in September. This next wave is our largest, and includes order management, forecasting and trade funds management, supply chain management, and financial planning. The project started in the summer of 2003 with a selection project whereby Oracle was chosen as our ERP platform.

Q. What motivated the company to implement ERP, and what are the expected gains?

GOSSELIN: Our legacy systems were disparate, quite old (1970’s and early 1990’s) and no longer upgradeable. Timeliness of information and data integrity issues across systems have been a challenge for us, especially for the level of business intelligence that is required in today’s environment.

Additionally, we lacked a scaleable technical platform to expand our collaborative efforts with our vendors and customers. Gains come from achieving our vision of “Simple, self-service access to timely information, maximizing value to Welch's and our business partners”. Working capital reductions, waste reduction, labor efficiency, better product and customer profitability analysis leading to margin improvement are all areas of expected improvement.

Q. What was the process of bringing in outside help, and assigning internal resources to the project, and how has the project been managed?

GOSSELIN: First, we recognized that we needed a strong business partner with experience in ERP implementations. Secondly, we recruited our best and brightest from all areas of the business to be involved in this project. Because of the importance that the organization placed on this project, it was not difficult to attract and motivate the employees we needed.

In terms of management, we did find that we needed to make course corrections along the way. Different phases of the project required differing expertise, including consulting resources, and we remained nimble to make these changes along the way.

Q. What has been the impact of the ERP early efforts on your existing business processes, and how will such processes be different once the project is completed?

GOSSELIN: We have been committed from the onset that this would not be solely an IT project. We spent considerable time upfront ensuring that every opportunity to redesign and improve our business processes would be taken. To that end, we appointed a 7 person business process owners team — to redesign business processes and create desired “to-be” processes, to guide the systems implementation. There will be plenty of change, as our new processes are very much streamlined and implemented with best in class process designs in mind.

Q. Kathleen, what is the new branding campaign planned for in 2008?

MIRANI: The new campaign is in the process of being developed now. The goal of the campaign is to make Welch’s relevant to Gen X Moms. Therefore the campaign will address how Welch’s core strengths in health, taste and family fit with Mom’s lives today.

Q. What inspired the new branding campaign, and will company product lines be portrayed in a different way than in the past?

MIRANI: Welch’s has conducted a tremendous amount of work on our equity that revealed key strengths that can be leveraged with today’s Gen X Mom. This work inspired us to develop the new campaign. Our brand will be portrayed in a more up-to-date, energized way than in the past.

Q. Judith, how is Welch’s responding to the growing national interest in more healthy and natural foods in its product offerings?

ZAUNBRECHER: Welch’s has introduced new products in the health/natural arenas over the last couple of years. We introduced light grape juice, organic juice, grape juice with calcium and grape juice with fiber. Outside of beverages, Welch’s introduced dried fruit, which addresses consumers’ need for convenient ways to get more fruit in their diet.

In addition, we are continuing to research the health benefits of Concord grape juice. Our current focus is on anti-oxidants, cardiovascular health and improved immunity.

We are developing new product formulations and processes to increase the nutritional benefits of fruit beverages and reduce calories of our products. Examples include proprietary technology to add calcium to grape juice, adding fiber to PGJ, superior tasting reduced calorie juice beverages.

We are developing and marketing new, great tasting, convenient fruit products such as dried fruit and licensing our brand name to market fresh grapes and frozen fruit bars. And we are developing and marketing organic Concord grape juice.

Q. What changes have Welch’s undertaken in its product processing, or storage, to address healthier consumer food products?

ZAUNBRECHER: We are focused on improving the retention of the polyphenolic compounds present in Concord grape juice through processing and storage. These compounds are the ones that provide the health benefits. We have, and continue to implement, new proprietary formulation and processing technology to deliver the health benefits of Concord grape juice.

We have developed new processing technologies to add nutritional benefits such as fiber and calcium to fruit juice products while maintaining great taste. Welch’s developed and patented the technology used to add calcium to grape juice products that delivers a consumer preferred product. And we have the certified production facilities to process and package organic fruit juices.

Q. What emerging industry trends or consumer concerns do you anticipate will have an impact on Welch’s processing methods, and product offerings in the next couple of years?

MIRANI: Welch’s has a commitment to understanding consumer trends and concerns, and to address them through our product offerings. We expect that concerns about sugar and obesity, concerns about obtaining certain nutrients in the diet, and concerns about consuming enough fruit will inform our development efforts.

ZAUNBRECHER: In general, consumers want and need to consume more fruits. Right now, a vast majority of people come no where close to consuming enough fruit for a healthy diet. Developing convenient and great tasting ways to get fruit into the average American diet will drive much of our new technology and product program.

The drive for flavor variety has always been, and will continue to be, important. Flavor trends include exotic tropical fruits (such as mango, passion fruit, guava) and flavors that connote health (including blueberry, cherry, and pomegranate).

Convenience will have a big impact on packaging, including more portion control and single serve offerings. Fresher and more natural products will also drive new packaging, processing and distribution approaches. Specifically, the market will move towards fresher fruit products sold in the refrigerated case, stand alone coolers, and in the produce aisle.

Great shelf impact is becoming an important selling tool. This is driving the development of new labeling and packaging technologies. And telling the consumer how a food will help them be healthier will continue to be important. This will drive health and nutrition research on our core grape juice products, and the development of new products with added benefits (such as probiotics).

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Q. What changes in the company, new ventures or projects, or new product offerings from Welch’s, should the public and market look for over the next two years?

ZAUNBRECHER: In terms of new products from Welch’s, our new venture effort is continuing to evolve, but you can expect to see new grape juice products, new beverages outside of juice, and new fruit products from Welch’s. We continue to see lots of opportunity in fruit and juice!

Specifically, Welch’s will continue expansion of the dried fruit line and other fruit products (yogurt covered fruit bits from PIM, expansion of frozen fruit novelties, low sugar spreads); add new, great tasting juices in refrigerated and in the shelf stable line; continued health and nutrition news on Concord and Niagara grape juice products; introduce new organic juice and sparkling juice products; new fruit beverages that expand the Welch’s line-up (such as an all natural sport drink, low calorie juice beverages, and fruit teas); offer new single package sizes; and introduce unique value added grape juice products that target the needs of specific demographic groups, such as baby boomers with high anti-oxidant, or heart health products, and products targeted at families with children.