Dead wood?

No brand can live forever, and companies are culling or rechristening famous products in an effort to minimise marketing clutter and make room for innovation. The brand owners may have commercial logic to back them up, but will consumers accep

It was a subject that generated more calls to Radio Suffolk’s daily mid-morning consumer affairs show than any other for several weeks. Listeners phoned in with memories of the long-lost brands of their childhoods, fondly remembering Spangles, Nutty Bars, Marathon and Opal Fruits and demanding that they be brought back. Programme presenter Luke Deal was particularly incensed by a story in Marketing Week (last week) that Cadbury Trebor Bassett was preparing to axe its Wispa brand, launched in 1981.

“We were inundated with calls from people across the county, talking about the brands they wanted back,” says one Radio Suffolk insider. “It’s nostalgia really. People buy sweets over the years, and it’s a shame when things aren’t available. The manufacturers bring them onto the market, but they go off the ‘fashionable’ list really quickly.”

The issue of the mysterious disappearing brands was a talking point at local radio stations across the country last week, inspired by Marketing Week’s revelation that Cadbury was preparing to axe its Wispa chocolate brand, changing the product’s name to Cadbury’s Dairy Milk Bubbles. Similar moves are expected to bring Caramel and Turkish Delight under the Cadbury’s Dairy Milk (CDM) umbrella. The rebranding is set to launch in August, along with an increased marketing spend for the CDM brand. Cadbury refuses to comment on the original story, but has not denied that any part of it is true.

In need of a Boost

In short, it sounds as if Cadbury is planning a wide-ranging relaunch of the Cadbury’s range, and many marketers believe this is not before time. The Birmingham-based chocolatier has some two dozen “endorsed” products – brands in their own right with the Cadbury name attached – such as Time Out, Crunchie, Double Decker, Curly Wurly, Fudge, Fuse, Dream, Boost, Star Bar, Picnic… the list goes on and on. But the company only has an estimated £35m of marketing spend to promote all these brands. About £17m goes on above-the-line advertising, £10m on the Coronation Street sponsorship and various sums on promotions and below-the-line investment.

Given that it costs at least £5m for a brand to reach critical mass in the UK, a market where £17bn a year is spent on brand advertising. Cadbury is tens of millions of pounds short of the funds it needs to make a success of each brand. By concentrating on “Cadburyness”, through its Coronation Street sponsorship and by bringing more brands into the CDM fold, Cadbury is maximising its limited budget. But you try explaining that to the Wispa fanatics of Suffolk.

In another blow for the nostalgics, HJ Heinz last week revealed that it is axing an old favourite, the Farley’s baby food brand, including the iconic Farley’s Rusks (MW last week). The range will be brought under the Heinz umbrella, with the Farley’s name kept for several months before it is phased out altogether. The Farley’s name will remain on the milks range, as Heinz does not have a strong reputation in that sector. Heinz has also revealed that it is launching a range of frozen pizza snacks – called Heinz Bite Me – after scrapping its San Marco and Pizza Pleasure brands, as well as the Main Street Bistro frozen ready meals.

While Wispa and Farley’s are victims of the growing practice of brand culling, the products themselves are still going to be available, but under different names, in the same way that Marathon and Opal Fruits are now sold as Snickers and Starburst.

You need size to pull your weight

The culling of brands is part of a continuing trend among brand owners that was ratcheted up by Unilever’s 1999 announcement that it was planning to cut its global portfolio of 1,600 brands to 400 – by the end of last year, it claimed to have slimmed down to 750. While some dismissed this as a move designed to impress City analysts, portfolio management soon became all the rage with packaged-groceries companies. They hired consultants to carry out “managing for value” analyses of their brands to find out which were the profitable ones and which were treading water or worse. It seems amazing – but is apparently true – that many corporations did not know the real profitability of many of their smaller brands, since production and distribution costs were often mixed between strong and weak brands.

Those same consultants have estimated that a fifth of brands in many packaged goods companies account for four-fifths of sales and an even higher proportion of profits. As supermarket retailers are anxious to stock only the biggest sellers and advertising has become more expensive as audiences and television channels fragment, the push is on to concentrate on the biggest brands and cut out the smaller ones. Companies are reluctant to sell off brands to rivals which might – embarrassingly – make a better job of marketing them. The seller wants a high price to make up for the lost profits, while potential buyers are wary of overpaying if they think they are going to have to put in extensive marketing support to ensure profitability.

“In general there are too many brands around at the moment,” says David Nichols, managing director of consultancy Added Value, which has advised Unilever and Cadbury on their brand culls. “More and more brands are trying to claim space in consumers’ minds. There are lots of forces driving people to ask questions such as: ‘Do I have too many brands?’ and: ‘What is the right number of brands?’ There has never been a more important time for people to have a portfolio strategy.”

It has long been argued that markets are a way to offer people a choice of flavours, colours and tastes they have never known before. Now, it seems they are offering too much choice, and brand owners claim they are simplifying the shopping process by stripping out brands.

But people do not feel this is done for their sakes, seeing it more as a move to preserve the margins of the businesses concerned, rather than to help out consumers. Radio Suffolk’s theatrical outrage at the axing of Wispa may sound like huffing and puffing, but it underlines the potential pitfalls of a consumer backlash for brand owners involved in culling.

And, according to Ian Hayes, a director of brand consultancy Corporate Edge, there is a limit to how many brands can be axed, at least in the confectionery sector. “It is a repertoire market, people are loyal to five or six brands, but confectionery is all part of the indulgence and treating process which involves personal surprise and delight. You can never say there is too much choice in confectionery,” he says.

In 1999, Heinz was on the receiving end of a consumer backlash when news emerged it was planning to ditch its Heinz Salad Cream brand, as margins were just too small to justify its continued existence. Populist newspapers campaigned to save the brand, and Heinz was forced to relaunch it, doubling its price and explaining that if people loved it so much, they would have to pay for it.

Sales have in fact grown, although it is unclear how profitable the brand is, or whether Heinz keeps it alive merely for fear of a tabloid backlash.

So Farley so good

But Heinz has taken care not to provoke a backlash with the axing of Farley’s, preferring a strategy of “brand migration”, where the Heinz brand gradually colonises Farley’s. This is being done by keeping the Farley’s name on packs and updating the familiar bear icon. “It is reassurance for Farley’s consumers that the product is of the same quality,” says a Heinz spokeswoman. “It is still going to be in the same position on the supermarket shelf.”

She adds that the decision to axe Farley’s was not a consequence of declining sales, but is a result of Heinz’ brand-leadership in wet baby foods – the company has a 58 per cent market share by value. “The idea is to provide total weaning under the Heinz brand,” says the spokeswoman.

“Heinz is in the opposite position to Cadbury,” says Andy Knowles of design consultancy JKR. While Heinz has been ruthless in bringing everything under its classic curved keystone, Cadbury’s range has become overrun with extensions and sub-brands. “Cadbury is in a situation where its products are not getting much of a ‘halo effect’ from the mother brand. It has got itself into a situation where it is vulnerable. The weakness of the branding strategy is that it has created all these sub-brands,” he says.

Knowles believes that the problem of oversupply extends to many sectors, not just packaged groceries. In airlines, British Airways has launched too many variants on its offers, and these are being targeted by specialist carriers such as easyJet. Telecoms brands are going down the same road, he believes, and points to Orange’s “Bright Business” sub-brand for business customers as a brand extension too far.

If all this clearing out ends up with more new brands being introduced and no reduction in the level of product clutter, people will be right to question brand owners’ motives. It may look like change for the sake of it – perhaps designed to impress upon investors that management knows what it is doing. The managers will argue that they are clearing the way for “true” innovation rather than the weak inventions of previous years. Listeners to Radio Suffolk may whinge about it, but in all likelihood many more of their favourite childhood brands will be culled in the years to come.

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