Cullinane says it’s "very disappointing" that a major FMCG company like Goodman Fielder, which is the country’s second biggest milk processor, is "so bereft of ideas" that it needed to resort to "blatant copying".
“It is identical in every way to Lewis Road right down to the bottle and label, except of course, it’s cheaper ... I think the agency and the marketing team should be keel-hauled,” he says.
He says they have also copied the label on the back, “right down to the full stop”. And it also mentions the fact that there is no palm kernel expeller used in the milk. He finds this quite ironic given Wilmar International, one of the companies that acquired Goodman Fielder in March this year, is one of the world’s biggest producers of palm oil.
Despite his gripes, Cullinane says he won’t be exploring any legal options and doesn’t think this launch will impact on Lewis Road’s organic milk sales, which he says have contributed almost all of the growth in the milk category (see below). And, as they say, imitation is the sincerest form of flattery, so he says the other way to look at it is that it’s "pretty encouraging" a big company has paid attention.
Cullinane has been quite outspoken about Fonterra and its quest for scale above all else and he thinks New Zealand food producers need to focus on quality over quantity. So for him, this is another short-sighted example of a company stripping value out of the market by reducing the cost, rather than trying to add value. Nielsen has shown that New Zealanders are particularly price conscious, with one of the highest rates of supermarket purchases bought on special in the developed world. But he says there’s lots of research out of Europe that shows price makes up just ten percent of a purchase decision—and price certainly didn't play much of a role when it came to the rabid excitement over its chocolate milk last year.
So is this dodgy? Or just the natural order of things, where a small, fast-growing challenger brand finds success and big competing businesses respond with similar products—and generally reduce the price so they can get a piece of the action? When asked for a response to Cullinane's accusations, a Puhoi Valley spokesperson responded via its PR agency PPR.
“Organic fresh white milk sales increased by 1.1 million litres over the last 12 months (up 53 percent vs. year ago) in New Zealand grocery supermarkets. This was 65 percent of all fresh white milk volume growth in the last year [source: IRI-Aztec Market Edge MAT data to 20th September 2015]. Puhoi Valley has a long history in creating premium dairy products, having been in operation since 1983, so it made perfect sense to launch a range of milks.”
The spokesperson says it wanted to stand out on shelf so the design team came up with the square bottle, which it says is "stable, easier to hold, giving consumers an easy pour.”
It also launched a "New Zealand-first" product into the market, Puhoi Valley Half & Half, which is “homogenised to create an even texture and with 18 percent fat content, it is higher than milk, but lower than cream”.
“The gold label and cap are a nod to our history, with our previous logo being gold. It also was a perfect fit given fresh white milk products are differentiated by cap colour. Trim milk has a green cap, then light blue, dark blue, then silver for old fashioned creamy milk. Half & Half is the next step along, so we went with gold ... Consumers love it, and retailers have told us it’s been flying off the shelves.”
Speaking of flying off the shelves, the launch of Lewis Road chocolate milk last year was phenomenal—and, Cullinane says, quite unexpected. But while there has been plenty of enthusiasm for the products in the milk-starved South Island, which only got distribution when the new flavours were launched recently, there haven’t been any security guards stopping fans hunting for the new vanilla or coffee extensions and the chocolate milk is now readily available in many supermarkets (on Facebook, Lewis Road apologised for the supply issues it thought it had fixed and said "the timing of the launch of Puhoi milk has only made things worse ... Puhoi is also being bottled by GVD and is taking capacity that would otherwise be utilised for our flavoured milks. Simply put, the more Puhoi milk on the shelves, the less Lewis Road Creamery flavoured milks available!"). In fact, someone spotted a chocolate milk on sale in Auckland recently. So is it hypocritical to be accusing a competitor of stripping out value?
Cullinane says it is selling pretty much everything it’s making and it never puts its products on sale, although individual shops might. And what about the surprising sighting of a Lewis Road coffee-flavoured milk in the reduced to clear section in Kumeu New World? He jokes that it's probably someone from Goodman Fielder attempting to destabilise the brand.