The declining yellow fats market, already over-saturated with brands and products, is to be shaken up by the long-awaited launch of cholesterol-cutting spread Benecol, scheduled to go on sale from March 29.
It is being launched at a time when consumers confused by various health claims afforded to spreads and margarines are turning back to butter and butter-tasting products.
Among the companies affected by the long-term decline in yellow fats and the trend towards butter, is St Ivel, whose managing director of the chilled foods unit Brian Cardy resigned suddenly at the end of last month (MW March 4).
His departure follows flat results for St Ivel UK, part of parent company Unigate’s Fresh Foods division. Unigate’s interim results for the half year to September 30 1998 show that the division, which also includes St Ivel Foods Europe and Malton Foods, suffered a fall in operating profit from 31.7m to 27.3m.
Unigate claims profit and sales for St Ivel UK were maintained at the previous year’s level, but did not break down the figures. The results revealed that volumes for the spreads business, which includes Gold, Utterly Butterly, Vitalite and Golden Churn, fell in line with the market, which contracted by six per cent. These figures may not explain Cardy’s departure, but they underscore the decline across the yellow fats industry.
MD Foods’ senior brand manger for Lurpak, Simon Eyles, says: “St Ivel isn’t really performing at the moment.”
Product innovation is an area where Eyles believes St Ivel has been weak and has suffered despite an above-the-line spend of more than 7m for the year ending September 30 1998 (ACNielsen-MEAL).
He says: “It has recently launched Vitalite Buttery which I am confused by, as it has health and taste connotations.”
But St Ivel yellow fats marketing controller Tony Lucas says: “Consumers are increasingly influenced by two key factors – taste and general health. This trend has been confirmed through the continuing success of St Ivel’s Utterly Butterly and the successful launch of Vitalite Buttery in October.”
But St Ivel is not the only company suffering in a market where growth is only being experienced in new and small sectors of spreadable butter and olive oil-based margarines.
According to figures from Information Resources for the year ending 24 January, top manufacturer Van den Bergh Foods saw sales of yellow fats fall 4.4 per cent to 222.5m. St Ivel’s sales fell 6.5 per cent to 135.8m, New Zealand Foods (formerly Anchor Foods) suffered a 9.4 per cent fall to 99.5m and Dairy Crest slipped 3.7 per cent to 56.8m for the same period.
The figures reflect the long-term decline in yellow fats. Overall sales in the same period dropped 4.2 per cent to 789m.
Miriam Jordan Keane, client services director at Young & Rubicam, which handles Dairy Crest’s Clover, says: “The downward trend is because of different times and ways in which meals are taken nowadays and the availability of ready-made meals.”
The only category to see growth was butter, which crept up 0.1 per cent to 313.5m. Dairy spreads slipped four per cent to 169.6m.
Eyles says: “Consumers buy for health or taste reasons. There is a switch at the moment away from health because people have become confused as to what is good and bad so they are moving to tasty products and a more balanced diet.”
Caroline Adams account director at BMP DDB for Lurpak says: “Spreadable butter with the convenience of spreading the product from a tub has helped the category.”
Sales of Lurpak Spreadable, launched in 1996, rocketed 64.4 per cent in the past year to 39.8m, although this has affected the performance of Lurpak, which fell 7.4 per cent to 48.6m. Following suit, New Zealand Foods launched its own spreadable butter called Anchor Sosoft last year.
Dairy spreads such as St Ivel’s Utterly Butterly, Dairy Crest’s Clover and VdB Foods’ I Can’t Believe It’s Not Butter have also used the taste factor to attract consumers. But only the latter enjoying year-on-year growth according to Information Resources.
Young & Rubicam’s Jordan Keane says: “People are moving away from deprivation into posi tive healthy eating. It’s about eating good things in moderation.”
She points to the success of Van den Bergh’s Olivio, which has grown 64.6 per cent year-on-year to 24.8m for the year ending January (Information Resources).
Jordan Keane believes Benecol may prove to be a similar success “depending on how well the health benefits are communicated to consumers”. But Johnson & Johnson, which is to launch Benecol through its new functional foods division, McNeil Consumer Products, does not intend to market the product as just another spread.
Chris Samuel, marketing director for Benecol, says: “It’s very much positioned as a product for people who are aware or feel they have a cholesterol problem. It is not about going into a supermarket and choosing between Benecol and another margarine.”
Other products in the Benecol range will include a low-fat version of the spread, and plain cheese and cheese with garlic herb spreads.
Unilever has also developed a cholesterol-cutting spread which in the UK is to be marketed by Van den Bergh as Flora pro-activ.
Once through the regulatory hoops, Flora pro-activ, like Benecol, will have to formulate its advertising claims carefully, to avoid the problems encountered by MD Foods’ Pact spread and Van den Bergh’s Olivio both of which had complaints about ads upheld by the Advertising Standards Authority.
Without innovation the yellow fats market is sure to go into even greater long-term decline, taking some of the country’s key marketing companies with it. Manufacturers will have to offer sound scientific research to back any health claims and secure the confidence of increasingly cynical consumers if they are to reverse this decline. The coming launch of the cholesterol-busters risks confusing the picture further.