Fast forward three- years and the supermarket’s current travails mean its attention is elsewhere.
The aim of Venture Brands, Clarke said at the time, was to create a house of brands that could take on premium offerings from companies such as Unilever and Procter & Gamble. The hope was that it would boost loyalty to Tesco by offering shopper products they couldn’t find anywhere else, giving people a reason to shop in its stores rather than at its rivals.
Natalie Berg, analyst at Planet Retail, said the logic made sense at the time, with the supermarket needing to offer points of difference in a “homogenous market” where they all offered the same brands.
Using Tesco’s firepower to move into FMCG
At the time Tesco was posting strong sales, with annual revenues across the group up 8.2 per cent. Clarke was keen to maintain that growth while stamping his own name on Tesco.
Ramping up standalone brand ranges, where Tesco had seen success with clothing range F&F and electronics brand Technika, seemed a logical strategic move.
The hope was that Chockablok ice-cream would take on Häagen-Dazs. The New York Soup Company would knock back New Covent Garden soups and the Carousel toy brand would overtake Fisher Price.
However, since then Tesco’s fortunes have changed for the worse. It posted its worst results in two decades earlier this year and sales are slumping, down 3.8 per cent according to the latest Kantar Worldpanel figures.
Clarke is now out and will be replaced by Unilever’s Dave Lewis, with the hope his experience in branding can help lead Tesco out of its funk. So what of the venture brands?
Taking on the discounters
Tesco’s plans for the Venture Brands portfolio were highlighted this week when influential Nomura analyst David Payne called on the supermarket to step up NPD and promotion of the current offering.
Payne says they are the answer to Tesco’s problems. Where other analysts are calling for Tesco to launch an all-out price war to see off the threat of the discounters, Payne believes it should instead launch a range of new discount venture brands.
These could help differentiate its messaging from rivals at a time when Asda and Morrisons, and to a lesser extent Sainsbury’s, are also talking about price. Plus, his theory goes, these brands would compete with the relatively unknown brands that can be found in Aldi and Lidl.
However, Tesco’s venture brands have so far seen varied success.
In November, the New York Soup Company was wound down and New Covent Garden soups, which had been taken off shelves, found their way back into Tesco stores. The Yoo range was slimmed down, with the yoghurt line scrapped, while feminine hygiene brand Halo was cut.
The pet food brands Lathams and Nutricat have similarly failed to take off, says Berg who blames a lack of differentiation and their “copycat feel”.
On the positive side, Chokablok, originally an ice cream brand, has been expanded into confectionary and hot chocolate. According to Euromonitor, sales of Tesco’s private label ice cream, which also include products falling under its own-brand ranges, have risen from nothing in 2010 to 0.3 per cent in 2011 and 0.9 per cent in 2013.
In confectionery Tesco’s share is also up slightly, from 0.6 per cent in 2011 to 0.7 per cent in 2013. Retail analyst Raphael Moreau credits Chokablok with helping to boost this market share, suggesting the strategy has been successful in this category at least.
Parioli, which offers a range of Italian foods including dried pasta, olive oil and antipasti, has also been expanded into cooking sauces.
A Tesco spokesman says: “We’re always listening to what our customers want and that includes reviewing and developing our ranges. Customers have responded really positively to ranges such as Chokablok and Parioli and we’ll continue to look for opportunities to bring exciting new own brand products to customers in the future.”
However, Berg can’t see Tesco taking this strategy any further than supporting the current successful venture brands. She believes they add an extra layer of complexity in terms of price and quality and can appear “sneaky” in an age when shoppers are looking for transparency.
They could even end up driving more people to Aldi and Lidl in search of a simpler shop. Rather than look to venture brands, Berg says Tesco should be working with its suppliers on limited edition or exclusive ranges and co-branded products.
Jim Prior, chief executive at branding agency Lambie-Nairn, believes venture brands are just another distraction for Tesco, taking up effort and money at a time when it should be focusing on the master brand.
“It might have seemed like a good idea at the time but it happened at the expense of the master brand and its financial plight clearly shows the error in that. What consumers want – and always have – is a high level, compelling yet simple proposition delivered with energy, clarity and flair,” he says.