SalvorHardin wrote:Back to A.G. Barr. Having had a closer look it seems as though A.G. Barr is doing something similar to what Coca-Cola did when they introduced "New Coke" in 1985, though this is in response to the sugar tax.
Coca-Cola introduced New Coke in response to how Pepsi was perceived in taste tests. The problem is that most of their consumer base didn't want their Coca-Cola taken away from them, and they voted with their wallets. Coca-Cola's researchers had never asked people how they would react if the new formula would replace the old formula and you could no longer buy your Coca-Cola. The result was a massive surge in people stockpiling Coca-Cola and terrible publicity for New Coke. If you've spent years building up your brand, then you say that you're going to get rid of it, you'd better be very careful.
Berkshire Hathaway's Charlie Munger commented on the New Coke debacle in his 1995 speech at Harvard University, "The Psychology of Human Misjudgment”. Here's the relevant section (whole speech linked below):
"The extreme business cake here was New Coke. Now Coca-Cola has the most valuable trademark in the world. We're the major shareholder. I think we understand that trademark. Coke has armies of brilliant engineers, lawyers, psychologists, advertising executives, and so forth. And they had a trademark on a flavor, and they'd spent better part of 100 years getting people to believe that trademark had all these intangible values, too. And people associate it with a flavor, so they were gonna tell people not that it was improved 'cause you can't improve a flavor. If a flavor's a matter of taste, you may improve a detergent or something, but telling you're gonna make a major change in a flavor, I mean … So they got this huge Deprival Super Reaction Syndrome."
https://www.youtube.com/watch?v=pqzcCfUglws
If you look on eBay there's a fair old market in old recipe Irn-Bru, with cans actually selling for around £3 each. A quick fix would be to reintroduce old formula Irn-bru (at a higher price to allow for the sugar tax) and see what happens. That's what Coca-Cola did when they reintroduced "Classic Coke".
Note that in the UK Coca-Cola responded to the sugar tax by reducing the size of their bottles and keeping the old recipe, rather than changing the recipe. The 330ml cans have generally gone up in price, though I've noticed more smaller cans in the supermarkets.
Hi Salvor,
So given that I've bought £1050 of stock @641p I'm thinking that I should really just stick it out, and hold for a few years (as Dod suggested) and see what happens. (That 1050 is about 1.66% of our foli right now). Does this seem like the best plan of action for now? I really don't want to buyers-regret-panic-sell because let's face it - anything could happen.
Matt