Will Britvic lose its bottle?

Now is a crucial time for Britvic’s marketing and the force behind it – Andrew Marsden – for the edgy campaigns have built brands that could push up the soft drink company’s flotation value. But, deal done, will Britvic lose its taste for risk just to keep shareholders happy? asks Mark Choueke

Britvic’s top marketer Andrew Marsden has a tough job on his hands. The owner of some of the UK’s favourite soft drink brands, including Tango, Robinsons and J2O, has announced its intention to float on the London Stock Exchange before Christmas – and Marsden will be challenged with persuading investors that the company’s commitment to innovative marketing is the key to its future success.

Once Britvic has floated and found its level, questions are bound to arise about how the marketing department will respond to the new pressure of being accountable to shareholders. Assessments of the company’s worth will invite analysis of what value the City places on strong brands and expert marketing.

Category director Marsden has been at the heart of creating Britvic’s reputation for brassy, risky marketing. They include HHCL’s long-running, and at times controversial, You’ve Been Tangoed television ads, aimed at fizzy-pop drinking youths who loved the fact their parents didn’t understand the campaign, and Bartle Bogle Hegarty’s current animated creative for Robinsons juice drinks, aimed at mums and acknowledged by many in adland as “visually stunning”.

Marsden is respected in the marketing industry for his willingness to push conventional boundaries. He gained experience at Unilever and HP Foods before starting at Britvic in 1997.

Along with director of brands marketing Richard Collins and others on the team including executives with experience gained at Unilever, PepsiCo and Mars, Marsden has been careful to make Britvic’s money work hard, making it difficult for retailers to ignore its products. The company has also fared better than many in the industry at engaging the “new world” of soft drinks – where bottled water, juice, sport and energy drinks are replacing carbonates as the biggest growth sectors in the market.

The energy for change

Despite being the owner or licence holder for many heavyweight brands, the company is not resting on its laurels. In January, Britvic will introduce Gatorade, the biggest selling sports drink in the world, to vending machines all over the UK (MW last week). Meanwhile, Drench, a new bottled water aimed at the youth market, will appear on shelves in the new year, backed by &£2.3m-worth of marketing support. Britvic’s water brands controller, Sharon David, describes the launch as “strategically our most important of 2006”.

In being so innovative, Britvic has fallen foul of less successful launches. It was forced to change the name of Freekin’ Soda to Freekee before its 2003 release, after being advised that freekin’ is the standard dubbed euphemism for the word “fucking” in pre-watershed TV movies (MW January 21, 2003). Britvic changed the brand’s name to Tango Strange Soda following a legal challenge from the Spanish confectionery manufacturer of Freekee Drops. A year later, the carbonated milk, fruit juice and water-mix drink was axed altogether.

Marsden happily accepts that creativity and innovative product development involves risk. reputation as a company with high profile innovation at its core.

Marketing Society chief executive Hugh Burkitt says/ “Britvic’s marketing is hugely valuable and Andrew is at the centre of it. He is set apart from most marketing directors in that many are merely young men in a hurry, trying to forge a career in which marketing director is just a stage. He is a dedicated marketing professional.”

Such expertise and intent has been the driving force behind J2O and Robinsons Fruit Shoot – two of the most successful soft drinks brands in recent times – and may prompt speculation that Marsden will be handed a seat on the board. Whether that occurs or not, it is clear that the brands and marketing guile within Britvic could be worth a fortune to shareholders.

Intangible benefits

The Institute of Practitioners in Advertising director-general Hamish Pringle cites recent examples of how brands can raise the value of a company. “The recent acquisition of Gillette by Procter & Gamble was worth &£31bn. ‘Intangibles’, which included the value of brands such as Gillette, Oral B and Duracell, were worth &£27bn. Normally, about a third of UK company value resides in intangible assets, but in luxury goods it can be much higher – between 70 and 90 per cent.”

In Britvic’s case, the City is likely to examine the value of the brands and the tenure for the licensing relationship with Pepsi, which was extended until 2018 last year, with a five-year addition to 2023 if Britvic lists on the Stock Exchange.

Britvic has a turnover of &£700m, sells more than 1.4 billion litres of ready-to-drink soft drinks annually, supplies more than 250,000 retailers in the UK, and in the past 12 months made a pre-tax profit of &£78.7m. It is also under licence to make and market Pepsi and 7UP products for PepsiCo in the UK. PepsiCo will retain its five per cent shareholding, while Britvic’s other major shareholders, Intercontinental (47.5 per cent) and Whitbread and Pernod Ricard (both 23.75 per cent) will dispose of their stakes.

All this suggests the City will welcome Britvic to the stock market with open arms. Predicted valuations for the company range from &£800m to &£1bn; as an indicator, Cadbury Schweppes this week agreed to sell its European soft drinks business for &£1.3bn – the upper end of analysts’ predictions – to private equity firms Blackstone and Lion Capital.

But Interbrand chief executive Jez Frampton says the power of Britvic’s marketing is unlikely to get the recognition it merits. “The City will assess managing expertise to a certain extent. I doubt that breaks down to a level where marketing is examined, because it is hard to measure. A world-class marketing department must have some value, but unfortunately the City doesn’t see it that way.”

Advertising industry figures maintain marketing has been key to Britvic’s success and must remain so. Sophie Hooper, managing director of Team Saatchi, worked on Apple, Orange and Blackcurrant Tango campaigns at HHCL. She says: “Britvic was really brave with Tango; the creative caused violent reactions in focus group participants and Britvic said: ‘Let’s go with it’.

“It told us to experiment and go too far, which is the ultimate brief. I’d hope the flotation doesn’t change Britvic’s attitude to risk and make it become oversafe towards campaigns. The guts to make risky advertising is what made those brands successful in the first place.”

Fizzling out

Another source says the pressure to demonstrate financial returns could affect the way Britvic’s marketing works, but argues the success of its brands has not solely been down to good creative work. “The creatives produced have been impressive, and Marsden in particular has great sensitivity and knowledge, and knows what works.

“But Britvic’s real strength is getting great visibility in a busy market on a budget lower than Coke’s. It has to out-think Coke and push for bolder ads, but also work hard at trade and agency relationships. The City will leave Britvic with a free hand as long as it makes money.”

Britvic’s success has so far hinged to a large extent on great marketing. If allowed, Marsden and his team will continue to play a vital role in its future prosperity.

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