Food & Beverage
Tunaround artist
How John Signorino revitalized Chicken of the Sea by changing the way consumers think about seafood
By Leslie Stevens-Huffman
Smart Business San Diego | November 2006
When John Signorino took over as president and CEO of Chicken of the Sea in January 2005, he faced a classic dilemma: How do you move your products away from being a commodity?
Most consumers don’t think much about the brand of canned tuna that they toss into their shopping carts. When product quality and packaging all seem the same, most shoppers base their buying decisions on price.
There was also a lackluster perception of tuna, and recent press coverage alluding to potential mercury contamination of the fish further complicated the matter.
“Consumers didn’t have a strong sense of differentiation among the brands,” says Signorino. “We were losing money, and the market had changed.”
Chicken of the Sea has been around since the early 1920s and the company generates an estimated $400 million in annual revenue and employs 2,500 workers.
As the industry matured and demand for the product leveled off, the company assumed a commodity-driven marketing posture, and the brand was no longer touted through continuous television advertising. Sales were flat, and margins were low.
Signorino was hired to put the company back on a growth track. Here’s how he did it.
A quick return to profit
Signorino started revamping the company by finding money in the existing operations.
“I needed to make quick decisions,” says Signorino. “My focus was to make money. Most of the time, there is money to be had in the operating budget. You just have to find it.”
Signorino found the majority of the funds that he needed to return the company to a positive bottom line in a few areas. For instance, he reduced the sales and marketing budget by $4 million after scrutinizing the advertising frequency.
“We kept on advertising, but by switching from 30-second spots to 15-second spots, we increased the frequency while reducing the cost, and the reach is about the same,” says Signorino.
He also identified excess capacity in the production plant in American Samoa. This change was vital to the swing in the bottom line because by reducing the cost of processing, he also increased the product margins.
“We increased our output and throughput by altering our work weeks in the plant when possible,” he says. “We reduced some of our work weeks from five days down to four days, which also helped reduce our energy costs.”
Productivity measures were put in place that increased the amount of product being produced using the same workforce.
The end result was more cash and a more efficient operation.
Creating a new value proposition
Signorino says the only way to a healthy bottom line in the long term is to restore healthy growth to the top line. To increase revenue, he drew on his knowledge and experience from his tenure at consumer products giant Nestle.
He began by examining the lack of customer enthusiasm for tuna, looked at consumer data at the macro level and asked how people’s lives could be improved from the identified trends, what products could be used to address those need, and what vision was needed to carry it all out.
“I started by looking at consumer research data that was available through A.C. Nielsen,” says Signorino. “I wanted to understand what the consumer was thinking. What I found is that health and fitness were important, as were time constraints.”
He also found that consumer tastes had changed. Buyers were looking for more sophisticated products to accompany a more refined palate. The notion of increasing product sophistication fit well with the need for improved margins, and his next move was to speed up the creation and release of new products by realigning the priorities of research and development.
He also brought in a new manager to oversee its project.
“The decision to create a separate position for new product development was made after reviewing the industry, its growth patterns, segment profit potential and consumer trends,” says Signorino. “When looking strategically at this landscape, I quickly saw the need for new and innovative products to drive profitable growth.
“I gave them new goals focused on product development. We want to have new products out on the shelf every time the store resets in order to keep the category fresh and exciting.”
One of the first new products to hit grocery store shelves was a gourmet smoked Pacific salmon fillet. Signorino says that this product appeals to consumers’ desire for more sophisticated, healthful seafood without the mercury contamination concerns.
Since the introduction of the line in 2005, the product has grown to 8 percent of the firm’s total sales, and Chicken of the Sea is now one of the nation’s largest purchasers of salmon.
“The vision was to create restaurant quality and convenience for the consumer,” says Signorino.
The new salmon offering has been joined by a line of flavored ahi tuna steaks, and the next new release will be a line of tuna and salmon cups.
The data showed that an increasing number of employees eat lunch at their desks and want healthy foods that can be eaten under tight time constraints. Chicken of the Sea responded with the tuna and salmon cups to fill that need.
Uniting sales and marketing
Signorino says he found that the sales force had a great deal of knowledge about what consumers were looking for as a result of their experience on the front lines. The problem was that the information and ideas weren’t going anywhere.
He needed to find a way to break down the internal silos.
“Sales and marketing didn’t overlap a lot,” says Signorino. “I wanted sales to bring ideas to marketing. They have great ideas, and I wanted those to flow both ways. In a company the size of Chicken of the Sea, driving profitable growth through the base business and new products requires seamless sales and marketing execution.
“When these functions are split, it is more difficult to achieve such execution. Since the margins in this business are tight, you need your marketing to stay close to your customer to make sure everyone is effectively building that relationship and gaining insights at the consumer and customer level.”
He hired a new vice president for sales and marketing and combined the departments. In addition, he realigned the priorities of the marketing function to allow people to spend more time on promoting new product releases.
In the food business, packaging and product presentation on the shelf are major contributors to successful sales and market share. Signorino also saw it as an area where the company could gain an advantage over the competition.
“I think that the shelves in the seafood isles look cluttered,” says Signorino. “We are redesigning our packaging and graphics so that the products work synergistically with each other. In some cases, our products are separated into different areas of the store, in other cases, they are clustered together. We are using common color trays so that we stick out more, whether the products are displayed in a singular fashion or collectively.”
Successfully managing shelf space is a major responsibility of the sales force, and Signorino went back to the fundamentals to ensure that the team would be competent at transferring the concept from the training room to the store shelves.
“We went back to the basics and retrained our sales team on blocking and tackling,” says Signorino. “We created a new manual that covers the basics on where we want to be on the store shelf in order to achieve market share.”
For many years, Chicken of the Sea relied on television ads featuring the mermaid logo to help drive brand loyalty. After a hiatus of almost 14 years, Signorino developed a new television ad that uses humor to create brand familiarity with a younger base of consumers while driving home a message that equates tuna with healthfulness.
“There is equity in our brand, but we need to bring it back,” he says. “There’s a whole new generation that didn’t grow up with the mermaid jingle and doesn’t know the brand.”
The people equation
Advertising, systems and processes weren’t the only things that changed. The people in the company had to start thinking in new ways.
“There were lots of good people on board, but the people were very comfortable in the situation, and the market had changed,” says Signorino.
To revitalize the employees and reposition them to relate to a more modern set of consumer sentiments, Signorino brought in new ideas and an outside vision, and changed the variable compensation plan for managers.
“I added more upside driven by meeting performance hurdles, with the idea being that the plan is designed to drive performance,” he says.
Being able to assess the team is a critical skill for any CEO.
“Once a team demonstrates they can work together, a CEO or president needs to assess the players,” says Signorino. “In doing that, I look for intelligence, integrity and imagination to see the business not only as it is today but as it could be, and they need to have the initiative and drive to make it happen.
“I look for team members that take their work, but not themselves, seriously. To be a true team member, people must not have overly large egos, and they should have a sense of humor, so they are fun to be around. We work long hours, and people like that make the job interesting and rewarding.”
Signorino’s goal is to take the firm from its annual revenue run rate of approximately $400 million to double digit growth within three years on the top and bottom lines, with the bottom line outpacing the top line. In addition to a more financially sound organization; Signorino wants to leave behind a new culture as his legacy.
“What I’d like to build is a culture, because cultures perpetuate beyond any one person,” says Signorino. “It’s how we act, go to market and how we behave. You outline it like a blueprint, and then you deliver on your commitments, seek change, focus on people and on quality.”
How to reach: Chicken of the Sea, www.chickenofthesea.com
