Executives at smaller companies do not not necessarily need to start thinking about their redundancy packages when a bigger player muscles in on their market, as new figures from olive oil company Filippo Berio demonstrate.
Berio, a family-owned olive oil company, has managed to stave off Unilever Bestfoods, at least for now (MW last week). The smaller player has just achieved its highest UK market share by volume – 27.3 per cent for the four weeks to March 23 (AC Nielsen). This comes despite the entry into the market last year of Unilever’s Bertolli brand, backed by a £6m marketing campaign, £2.8m of which was spent on advertising (AC Nielsen).
The figures show Bertolli trailing in third, with 2.5 per cent, behind Carapelli, which is owned by French group Eridania Beghin-Say. Unilever has since admitted that the Bertolli range is being slimmed down from five oils to three.
Berio managing director Walter Zanre’s introduction to the olive oil sector 18 months ago was not gentle. He says: “Almost immediately I started here, there were rumours about Unilever coming in. At the same time, Carapelli decided to spend £1m on advertising – something it had never done before.”
Zanre’s marketing budget – about £2m last year, with £436,000 on advertising (AC Nielsen) – could have allowed him to match the four-week Bertolli TV campaign, but this would have left no funds for the remaining 11 months.
Instead, Berio decided to increase its marketing spend slightly but to play to its established strengths. The extra money was spent on press campaigns in specialist food magazines (talking to consumers who were already converted) and trade magazines (to the all important buyers).
The strategy seems to have worked for now, but Berio is aware that Unilever has deep pockets.
Zanre says: “Unilever’s classic tactic is to throw money at a brand for three years in the hope of making an eventual return.”
In similar circumstances to Zanre’s, Kettle Foods marketing director Keith Stevens joined the company two months ago, as news broke that crisp giant Walkers was launching an adult premium crisp, Sensations, to rival the Kettle Chips brand (MW March 7). Walkers will launch the brand with a high-profile campaign, featuring Gary Lineker and Victoria Beckham.
Stevens remains unflustered, saying that Kettle will stick to its formula of direct marketing, Internet marketing and public relations activity at selected shows and events such as Henley Regatta. Mass communication, he says, would be “inappropriate” for the brand.
Muffin and cake company The Fabulous Bakin’ Boys faces a slightly different problem, in that the muffin and cake market is dominated by supermarket own-label products. The company is not yet the market leader, but it has succeeded in persuading buyers to devote less shelf space to their own products in favour of Fabulous Bakin’ Boys cakes, which are now stocked by the four major supermarkets.
General manager Tom Russell says that the company has succeeded by trying to be different. The company has entered into licensing deals with films such as 20th Century Fox’s Ice Age and PathÃ©’s Chicken Run.
FutureBrand head of brand strategy for Europe David Hemsley says that smaller companies should consider devoting their marketing budgets to design and point-of-purchase activity rather than advertising, which can become “lost in the noise” if it is not sustained or wide enough.
Hemsley says: “If a brand can make itself a household icon, it not only has the edge in store but it can also become a way of showing customers’ aspirations.”
Dyson’s dramatic entrance into the UK vacuum cleaner market illustrates this. Bagless vacuum cleaners are now a must-have item for Middle England. Competitors such as Electrolux and Zanussi have been left trailing, with Dyson taking 46 per cent of the floorcare market in February (GFK Lektrak).
The company has consolidated its position largely through the distinctiveness of its cleaners, plus legal actions to prevent rivals from copying its designs.
In the soap powder and cleaning products market, Unilever and Procter & Gamble charge their huge research departments with generating new and innovative ideas, and the two companies dominate most sectors. But relatively smaller players such as Henkel – which saw off Unilever’s Persil Revive with its Somat dry-cleaning sheets – can still survive.
What smaller companies do have in their favour is that many consumers are becoming more ethical in their choices and are resisting global “one size fits all” brands. However, ethical brands can change hands when they become successful enough to catch the multinationals’ eyes. Ben & Jerry’s, which campaigned against (then Pillsbury-owned) HÃ¤agen-Dazs, is now owned by Unilever.
David Shute, managing partner of consultancy the Brand Engine, claims the issues raised by these cases are wider than “big versus small” and says that the product – regardless of ownership – is what matters, citing Unilever’s Marmite as a product which, despite being owned by a multinational, still generates considerable loyalty and passion among consumers.
The entrance of a large company, with its attendant marketing muscle, onto the scene does not necessarily sound the death knell of the minnows. What is more important is that the product is relevant and meeting customer needs – something all brands need to aim for.