Last year McVitie’s flooded the biscuit market with a range of new
brands and product variants. Forty-one new biscuit products arrived on
supermarket shelves, following on from 35 in the previous year.
But McVitie’s last week announced that it has seen the future and it is
not NPD (at least not on such a large scale). Instead, it is slashing
its new product development by 50%.
The large sums of money which will be saved by cutting back on NPD will
be channelled directly into greater advertising support for core
And it is from these core brands that McVitie’s now sees its main NPD
McVitie’s countlines marketing director, Mark Horgan, explains that the
firm’s marketing effort has been spread too thinly. The biscuit market,
of which McVitie’s owns five of the top ten brands, has become lumbered
with a reputation for launching underperforming products.
Industry estimates indicate a success rate of less than 10% for all NPD
Finding the core
Horgan is the first to admit to McVitie’s own patchy form in NPD. While
the Ace countline and the Go Ahead low-fat range are both heading for
core brand status, the countlines United and 54321 ranges have been axed
and the Masterpieces range is set to follow.
David Jones, chairman of DMB&B, an advertising agency with a strong
portfolio of FMCG clients, supports McVitie’s move.
’There has been too much wasted time and money on fruitless NPD.
Marketing directors are rightly asking, ’Why are we launching 40 new
products a year when we can only really afford to invest in one or two’
Companies have been allowing brand managers to have too much fun.’
The concentration on core brands, believes Horgan, is the only way for a
market leader to stimulate a stagnant biscuit market.
Overall, the sector is growing by a mere 3.8% per annum and Horgan says
retailers perceive it as ’boring’. The top ten brands, on the other
hand, are growing by a more encouraging 6.7%.
But there could be another factor behind the strategy. That the
challenge of own-label has brought home to McVitie’s the need to protect
its core brands.
One senior ad agency source points to the high-profile copycat battle
between McVitie’s Penguin and Asda’s Puffin bars earlier this year. ’The
Puffin case highlighted the weakness of Penguin and made McVitie’s
realise that you’ve still got to build old, established brands,’ says
Tim Potter, FMCG analyst at Merrill Lynch Pierce Fenner and Smith, says
that the biscuit manufacturer has done well to develop the Go Ahead
range of low-fat biscuits and cakes, and indicates that this is the kind
of strong branding it should pursue.
Backing a sure thing
’There’s no need to commit major resources elsewhere. You can’t
criticise the firm for focusing on core brands. In stock-market terms it
makes sense to back winners.’
Indeed, in a corporate sense, McVitie’s has moved in line with other
parts of the United Biscuits group.
Over the past 18 months, under pressure from the City, UB’s KP arm has
similarly concentrated on its strengths.
It has thrown its marketing muscle behind corporate-branded nuts and its
five core crisps brands at the expense of its underperforming
To many observers, McVitie’s strategy looks right for both the company
and its market. But what is good for McVitie’s does not necessarily
apply to other sectors or even other companies within the biscuit
Julie Davidson, group product manager for NPD at Cadbury, which launched
its Astros confectionery product this week, says: ’We have a tradition
of consistently high NPD and have no plans to change this. Innovation in
our market is critical but it is always a question of striking the right
balance between new and existing brands.’
McVitie’s biscuit breakdown
Year New Advertising
1995 35 pounds 6.3 m
1996 41 pounds 7.6 m
1997 20 pounds 9.0 m
1998 Fewer pounds 13m+
than 20 (projected)
NPD IN OTHER SECTORS
- Washing Powders
Manufacturers in the washing powder sector such as Procter & Gamble and
Lever Brothers have refocused on core brands. The threat of
supermarkets’ own-label products, the withdrawal of Lever’s Persil
Power, the failure of concentrated products to establish a large market
share and fears that consumers were confused by too many product
variants have forced a move back to ’big box’ products.
- Alcoholic drinks
Brewers have been prolific. A stream of new products has hit the beer,
lager and alcopops sectors. Bass has developed the hybrid-ale sector
with its Caffrey’s Irish ale and revitalised the lager sector with
Carling Premier. It has also found success with its alcopop, Hooper’s
Hooch, while Whitbread, Carlsberg-Tetley, Allied Domecq and Matthew
Clark are not far behind. However, the life span of many new products in
the alcopop sector is likely to be short.
Cadbury and Mars have been looking outside their core brands because
supermarkets have yet to make an impact with own-label. Cadbury launched
Fuse, Wispa Gold and Astros. Mars, which has a reputation for
concentrating on core brands, has stepped up NPD and launched
low-calorie chocolate bars Flyte and Mars Lite and Galaxy brand
- Soft drinks
The soft drinks market has been awash with new flavours, but not all
will achieve core brand status. Coca-Cola and Pepsi have been hit by the
arrival of own-label products. Coke withdrew Fruitopia from the UK last
year, but it has launched two products in the US, Citra and Surge.
PepsiCo invested in repackaging Pepsi last year with marginal returns,
but has had success with Pepsi Max.