Tango’d by a lack of cash?

Last week’s delisting of most of the Tango range by Somerfield could soon be followed by similar moves from other supermarkets, and has led to the ‘realignment’ of the brand around Tango Clear. Will this new strategy succeed without major investment from Britvic? By Mark Choueke

Tango, one of Britvic’s best-known brands, is in trouble. Somerfield, the fifth-biggest supermarket in the UK, has revealed that its stores will no longer stock Tango products apart from Tango Clear, and will also delist Britvic’s 7UP completely (MW last week).

Perhaps equally worrying for Britvic is that rumours of other major supermarkets delisting the Tango range refuse to go away, although those companies’ soft drinks buyers either deny that they are going to act, or refuse to comment.

A Somerfield spokesman says/ “Approximately 90% of Tango sales are driven through promotions. When you stock an own-label fizzy orange drink, market leader Fanta and maybe Orangina as well, you don’t need another fruit carbonate which is number two in a declining category.”

Tango Clear will remain in Somerfield stores as it presents a point of difference, and therefore a choice, for customers. It contains no added sugar and is seen as being more in line with the sort of soft drinks shoppers are seeking nowadays.

But it would take a huge amount of spin to portray the decision to delist what is seen as one of Britvic’s core products – just six months after the company floated on the Stock Exchange – as anything but a blow. Yet a Britvic source responded to the news by claiming the Tango brand has been “realigned”, and that Tango Clear is the new “headline” focus of the range.

The source supports this viewpoint with a reminder that the last television activity seen from the Tango brand was for the launch of Tango Clear, and also says that a recent online viral campaign for the product – a spoof of the Sony Bravia “Balls” ad in which oranges, lemons, apples and watermelons are fired down a steep street, denting cars and smashing windows – reached 2 million unique users.

But if Tango Clear is to become the core focus of the Tango range, it puts pressure on Britvic to ensure it succeeds as a product in its own right if it is to justify the significance the Tango brand commanded when it invited analysts to offer valuations of the company’s assets during its initial public offering (IPO) last December.

Brand more valuable than sales

An industry insider says the Tango name has long been more valuable than the revenue it pulls in, adding that other products such as Tango Ice Splash are “insignificant” in terms of sales.

The source says: “Tango is a high-profile brand with enormous heritage, but it isn’t significant in terms of revenue and hasn’t been in recent times, including during the IPO. The brand is one that people know and love, which allows Britvic to work on brand extensions and innovation. All the figures for each brand and the growth of each category were clearly set out in the IPO proposal, and the company talked about the decline of fruit carbonates as the reason behind innovations such as Tango Clear.”

New flavours such as Mango Tango and brand extensions such as Clear and Ice Splash – both launched in 2005 – have slowed the brand’s decline. Sales fell by 4% last year to &£49m, following a 19% decline in 2004.

However, Britvic’s share price is hovering around 210p compared to a price of 230p when it floated, and an average of 270p during February. The price plummeted after Britvic released trade statements concerning falling carbonates sales.

Tango Clear – available in orange, apple & watermelon, lemon & kiwi, and raspberry & white cranberry flavours – is a departure for Tango, in that it is aimed at health-conscious 18- to 30-year-old women, rather than pop-guzzling teens who loved the brand’s exuberant television ads. But it remains to be seen if the sophisticated Clear drink is going to thrive under a brand umbrella that became famous for HHCL’s irreverent and often nonsensical “You’ve Been Tango’d” advertising.

Influx of cash essential

Tim Hill, marketing director at branding consultancy FutureBrand, says investment could be key to the future health of Tango: “Before Britvic relaunched Tango eight years ago it was never a major player. It was in a dull silver can and didn’t threaten the market, generally floating around at number seven or eight in the category.

“Then Britvic decided it wanted to occupy position two, which is a major leap, and invested heavily in it, asking advertising and design agencies to give it a ‘soft drink that acts like lager’ feel. That’s where the laddish ads came from. The substantial investment saw it consistently in the top four but in the past two years it has been neglected.”

Hill adds that while Tango’s delisting from a major supermarket is serious, Britvic would be mad to sell it off. He says: “What Britvic needs to do is keep the brand and reformulate the product – make it acceptable to health-conscious consumers who still love and value the brand, and maybe relaunch the original Tango drink as Tango Classic, but without sugar.”

But Britvic category director Andrew Marsden says the changes to Tango, and the consumer habits dictating them, are endemic across all food and drink brands. Marsden points out: “Somerfield can make its own decisions but original Tango and Tango Clear are both performing well elsewhere in the market, so I don’t share its view.

“But volume sales of fruit carbonates are down 18% in the year to July and the majority of that decline is in regular rather than no-added sugar varieties. That includes Fanta, which saw a 35% drop. Consumers are looking for healthier alternatives.”

Marsden states that Britvic’s shareholders have equal confidence in its strong-performing brands such as J2O and Robinsons. There is also potential for strong growth through sub-brands.

He adds: “From a marketing point of view, it was preferable to extend the Tango brand into Tango Clear than to create an entirely new brand – it fits into the Tango family. The same can be said of Coke Zero which relies on the Coke name to sell – who would have bought it if it were just called Zero?”

All the same, the Somerfield decision may well have dented confidence in Britvic, in what has been a turbulent first six months on the Stock Exchange.