Virgin in fmcg U-turn

Virgin is curbing its expansion into packaged goods to redirect investment towards its “core” activities, including its troubled rail business.

The move comes close to an admission that the group has bitten off more than it can chew. Virgin corporate affairs director Will Whitehorn says: “We don’t plan to extend the brand much further.”

Observers see the Virgin strategy shift as an admission that some brand extensions, such as its forays into cola and vodka, have not been as successful as it hoped, and that others – such as its massive commitment to railways, are eating up both capital and senior management time.

Last week, Virgin announced a 500m order for tilting trains on its West Coast mainline service. It is also a member of the London & Continental Railways consortium which has until next week to come up with an alternative proposal to finance the Channel Tunnel rail link. Virgin is understood to be working on a plan to make LCR’s Eurostar service viable whoever takes over the rail link.

“We are not going to see a Virgin motorbike or Virgin motor car,” says Whitehorn. “And I don’t think you will see many more consumer goods products in the next few years. The cosmetics and clothing companies are going to be our last big moves in fmcg.”

Its clothes brand is scheduled to be launched in the autumn, having been previously delayed. But the group has flouted conventional marketing wisdom over the past 15 years by extending its brand over a host of businesses from airlines to cola, to Peps and trains.

Virgin has identified a number of “core businesses” where it wants to see growth: Virgin Atlantic; Virgin Express (Virgin’s low-cost European airline); its cinema business through expansion in the US; its Virgin Megastores, especially in South America; and its rail business.

“We are going to consolidate around these core areas,” says Whitehorn, “because we have a lot to do with them.” But in an apparent contradictory move, Whitehorn also says Virgin will “look at telecoms” in relation to entertainment, retailing and media opportunities.

Defending its rail business, Whitehorn reveals it was a Government imposed condition, and not a choice, to plaster the Virgin name across it from day one.

“We realised when we did it that it was going to cause problems,” he says. But he claims that the railway will be “by far the biggest business in the Virgin empire apart from, possibly, Virgin Atlantic Airways”.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here