When the bubble bursts

Britvic Soft Drinks’ demands for challenging advertising to support its Tango brand may have squeezed the creative juices dry of its long-standing advertising agency HHCL & Partners. The UK’s leading soft drinks company is poised to take drastic action by reviewing Tango’s advertising account as the gap between the soft drink and the market leader Fanta widens.

HHCL & Partners is being given one last chance to come up with a magic formula that will replicate its original success in rocketing Tango Orange to its one-time position as best selling drink in the orange carbonates market. But waiting in the wings is a “pre-selected” shortlist of other creative agencies, drawn up with the help of the AAR, to which Britvic will turn if it is not presented with a panacea.

Tango’s plight is highlighted by figures from AC Nielsen/Checkout’s recent survey of the Top 100 grocery brands in supermarkets. Coca-Cola’s Fanta is ranked 85th, with sales estimated at &£53.9m and with a growth in value of an impressive 55 per cent on last year. Tango is ranked at 96th, with sales of &£49.3m – down seven per cent in value on last year. Looking at all retail outlets Tango’s performance is even worse, with sales down 17 per cent (AC Nielsen) in the year to April 2001. This is despite the fact that Tango’s ad spend (&£5m for October to September 2001) is more than that of Fanta, which spent &£3.47m over the same period (AC Nielsen).

Tango has been losing ground in a growing market – the carbonates sector was worth &£4.75bn at retail in 2000, up by six per cent in value from the previous year (Sucrose annual report). In particular Tango has lost out to Fanta, which took the number one position in the orange carbonates market in 1998.

Britvic category director Andrew Marsden acknowledges tough times and says: “It’s a highly competitive sector with aggressive marketing and we want to keep our eye on the ball.”

This may have been difficult for Britvic, which has not been able to count on the long-term commitment of its shareholders. They recently shelved plans to auction off the company, a plan which has been in and out of play more times than John McEnroe’s tennis balls.

But whether the focus for Tango will change is debatable. Tango shattered the cosy advertising approach to soft drinks when HHCL kicked off its series of anarchic creative ads with “You Know When You’ve been Tango’d” in 1991.

The rebellious theme became more radical and two HHCL ads featuring the face-slapping genie and the middle-aged men bullying a fat boy through megaphones had to be withdrawn, following pressure from the Independent Television Commission.

An end to rebellion

But yesterday’s teen rebel is today’s corporate executive and, given its phenomenal sales growth through the Nineties, Tango can no longer claim to be the outsider. As one creative director, who is highly familiar with the brand, says: “It’s difficult to maintain the approach of being challenging and rebellious once you have become brand leader”.

Tango’s values have also been diluted by lookalike campaigns from products trying to steal some of that tasty irreverent attitude. Even Fanta’s latest ad campaign with its tagline “Why Can’t Everything Orange Taste Like Fanta?” and its accompanying zany creative treatment smacks of a “Tango-esque” influence. As Marsden points out, there are something like 196 carbonate variants all jostling to be heard.

Apart from the challenge to the creative positioning of Tango, the agency responsible for it, HHCL, is also facing severe challenges. People have moved on, including HHCL founder Rupert Howell, who is now chief executive of HHCL’s parent company Chime Communications. The agency still has several key experienced people in place, including chief executive Robert Aziz and creative director Al Young, but Britvic may not have enough confidence in the agency to stick with it.

However, observers say that Tango’s steady decline could be less to do with creative marketing and more to do with Coca-Cola’s focus on Fanta. Coca-Cola relaunched its Fanta brand in 1997 with a &£15m advertising campaign and a more focused distribution network. This was helped by the global soft drinks giant taking control of UK distribution arrangements by buying out CCSB (Coca-Cola Schweppes Beverages) partner Cadbury Schweppes in 1996, which enabled it to deal with the distraction of Schweppes’ orange carbonate brand Sunkist.

Killing Tango

Fanta is now one of the “core four” brands at Coca-Cola, and as one observer put it, “is out to kill Tango” through every means possible, from supermarket promotions to distribution.

Despite Tango’s strong advertising, Coca-Cola’s strength in distribution gives it an unassailable advantage when it comes to impulse purchases. If a customer is prompted to impulse buy a soft drink by an ad, but can’t find the advertised brand, they’ll pick up the competitor instead.

Coca-Cola increased Fanta’s impact last spring by introducing an Icy Lemon variant, already familiar to consumers who holiday in Europe.

But buyers think that Tango, with its extensive range of variants, including Tropical, Cherry, Lemon, Diet Orange and Apple, may have gone too far. While variants are a logical way to maintain growth, they can also dilute the core brand. In a bid to capitalise on the burgeoning market for non-carbonated drinks, Britvic even went so far as to introduce a still version of Tango, but later had to withdraw it. One buyer says: “The proliferation of product on shelves suggests that Britvic doesn’t know who is the key target market. Britvic is diluting the offer and it has got to get back to basics.”

Don’t Tango mums

Britvic has not been afraid of tinkering with Tango: the introduction of ten per cent more fruit into Tango Orange earlier this year and packaging changes have come and gone. However, now might be the time for a root-and-branch overhaul.

At least one buyer says the brand has painted itself into a corner with its marketing and that it needs to broaden its consumer base. The buyer says: “They have taken a predominantly universal product into a niche area. Mums don’t want to be ’Tango’d’. Fanta took a universal approach and maybe that’s what Tango needs to do.”

One analyst agrees, saying: “I think the Tango campaign in its heyday was very innovative and very much in tune with a particular age group, but Britvic hasn’t followed that up with the same sort of hard-hitting campaign for the next cohort.”

Britvic could consider taking the product to a younger generation than the 18to 20-year-old “jack the lad” market that the HHCL ads appear to target. Innovations such as a limited edition trial of Tango Cherry flavour, 250ml squat bottles aimed at the lunchbox market, and Tango Crunchie have created some appeal for kids.

But a fully-fledged repositioning of Tango as a children’s product would require a major change in strategy and a definite move away from the edgy advertising associated with the brand. Refusing to be drawn on such a course of action, Marsden says: “The lunchbox market is very lucrative and is worth about &£4bn a year in total for all products.”

Just as Britvic is no doubt examining the future positioning of Tango, it must examine its overall strategy. The soft drinks company is ten per cent owned by PepsiCo and 90 per cent owned by Britannia which in turn has three shareholders – Six Continents (formerly Bass), which owns 50 per cent plus one share, and Allied Domecq and Whitbread, which between them control the remaining 50 per cent minus one share. Six Continents results are due to be announced on Thursday (December 7), and with them some indication of how Britvic is performing.

Various attempts to sell the business have been undermined by one or other of the owners over the past decade. October’s negotiations were said to founder through PepsiCo’s objections – depending on reports, either because the bidders were equity partners not familiar with the bottling business or because PepsiCo thought Britvic was undervalued.

The Britannia partners – all once pub owners – have now divested themselves of these interests, but Six Continents and Whitbread still have a sizeable number of distribution outlets in their hotel and restaurant interests.

Back to basics

One analyst says: “All three companies have lost the rationale for keeping Britvic as a production operation, but not the rationale for distribution.”

A spokesman for Six Continents says that Britvic is not a core business, but it is a profitable business – generating &£46m of operating profit in 2000, up from &£44m the previous year. The company was valued at between &£500m – &£600m in the last round of sales negotiations and is regarded as well-run.

As far as PepsiCo is concerned any decision to sell its stake in Britvic is fraught with problems. It could lead to a search for a new bottler or a decision to negotiate a new contract with its former subsidiary. Any potential buyer could perceive PepsiCo’s willingness to sell as a possible lack of loyalty to the operation, which would signal a withdrawal of PepsiCo’s bottling contract and therefore give it reason to negotiate the price down.

The situation is not encouraging for Britvic – to grow it needs investment and if it is regarded as an ancillary business, that’s not likely to happen. However, now the sale is off, the owners may decide to reassess the emphasis placed on the company within their own portfolios. Britvic has a very strong brand in Robinsons (number eight in the AC Nielsen/Checkout survey with sales up 14 per cent to &£186.5m), while the acquisition of Orchid Drinks (Amé, Aqua Libra and Purdey’s brands) last year gives it good leverage in the growing UK adult soft drinks market. An analyst points out that there is still plenty of room to develop Tango as an international brand.

Maybe that fat orange genie needs to be resurrected one more time to grant Britvic’s investment wishes.