Any doubt that Stella’s new product will fail miserably was laid to rest for me by Stuart Macfarlane – the UK chairman and president of Anheuser-Busch InBev, the global brewing behemoth that owns Stella. He was in bullish mood last week while announcing his company’s latest diversification. Alas, it pains me to point out that pretty much everything he said last week was wrong.
Let’s start with his contention that Cidre will “prove once and for all that Stella is right up there with other leading FMCG brands, such as Coca-Cola, in its ability to reach new customers in new categories”. While it’s true that Coke has conquered a host of diverse categories like water, sports drinks and orange juice, it has done so using completely different brand architecture from the one Macfarlane is applying to his Stella launch.
For all Coke’s brand equity, consumers would not have bought Coke water, Coke sports drinks or Coca-Cola orange juice. That’s why Coca-Cola used a house of brands architecture instead (like Procter & Gamble, Nestlé, Unilever and the other FMCG companies that Macfarlane aspires to follow) to sell Dasani – a failure in the UK, but not elsewhere – Powerade and Minute Maid. AB InBev should have followed suit. Leveraging Stella into the cider category is not a demonstration of the brand’s strength, it’s a sign of the parent company’s branding weaknesses.
Which brings us neatly to his next error. According to Macfarlane, Cidre will be successful because Stella brings “premium, craft, heritage and quality to the cider category mix – the same skills that have brought success in lager”. Like so many British executives, Macfarlane needs a lesson in brand heritage. You cannot adjust your origins to fit your current strategic requirements. Brand heritage is where a brand was born and what it originally did. In Stella’s case it is a magical story of Dennis Horeney’s brewery in Leuven, a master brewer called Sebastianus Artois and a beer that was named after the Christmas star. It’s a tale of beer three centuries long. And because it is a tale of beer, it is not a tale of cider.
Would you drink a lager from Strongbow? How about a whisky from Guinness? Or a Bailey’s gin? These are brands, like Stella Artois, that have a clear and strong heritage but one also inextricably linked to a totally distinct and therefore inappropriate origin. Not only does Stella not have any positive heritage in cider, its ancient beer roots actually make it enormously unlikely to succeed in any other category.
Macfarlane’s ignorance of brand heritage can also explain his casual dismissal of original cider brands like Westons and Aspall, which he regards as “delicious but not accessible and not with scale”. He also claims: “That’s what Stella brings: top quality and scale to the party.”
Look back on most of the great product failures of the past and you will find managers with both a misplaced over-confidence in their offer and an ill-conceived disregard for their rivals. Now think about some of the most successful marketers you have met and rarely will you encounter a more paranoid or sullen bunch. Enthusiasm and confidence are the enemies of brand success.
To begin with, of course, Macfarlane’s confidence will appear well placed. A stranglehold on distribution and an eight-figure marketing budget will ensure that Cidre will sell. But that initial success will end when the summer, the initial consumer trial and the launch ads fade.
But have no fear. I’ll bet that the executives at AB InBev will be ready. Not to fix the Cidre brand or revitalise the original Stella Artois. Instead, they will come out with another innovation. And another. And another. I’ve seen this pattern before – it’s the vicious cycle of product launching that fills a vacuum in companies unable to manage one brand well for decades. And it’s a cycle that exists because AB InBev is not really any good at brand management. It is good at growing revenues through acquiring brands and increasing profits through achieving back-of-house synergies. But that’s not quite the same thing as managing a brand.
With no more beverage brands left to acquire and all the back-of-house synergies from AB InBev’s portfolio mostly realised, the brand owner must now manage its existing portfolio over the long haul. And Cidre is not a good start.
Many years ago, John Quelch, a branding professor from Harvard Business School, made the point that while brand extensions occasionally succeed, they usually fail. And in the worst-case scenario they not only fail, but also weaken the brand in its original category.
Like I said, not a good start.