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China Environmental Policy and how it is affecting commodity prices

May, 2017 · By PrichAdmin

A comment piece researched and written for a client company website and posted on LinkedIn.

Chinese cargo containers in the port

Background

Early in January the monthly review of commodity price movement was printed – not a riveting read but a vital one in the premium business.

This edition is the fun one – it is the one that shows how commodities have increased or decreased over the whole of 2016.

This year the movements were stark.

There was next to no decline or static price maintenance, it was nearly all drastic price increases.

Some examples…

  • Tin +58%
  • Plastics – from 6% to 156% depending on the type
  • Cardboard +39%
  • Cotton +31%

The China Effect

Whilst there is a never simple, or single, explanations for such trends, there is a powerful force within China that is definitely having a significant influence – the enforcement of strong environmental policies by the Chinese Government.

China unveiled its 13th Five-Year Plan in September 2016, which will guide the country’s economic and social development through to 2020.

A key element of this plan is that environmental stewardship is an increasingly integral component of China’s development.

Where once it was cheaper to pollute than clean-up, it is now the case that strong official action will be used to tackle industry pollution sector by sector.

ASL have experienced this policy first hand.

We were producing a complex item that was made up of multiple metals in an audited factory in the Guandong region.

Just before Chinese New Year all metal factories in this region were closed, for a month, as Government officials reviewed every factory, with no notice, no matter their audit status.

They then shut down those factories that did not meet the new pollution guidelines with immediate effect.

Policy Targets

The 13th Five Year Plan targets:

  • A reduction of water consumption by 35% by 2020 – compared with 2013
  • Total consumption of primary energy in 2020 of less than 5 billion tons of standard coal
  • A reduction in energy consumption per unit of GDP by 15% by 2020 – compared with 2015
  • A reduction of carbon dioxide emissions per unit of GDP by 40-45% by 2020 – compared with 2015

Pollution-intensive enterprises will face immediate closure or a massive pollution control charge, enforced by national, provincial or municipal governments.

Key initiatives put in place to reach the targets include:

  • Setting and enforcing standards for carbon/waste emissions, clean energy, along with water/soil pollution
  • environmental credit record for companies
  • Stronger monitoring of and immediate closure for polluting companies
  • “Green” tax incentives covering resource extraction, consumption and pollutant emission
  • Stronger import and export controls for pollutant elements
  • Promotion of green certification systems and green government procurement policies

What this policy means for commodity prices

The new Chinese Environmental policies effect on commodity prices has been immediate and drastic.

At the beginning of this article there was information showing 2016 price increases for 4 commodities – tin, plastics, cardboard and cotton.

Taking one of these commodities, cardboard, we can investigate just how drastic.

According to China’s Customsin October 2016, China imported 192.54 million tons of waste paper and this was a 27.38% decrease from September.

 Several shipments of waste paper and cardboard from overseas were detained at customs due to the greater enforcement of regulations on imported waste.

For example, in September, 667 tons of waste paper from the US were found to include PVC infusion bags and other medical waste.

The policies have caused an immediate drop in overseas supply.

Like the metal factories in Guandong, China’s domestic paper and cardboard waste market has recently come under increased scrutiny.

In addition, from October 20th, 2016, China’s Ministry of Environmental Protection began inspecting over 20 provincescracking down on paper and cardboard projects that violated the law — specifically regarding significant pollution created during production.

In the end, many small- and medium-sized paper and cardboard factories that failed to pass the Environmental Impact Assessment (EIA) were forced to shut down, resulting in a major drop in the domestic supply of reprocessed paper and cardboard.

Due to these two policies cutting down supply, entrepreneurs have seen an opportunity and stockpiled paper and cardboard to boost the price they can get at a later date.

Combine these factors with events such as China’s Singles Day, (on November 11th every year,) where The National Post Office delivers over 350 million packages in a single day and you have a “perfect storm” of lower supply and higher demand!

The result?

The combination of drops in imported/domestic supply, massive demand peaks and stockpiling means violent price changes.

From October to November 2016 alone, the price of cardboard jumped 33%, from 1210 RMB per ton to 1610 RMB per ton — and at one point, it increased at a rate of 150 RMB per ton per day.

ASL comment

ASL supports all environmental initiatives, as we do for social compliance and quality assurance initiatives.

We are proud members of Sedex and Ecovadis global schemes and seek to drive their agendas with all our clients.

The increased stringent application of stronger environmental laws from the end of 2016 in China has caused immediate price hikes.

In time these rises will become controlled and could drop as new players enter the supply chain, filling the void left by old suppliers.

In the short term, through careful procurement practices such as cost avoidance or best value methodologies, product design, rationalisation and consolidation, ASL will seek to reduce the effect of price fluctuations as much as possible for our clients.

In the longer term we will partner with the new generation of environmentally friendly suppliers to ensure the best solutions for both China and our clients.

A case study for Sports Sponsorship Insider

May, 2017 · By PrichAdmin

Case study written for annual review of Sports Sponsorship

  1. Project details

Title:                                        Shell – Ferrari’s Innovation Partner

Sector:                                    Media Relations

Rights Holder:                    Ferrari

Name of Agency:                Crunch Communications

  1. Campaign summary

 Recognised as one of the most enduring partnerships in motorsport history, the relationship between Scuderia Ferrari and Shell which dates back to the founding of the race team by Enzo Ferrari in 1929.

 

Although most closely associated with Formula 1TM, the successes won by the partnership include world championship titles for sports and GT cars through victory in races such as the Le Mans 24 Hours. These successes have informed the design and production of some of the most famous road cars in the world, together with their fuel and lubricants, allowing both brands to share an intimacy rarely seen in contemporary sport.

  1. Planning

In 2015, Shell and Ferrari upgraded their association, graduating from Technical Partner to Innovation Partner, which acts as a clear indication of the desire that both parties have to look to the future. The Innovation Partnership deepens the ties between the two companies in terms of research and development on one hand, and co-activation on the other.

This is proven in no uncertain terms by Ferrari having come on board as a supporter of the Shell Eco-marathon programme – a competition that challenges students to design the world’s most energy efficient car. Shell has also played a key role in the development of some of Ferrari’s most technologically advanced cars in recent years, most notably in relation to the hybrid LaFerrari supercar, launched in 2013.

Activated globally in more than 100 markets, Shell’s Innovation Partnership with Ferrari is now deployed via a plethora of channels, ranging from global communications campaigns to VIP hospitality programmes at the races themselves, all of which allows both to engage with an ever-growing on-line audience.

This, in essence, is at the crux of Shell’s involvement in motorsport, using the global awareness that its partnership with Ferrari generates to drive knowledge of its differentiated product portfolio, to drive sales volume, and to support its new energy narrative under a heading of #MaketheFuture.

In the current economic climate, the decision to deepen the ties between Shell and Ferrari were not taken lightly, even with the most successful team in Formula 1 history and one of the world’s most powerful sporting brands. Instead, the commitment was balanced against an in-depth analysis of its sponsorship ROI, as well as having re-assessed the likely direction the Shell, Ferrari and F1 brands would take in the short to medium term. This analysis informed the shape of the new five-year deal, which aims to maximise the value of the partnership in terms of the technical excellence on hand, the target audience available, and the long-standing legacy the two partners have shared.

 

The partnership itself is deployed in multiple channels, including – but not limited to – branding presence at more than 40,000 Shell retail outlets around the world. Every employee on its forecourts proudly wears the “Scudetto” on their uniform, alongside branding Shell V-Power Nitro+ fuels and Shell Helix Ultra with PurePlus Technology lubricants. It is these  premiumproducts that can directly trace their development back to the relationship between Shell and Ferrari.

The partnership is also brought to life via a global VIP hospitality programme, an ever-growing digital presence, and a class-leading press office function.

  1. Activation

Shell’s inclusive media relations programme in recent years has not only opened the doors to one of the world’s most secretive partnerships, but also pioneered a new understanding of the role that Shell plays in Scuderia Ferrari’s success.

Central to this is Shell’s motorsport press office, which has come to be regarded as one of the most efficient, knowledgeable and helpful in motorsport; offering a professional and sympathetic service to Ferrari, key Shell markets and, of course, the world’s media.

Strategy

Agile in its delivery of both a proactive and reactive press office function, the communications strategy affords Shell the perfect opportunity to amplify its key messages and increase awareness with media inside and out of the F1 paddock.

This results in consistent coverage across broadcast, print and online media that significantly enhances the value of the sponsorship. Relationship building has been key to this end and, additionally, there can be few teams in the business who boast such a breadth of contacts; a fact that has been pivotal in sustaining such positive Shell sentiment throughout.

Aligning Shell’s ATL messaging with its BTL was also key to delivering consistency across its brand’s story, and defining an over-arching message that filtered down through chapters allowed for an increase in the range of media targeting.

Tactics

Numerous assets available within this sponsorship have been utilised to deliver the utmost value from the media coverage and ROI generated, which include:

  • Access to Scuderia Ferrari drivers Sebastian Vettel, Kimi Räikkönen, Marc Gené and Esteban Gutiérrez
  • Access to facilities at Ferrari’s base in Maranello, Italy, as well as the Shell Technology Centre, Hamburg in Germany
  • Access to Shell’s Trackside Laboratory – a bespoke fuel and oil testing facility, unique to the F1 paddock, and on-site at every race
  • Rights associated to Shell’s Estate Partnership with the Goodwood Estate – specifically, the Goodwood Festival of Speed and the Goodwood Revival.
  • Continual technical development that has seen new fuel and oil products delivered to races, and delivered a demonstrable performance benefit to Ferrari’s overall performance on the track

While maintaining a steady technical narrative throughout the F1 season, with driver interviews, filming days, news stories, digital content creation and tours of Shell’s Trackside Laboratory at races; additional deployment of these rights saw several large-scale and notable PR stunts delivered over the course of 2015.

Goodwood Festival of Speed (FOS)

As an Official Partner of the Goodwood Estate, Shell had the exclusive opportunity to provide a ‘moment’ at the 2015 Festival of Speed, which proved to be a unique spectacle for fans and the festival alike. In collaboration with Sky Sports F1, the press office developed an exclusive feature with former Formula 1 World Champion Kimi Raikonnen.

Fun-filled and playing on the Finn’s dead-pan delivery and everyman appeal, the piece saw TV commentator David Croft join the Ferrari mechanics in the garage to prepare the 2010 car for a run up the fabled hillclimb. There was only one problem – they did not have any fuel! Cue Kimi to the rescue, delivering a jerry can full of Shell V-Power unleaded road fuel from a local forecourt, which would later power his run. The piece rated amongst Sky’s most popular pieces across the weekend, and featured on Shell’s digital channels too, en route to becoming its most viewed video of last year with 1.6m views.

Monza

Home advantage never felt so sweet as when Shell announced its ground-breaking new Innovation Partnership with Scuderia Ferrari at the Italian Grand Prix, staging an iconic photoshoot that would stay long in the memory of journalist and photographer alike. Picture the scene – two world champions, their enigmatic boss and a couple of high-ranking Shell execs, flanked by the SF15-T and its 1950 equivalent, and it is enough to get the juices flowing.

Put all of that together on the old banked circuit that still circles much of the modern day track, and it is easy to see how it became one of the most popular photo opportunities of recent times. The image ran around the world, which was perfect, you might say, to mark this latest chapter in a truly global partnership.

Growing Asset Portfolio

Formula 1 sits at the top of the hierarchy of motorsport worldwide by virtue of its global reach, large and mature audience and its combination of heritage and prestige. Yet the pyramid of motorsport offers a large and diverse number of platforms in which Shell is also engaged, all of which benefit from the partnership with Ferrari.

Chief among these is the FIA World Endurance Championship (WEC), the eight-round series of long-distance sports car races. Shell has been Official Fuel Partner to the WEC since 2014, when it introduced new Shell V-Power diesel and gasoline fuels tailored to meet regulations that stipulated a 30% reduction in fuel consumption while also satisfying the competing teams’ thirst for more performance.

Developed in the same laboratory as the Ferrari racing products, the WEC fuels programme has become an unprecedented success that is seen as one of the most positive news stories to have emerged in motorsport over the past few seasons. The cars that they power, primarily the LMP1-H hybrid sports-prototypes of Audi, Porsche and Toyota have shown immense performance and delivered thrilling entertainment while majoring on the energy efficient theme that governs the WEC and its showcase event, the legendary Le Mans 24 Hours.

Thanks to the terms of the new Innovation Partnership, Ferrari’s WEC contenders – privately-entered 458 Italia GT cars based on the marque’s showroom product – will also benefit from the Innovation Partnership agreement between Shell and Maranello.

In addition to using the innovative Shell V-Power racing fuels developed for the WEC, from 2016 onwards they will also have access to the latest specification Shell Helix Ultra with PurePlus Technology motor oils, developed through a unique process that creates crystal clear base oil from natural gas. Not only does this bring Ferrari’s sports racing competitors within the same technical framework as Scuderia Ferrari’s Formula 1 team, but it also brings with it significant communications and marketing opportunities that come as part and parcel of delivering the Innovation Partnership.

  1. Evaluation

Founded upon the experience of driving innovation and performance in the Formula 1 paddock for more than 60 years, the 2015 season saw Shell become a mainstay in the media consumption of Formula 1 fans across the globe.

Engaging more than 150 journalists through tailored media events at key Grands Prix through the season resulted in more than 40 TV features being aired in 2015 that spoke in glowing terms of the work that Shell does to not only power Formula 1’s most successful team, but to develop products and technology that will eventually benefit everyone behind the wheel. This was above and beyond the previous achievements of an otherwise successful press office, and was a measure of the appetite for technical discussion that has innovation at its heart.

Shell and Ferrari also collaborated to bring unprecedented access to the fans through the Scuderia Ferrari Uncovered interactive experience, that was free to access and designed to deliver an immersive look inside the team’s facilities at a Grand Prix weekend. Utilising 360o photographic technology, unprecedented access and a wealth of supporting material from the technical teams and combined archives of Shell and Ferrari, Scuderia Ferrari Uncovered drew a phenomenal response from fans who might never have the opportunity to go behind the scenes and explore the pit garage for themselves.

The supporting materials that were produced in 2015 lay down a clear marker to the future of the Innovation Partnership between Shell and Ferrari. They are now proven to deliver the kind of content that media and audiences demand both inside and out of the immediate paddock environment, engaging global broadcasters of the likes of CNN, AP, NBC and Reuters, as well as many others besides, exceeded all pre-agreed AVE targets. Several local events were also staged in key Shell markets, using its innovative motorsport partnerships as proof points of not only its technical excellence, but also of its other applicable business successes.

 

Why are certain agencies always ignored?

May, 2017 · By PrichAdmin

This post was written for an internal newsletter for a Prich client.

Why are certain agencies always ignored?

Back in August Print Week ran an article that got the powers that be at ASL thinking.

It was a report of an interesting (and successful,) promotion being run by PG tips during the second half of 2016 – see below.

It was not the promotion, or it’s success that got us thinking, it was these two lines

PG Tips has worked with London-based integrated agency Hey Human on the project.

It’s not clear whether the companies are working with a UK supplier to provide the mug printing and fulfilment service.

The integrated agency gets a name check but the mere “supplier” agency is unknown!

Is this always the lot of those who actually design, make and deliver the goods?

On the whole yes!

But why?

The premiums industry, the agencies that develop and make merchandise or promotional items such as this mug, is a multi billion dollar concern.

There are many, many fine local, national and international agencies that work with the biggest and most famous brands in the World – making items such as these mugs.

Indeed, their promotional items have been vital in building these brands, think of how long and how desired many Coca – Cola merchandise items are.

Yet their names, despite many being long established, very successful and highly creative, are often ignored.

They are purveyors of “trinkets and trash” and perceived as not as creative or exciting as the design, integrated or digital agencies that seem to come and go.

Their creativity such as the idea to personalise a tea mug for consumers is seen as prosaic.

Yet half a million Brits had direct online contact with Unilever, with a 32% interaction rate  – a percentage that many a digital agency would win huge plaudits for in marketing press.

Sales in participating stores increased by up to 25% and winners will be drinking from a personalised mug with a strong reminder of the PG brand every day.

So lets not ignore the premium and merchandise companies – they are a key part of a marketers armoury, delivering tangible brand reminders direct to consumers as well as increasing immediate sales.

And the supplier for this mug initiative, which I am sure many of you have guessed by now, was ASL Global, who actually originated the idea and went to Unilever with it in the first place.