When drinks distributor and cider maker Matthew Clark appointed DMB&B as its agency last week, it unveiled a 31m marketing budget for its ciders, the biggest in the company’s history.
Blackthorn, Matthew Clark’s lead brand, is to appear on TV again this summer with a new 7m ad campaign, part of a drive to restore growth to a cider market which for three years has been crushed by the success of alcopops and pre-mixed spirits.
The campaign will be the first under Matthew Clark’s new owner, US drinks distributor Canandaigua Brands, and marks a big increase on the 1.7m that was spent in 1996 advertising all Matthew Clark’s ciders – Blackthorn, K, Diamond White and Gaymer’s Olde English.
Matthew Clark’s cider brands and its alleged reluctance to advertise them in the past, have been its Achilles’ heel. Not so long ago, when the company was listed on the stock market, it was the apple of the City’s eye. Through a process of acquisition and cost-cutting it transformed itself in six years from a drinks distributor with profits of about 2m into the owner of a plethora of brands from cider to water with profits of 42.3m. Then everything went wrong.
Alcopops took off and the cider market crashed. Matthew Clark was heavily criticised for being caught on the hop with a series of brands that hadn’t been supported for several years. In the year to April 1998, the company’s cider profits, about one-third of its business, halved from 18.9m to 8.5m. The City lost faith and last November Matthew Clark was sold to Canandaigua for 215m, about 500m less than its peak stock market valuation in 1996 and 60m less than it paid for Taunton in 1995.
Ironically, the same City analysts whose criticism fatally damaged Matthew Clark’s stock market value are optimistic about the company’s potential now it is in private hands.
Matthew Clark’s new owner is the largest exclusive supplier of wines, imported beers and distilled spirits in the US, amounting to more than 120 brands, such as Paul Masson and Corona. With profits of $84.9m (51.4m) last year on sales of $1.6bn (1bn), Canandaigua is expected to become an aggressive player in the UK and is widely tipped to acquire businesses in Europe.
One analyst comments: “Canan-daigua has given its support to Matthew Clark’s existing management team to go out there and shake things up. It is something Matthew Clark always wanted to do but hasn’t been able to because of its balance sheet. It is now shielded from the City, which was too demanding [in the past]. Now it only has to satisfy Canandaigua.”
Which is probably how Matthew Clark can afford its new marketing budget, even though it has only 18 per cent of the cider market, compared with rival HP Bulmer’s 36 per cent. Private ownership gives it the flexibility to sacrifice short-term profit for the longer term brand-building which is vital to the future of the UK cider market.
The sector has dropped 7 million gallons since its peak in 1995 to 106 million in 1997, according to statistics from the Brewers & Licensed Retailers Association. The decline in the past three years comes against strong growth throughout the Nineties – in 1989 just 67.5 million gallons were sold. Alcopops damaged sales but now that boom has subsided and early figures suggest the cider market made a slight recovery last year, despite the beer sector having one of its worst years on record.
To some extent, however, the damage has been done. The impact of alcopops revealed cider’s vulnerability to the vagaries of fashion, particularly the more upmarket, © trendy brands such as Matthew Clark’s Diamond White and K. Both Bulmer and Matthew Clark have identified draught mid-market lines such as Strongbow and Blackthorn as their main brands, staking out ground away from the areas of the market occupied by packaged alcopops and pre-mixed spirits.
The challenge for cider makers, say observers, is to raise their brands’ profile and ensure cider becomes part of the range of drinks that consumers buy. To do this they must say something about cider itself.
It is tempting to suggest this is why Matthew Clark left its previous agency Grey Advertising last year. The agency’s most recent campaign for Blackthorn featured aliens with pointy heads who believed Blackthorn was the “finest sharpener in the universe”. In some respects, this idea is similar to recent work for Hooper’s Hooch which carries the tagline “Hooch, that little bit sharper”.
By contrast, Bulmer’s Strongbow has been claiming altogether different ground with its “loafing” campaign featuring Johnny Vaughan. The ads, by TBWA GGT Simons Palmer, are part of a 22m marketing budget for the brand this year.
Matthew Clark’s marketing director Robert MacNevin, who joined from Guinness 18 months ago, maintains Grey’s original aliens work has performed well, but he says: “What Grey couldn’t come up with was new executions to pick up the theme and take it on. There was no follow-up to the original launch ads.”
Intriguingly, MacNevin blames the poor support given to Matthew Clark’s ciders in the past on the previous managers of Gaymers and Taunton. According to MacNevin, they had already cut their marketing budgets before Matthew Clark bought them.
He says: “What was evident when the business [Taunton] was bought was that the marketing strategies weren’t coherent. [You really need] to get to know the brands before you go out marketing. I suppose the test started in 1996-97. Through 1997-98 we have consistently supported our brands. We have overhauled the whole cider portfolio.”
Advertising observers believe DMB&B’s new campaign is likely to promote the character of cider. Some say it has got to move away from humour and attempt to treat Blackthorn seriously. Both MacNevin and DMB&B are remaining tight-lipped about how this will be done.
Matthew Clark’s considerable budget and that of Bulmer, can only be good for the cider market. As for Matthew Clark, its management team must prove to Canandaigua that it can use the new investment to recover lost ground and deliver strong brands.