Under the Influence with Terry O'Reilly - S9E02 - Goliath Meet David: Small Brands That Beat The Big Boys

Episode Date: January 9, 2020

This week, we analyze how small brands outsmart their giant counterparts. We’ll look at a snack food company with a cult-like following that outsells Frito-Lay in Baltimore. A tiny soda brand that obliterates Coca Cola in Scotland. And a bubble gum-flavoured drink that beats all the big boys only in Peru. Goliath, meet David. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. This is an apostrophe podcast production. Your teeth look whiter than noon, noon, noon! You're not you when you're hungry. You're in good hands with all the teeth. You're under the influence with Terry O'Reilly. Back in 1919, Jess Willard was the heavyweight champion of the world. Heavyweight being the operative word, as Willard stood 6 foot 6 and a half inches tall

and tipped the scales at 235 pounds in an era when the average heavyweight was 180 pounds. Giant Jess Willard, as he was called, had a brutal reputation. He gained that notoriety when he fought a boxer named Jack Bull Young in 1913. Willard hit him so hard that Young died in the ninth round. Willard was actually charged with second-degree murder, but fought the charge and won.

Two years later, he won the heavyweight title when he beat formidable champion Jack Johnson in a staggering 26-round match. Which brings us to July 4th, 1919. Willard was set to defend his title against a young up-and-comer named Jack Dempsey. The 24-year-old challenger had racked up a number of first-round knockouts and earned a shot at the title. Willard laughingly told the press this would be one of the easiest fights of his career, and he insisted on being indemnified in case he accidentally killed the kid in the ring. 70,000 spectators showed up to watch the bout in Toledo, Ohio.

The temperature that day was 38 degrees Celsius, or 100 Fahrenheit. When the two men stood in the center of that hot ring to hear the referee's instructions, it looked like a man facing off against a child. Jack Dempsey was 6'1", 187 pounds, big for a heavyweight, but he looked absolutely miniature next to Willard, giving up 5 1⁄2 inches in height and nearly 50 pounds in weight. But when the bell sounded for the first round, Dempsey took the fight right to the giant.

Willard had an old-school Marcus of Queensbury style, standing straight with his fists out. Dempsey was a new breed of fighter. He bobbed and weaved and employed fast footwork. He peppered Willard with a flurry of body punches. He easily ducked the first few jabs Willard threw. Dempsey pounded Willard. He wouldn't let him breathe. Then, Dempsey caught Willard with a big left hook.

Now watch, watch. There's thatpsey caught Willard with a big left hook. Now watch, watch. There's that big left and Willard down. It was the first time Willard had ever been knocked down in his career. That punch broke his jaw. He managed to get back up, but was knocked down again five seconds later. There's that left again and Willard's on the floor for the second time. Dempsey would knock Jess Willard down an astounding seven times in round one.

Willard seemed to have no defense against the smaller Dempsey. The beating continued through rounds two and three. When round four started, giant Jess Willard couldn't answer the bell. Jack Dempsey was crowned the new heavyweight champion of the world. It was one of the most brutal fights in history and it was a legendary match because it

turned the tables upside down in the boxing world. A much smaller challenger had beaten a giant champion. Although it's very rare in the world of marketing, smaller brands sometimes do beat the giant ones. It's an astounding feat because these smaller brands don't have as much marketing muscle as the big brands.

They don't have the same resources and are often outspent more than two to one. But somehow with smart strategy, a deep understanding of their customers, and sheer guts, smaller brands do occasionally beat the big brands. Goliath, meet David. You're under the influence. The undisputed giant in the potato chip category is Lay's. It dominates just about every market in North America, except for Baltimore, Maryland. There, a much smaller brand called Utz Potato Chips outsells Lay's.

Back in 1921, a couple named William and Sally Utz began making potato chips out of their home. With a $300 investment, they started a company called Hanover Home Brand Potato Chips. Their hand-operated equipment could produce 50 pounds of potato chips per hour. Utz chips were so good, grocers told them they would take all the chips the couple could produce. By 1938, the Utz company could afford to buy an automatic fryer that could produce over

300 pounds of chips per hour. With that, the company was able to sell more chips to more stores. As the business grew, it changed its name to Utz Quality Foods. Potato chips are one of those snack food products that inspire intense loyalty. People often stick with a flavor and brand they loved in their youth. Utz was one of those brands

for people growing up in the city of Baltimore. It has almost created a cult-like following there, and Utz Potato Chips embraced Baltimore right back. One of the key secrets to its success is that Utz always marketed their chips as a hometown product. The company stays focused on what it does best and makes a huge effort to stay locally connected. For chip lovers in Baltimore, there is a sense of pride that you can't get Utz chips everywhere and they feel loyal to it.

It's a remarkable story because so many local snack food companies struggle to compete against behemoths like Frito-Lay and many have shut their doors over the last 20 years. But there in Baltimore, the much smaller Utz commands over 50% of the potato chip market. By 2005, the Utz family company was leading with $28 million of supermarket sales in the Baltimore area and the mighty Frito-Lay company found itself in second place at $11 million. Utz has consistently celebrated Baltimore in its marketing and has stuck with a long-running animated advertising campaign featuring the well-loved Little Utz Girl. The Little Utz Girl loved sharing the crunchy snacks her family made together because they

knew just being yourself is the funnest adventure of all. Utz, the crunch that connects us all. Today, Utz Quality Foods makes a long list of snack foods and is the largest family-owned snack company in the U.S. But while it only has a 3% market share nationally, it has dominated the potato chip market in Baltimore for over 100 years. Coca-Cola outsells virtually every other soft drink in every country around the world, except Scotland. Back in 1901, a soft drink was created to quench the thirst of Glasgow steel workers. Because sanitation was poor at that time, this drink was considered a healthy way to boost energy in industrial areas.

It was like a tonic, with lots of sugar and caffeine. It was called Iron Brew, spelled I-R-O-N-B-R-E-W. Then in 1947, the name was changed. That year, the Scottish government insisted that all brand names had to be, quote, literally true. Now you might be thinking the name had to change because it didn't contain any iron. Actually, it did contain some iron. It just wasn't brewed. So the name was phonetically changed to Iron Brew, spelled I-R-N dash B-R-U.

Not only did the new name conform to the new law, it also gave the soft drink a legally protected brand identity. Iron Brew has a distinctive orange and blue packaging, and the logo features an image of a strongman. The liquid itself is bright orange. The brand even has its own tartan. In the 1970s, Iron Brew adopted the slogan, Made from Scottish Girders, meaning steel beams, a tongue-in-cheek reference to its rusty color and its steelworker heritage. It became so beloved, it's called Scotland's other national drink after whiskey. 20 cans of Iron Brew are sold in Bonny, Scotland every second. Some say it's hard to describe the flavor of Iron Brew.

It's orange but doesn't taste orangey. Some say it tastes a bit like bubblegum, whereas most say it's more like a fizzy cream soda. It is said the secret formula is known only to three people at the company and they are not allowed

to travel together on planes. A big part of Iron Brew's popularity in Scotland is due to its cheeky and sometimes controversial advertising. One billboard showed a cow with the headline, quote, When I'm a burger, I want to be washed down with Iron Brew. That one got over 700 complaints. Here's a TV commercial with a family of four singing about their love of Iron Brew, That one got over 700 complaints. Here's a TV commercial with a family of four singing about their love of Iron Brew,

with mom doing a solo. Ready everybody? Everybody in the world loves Iron Brew. I do. I do. I do. Me too. Everybody in the world loves Iron Brew.

He does. She does. We does. Me does. And I. We does. Me does. And I especially love iron brew, even though I used to be a man. Even though I used to be a man. Scotland's love of iron brew didn't stop Donald Trump from creating a bit of outrage there recently. He owns a luxury golf course in Turnberry, Scotland, and it banned the sale of iron brew on its premises. The stated reason?

The bright orange liquid stains the resort's expensive carpets. Probable reason? To serve American Coca-Cola. When that ban was announced, one Twitter user said, quote, Another said, If Trump is so President of the United States has just declared war on Scotland. Another said, if Trump is so afraid of the color orange, how does he explain his fake tan? And on it went.

Through it all, Iron Brew still outsells the mighty Coca-Cola to this day and has dominated the Scottish soft drink market for over a century. A historical first happened in Norway in March 2019. Electric cars outsold fossil fuel cars for the first time ever. Nearly 60% of the new cars sold in Norway that month were battery-powered. Norway has a population of 5.3 million, and its parliament has set an ambitious goal that all new cars sold must be electric by the year 2025. The government there has created big incentives to make that happen.

It waived hefty vehicle import duties on electric cars, as well as registration costs and sales taxes. Owners don't pay road or ferry tolls. They are allowed to use bus lanes in traffic congestion. They also enjoy free parking and free charging. As a result, nine of the top 12 new cars sold in Norway were electric. The top brands were the VW e-Golf, BMW i3, Nissan Leaf, and the Audi e-tron. But it was the Tesla Model 3 that accounted for over 30% of those sales,

a record for a single car model in a single month. While it was impressive nearly 60% of all new cars sold in March were electric, that number could have been much higher. Thousands of Norwegians are on waiting lists for electric cars as supply is lagging far behind demand. Norway has hit its zero-emission vehicle targets three years earlier than planned. No other country in Europe comes close to Norway's numbers. And it happened fast. March 2019 sales numbers were twice as much as March 2018, which were twice as much again as March 2017. Norway's electric car sales are on track to slingshot past 50% of all new cars

sold in 2020. That's a huge milestone for the small electric car category, and a big plug for an emission-free future. And we'll be right back. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. Bet MGM is an official sports betting partner of the National Hockey League and has your back all season long. From puck drop to the final shot,

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Must be 19 years of age or older to wager. Ontario only. Please play responsibly. If you have any questions or concerns about your gambling or someone close to you, please contact Connects Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Why not dip into our archives? Available wherever you download your pods.

Go to terryoreilly.ca for a master episode list. Scotland isn't the only country where a local cola outsells heavyweight Coca-Cola. Peru has a population of 33 million, and a large percentage of those folks love a local soft drink called Inca-Cola. That brand stands out for a number of reasons. First, the label features an

Inca on it, and the company delivery trucks sport Peru's national colors. Inca-Cola itself has a unique yellow-gold color. It's carbonated and very sweet and is made from a secret recipe based on local fruits. And it, too, tastes just like bubble gum. Peruvians prefer to serve it at room temperature, no ice. It is not used as a mixer for alcoholic drinks.

And Inca Cola has outsold Coca-Cola for decades. Which is extraordinary, because Coke has more international marketing muscle than almost any other brand in the world. Back in 1910, British immigrant Joseph Robinson Lindley started a small bottling company in Lima, Peru. By the early 1920s, the company had a line of 10 flavors. Then, in 1935, on the 400th anniversary of Lima's founding,

the Lindley Bottling Company launched what would become its most famous product, Inca Cola. Five years later, Inca Cola was the leading soft drink in Lima. It achieved that with a very specific strategy. From the very beginning, Inca Cola marketing was wrapped in the Peruvian identity. It positioned itself as, quote, the brand of the people. Soft drink marketing is a unique category because it has little to say but lots to communicate. The same is true of Inca cola, which carries a cultural meaning that goes far beyond an ordinary soda. The soft drink appealed to national pride and their Incan ancestry.

That was important to Peruvians when they were made to feel inferior to other countries, especially as Peru battled poverty, political instability, and slow economic growth. The company's slogans promoted Inca-Cola as the, quote, drink with a national flavor and the taste of Peru. Inca-Cola launched one year before Coke entered the Peruvian marketplace. It also made a concerted effort to penetrate every corner of the country, sending reps and product over bad roads to remote outposts, an important effort that gave Inca more reach. Inca Cola cut deals not just with large stores,

but with small mom-and-pop shops. By the 1980s, Inca had a 35% market share. Coke trailed at 21%. For decades, Coke tried to overtake Inca-Cola, reportedly even increasing its sugar content to compete with Inca's sweetness. But to no avail. By the 1990s, even McDonald's in Peru broke its exclusivity contract with Coke and began carrying Inca as well. Many smaller

eateries only stocked Inca Cola. In the late 90s, Inca Cola was still the market leader, but the country's hyperinflation bit into the company profits, and it was becoming more and more expensive to compete with Coke. So, in 1999, Inca sold 50% of its company to Coca-Cola, but the original Lindley family retained ownership of the brand in Peru. For Inca, it wasn't just a lifeline. It was an opportunity to market its brand internationally using Coke's distribution power. For Coca-Cola, it was a defensive move. It couldn't outsell Inca, but by partnering with it, Coke created an unbeatable soft drink portfolio.

Even with this partnership, Inca-Cola still outsells Coca-Cola in Peru to this day. After decades of being the perennial number two in the soft drink category, Pepsi was finally making some headway against Coke in the mid-1980s. Their persuasive Take the Pepsi Taste Challenge advertising campaign, created in Canada, by the way, was getting big-time traction here and in the U.S. Coke drinkers were switching to Pepsi in numbers bigger than ever. That campaign was so powerful,

Pepsi was actually gaining parity with Coke in Canadian stores for the first time ever. Then came Pepsi's biggest campaign to date, the Choice of a New Generation, featuring pop stars Madonna, David Bowie and Michael Jackson. Hey, you're the Pepsi generation That famous campaign worked everywhere, except in Quebec, where it fell flat. That was puzzling to Pepsi, because Quebec had long been a Pepsi stronghold.

As a matter of fact, when Pepsi first moved into Canada, it opened its first plant in Montreal in 1934. Quebecers loved Pepsi so much that the word Pepsi became a derogatory term used to describe French Canadians. It started in the 1940s when Quebec Anglos disparagingly said French Quebecers swilled Pepsi because they couldn't afford Coke, as Pepsi was cheaper than Coke back then. Quebec was important to Pepsi because the province consumed 25-30% of all soft drinks in Canada. But Pepsi's growth had stalled, and Coke was now outselling Pepsi in the French province. As every David experiences when confronting a looming Goliath, it is forced to take risks.

Pepsi needed to counterpunch in a way that left Coke flat-footed. The first decision Pepsi Quebec made was a big one. It decided to drop the Pepsi choice of a new generation celebrity campaign. You can only imagine what a decision that was. It was a massive coup for Pepsi to land celebs like Michael Jackson, Lionel Richie, and Michael J. Fox. Standard marketing practice would have been to translate the celebrity campaign or just dub it from English to French.

Instead, Pepsi and its Quebec advertising agency boldly decided to go in a completely different direction. Quebec was culturally different from all other provinces, so much so it had its own star system and entertainment industry. And it was particularly strong in the comedy world. So Pepsi hired a French comedian named Claude Meunier to create a series of television commercials using his trademark absurdist humor. Meunier's style of comedy made fun of old-school Quebec stereotypes,

and by doing so, he redefined the culture of a younger generation of street-smart Quebecers. It was humor only people in Quebec could appreciate and love. The campaign launched in 1985 with a very smart theme line, ICI, say Pepsi, meaning, here, it's Pepsi. The campaign made fun of trying to drink Pepsi while driving over Montreal's infamous potholes. It made fun of ordering Pepsi like a fine wine at restaurants. And it made fun of frigid Quebec temperatures,

with Meunier forced to enjoy a frozen Pepsi like a popsicle. The commercials were so popular that Pepsi almost overtook Coke in the first six months. One year later, Pepsi surpassed Coke. Coca-Cola tried to fight back by outspending Pepsi 2 to 1, but Pepsi continued its climb. Quebecers appreciated that a multinational corporation had finally respected them enough to create a campaign made in Quebec by Quebecers with their sensibility and their accents. As a marketing expert said at the time, Quebec was a French province moored in a sea of English. They could identify with the number two brand fighting to exist in a sea of Coke. That Pepsi dominance in Quebec has continued to this

day, and so has the Quebec-only marketing. In one commercial typical of the long-running campaign, a runaway Pepsi vending machine slides off a delivery truck and rolls by a series of Quebecois landmarks. When it reaches the Ontario border, it hesitates, stops, and turns back. Today, Coke dominates global soft drink sales with a massive market share of 49% versus Pepsi's 21%. Except in Quebec. Pepsi still outsells Coke in La Belle-Provence almost 3 to 1. And Quebecers are proud it's one of the only places in the world

where Pepsi beats Coke. Goliath raconte David. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it.

Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. getting into a cab, two muggers jumped him. Dempsey knocked them both out in a matter of seconds, one with a bone-rattling uppercut and the other with his famous left hook. Dempsey was 74 years old at the time. That's the key when smaller companies find themselves in the ring with giants. They have to keep slugging. You may have noticed that in our stories today, smaller brands win because they can stay closer to their customers than bigger brands can. So, it's inspiring to see electric vehicles outsell the traditional cars for the first time ever in a country that makes it easy for people to own one.

Utz Potato Chips outsells a monolithic competitor by celebrating its unique Baltimore heritage in a way that would be inauthentic for Lay's. The people of Peru stand by Inca Cola because it has become

interwoven in their culture. Pepsi upset the world order beating Coke in Quebec by using a one-two combination of local talent and a willingness to go their own way. And the fact Iron Brew outsells the mighty Coca-Cola is a badge of honor in Scotland, despite Donald Trump. It proves two things. That local appeal can be more powerful

than mass appeal, and that something small can indeed beat something big. You just have to punch way above your weight when you're under the influence. I'm Terry O'Reilly. This episode was recorded in the Terrastream Mobile Recording Studio. Producer, Debbie O'Reilly. Sound Engineer, Keith Ullman. Theme music by Ari Posner and Ian Lefevre. Research, Abby Forsythe.

If you liked this episode, you might also enjoy Small Move, Big Game. Season 5, Episode 5. You'll find it in our archives wherever you download your favorite podcasts. See you next week. Ice cold iron brew available in 32 thirst quenching flavors. In 500 and 700 milliliter sizes. Ticket to Scotland not included. In case nobody's told you, weight loss goes beyond the old just eat less and move more narrative.

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