Heinz has revealed that it is on the hunt for virgin retail territories to lessen its reliance on increasingly powerful supermarkets.
Heinz UK and Ireland chief executive Dave Woodward has characterised these unexploited retail openings as 'white space' opportunities. His company's efforts reflect a wider trend of brands seeking out different ways to reach consumers.
Supermarkets will continue to be the main route to market for FMCG products - 70% of Heinz's volume sales come from Morrisons, Tesco, Asda and Sainsbury's. However, the brand has also identified Wyevale Garden Centres as a suitable outlet for its barbecue sauces and Mothercare for selling its babyfood. It also plans to get more of its lines into service stations and convenience stores.
These machinations come as Heinz finds itself rocked by consumer desertion of its brands in the wake of the downturn. Its share of the ketchup market, for example, has slipped to 74.7% in the four weeks to 11 July, compared with 79.9% during the same period in 2008, according to Nielsen.
Showcasing opportunities
Richard Tolley, former group marketing development director at Dairy Crest, praises Heinz's strategy as a 'great idea'. 'It's about putting your brand in the correct neighbourhood. For years you have been able to get a Persil or Ariel when you bought a washing machine. You can get popcorn in Blockbuster and nobody bats an eyelid,' he says.
Similarly, Plum Baby, the premium babyfood producer, has signed a deal that will see its products being offered in IKEA cafes and at Luxury Family Hotels. The brand already has a presence on the Pizza Express menu.
'We saw this sort of distribution as being strategic rather than driving volume,' says Plum Baby chief executive Patrick Cairns. 'It as an opportunity to showcase our range in an appropriate and surprising environment.' However, he also acknowledges that the majority of consumers 'will always buy their babyfood in supermarkets'.
Orit Pelag, the head of shopper marketing at brand activation specialists OgilvyAction, detects a shift by companies to 'occasion-based' activity, designed to help consumers see where brands 'fit into their lives'. She says brands have been 'missing an opportunity' in this area. 'Retail channels can be used to amplify occasions,' she adds. 'Traditional advertising can't always do this.'
However, the fact that big FMCG businesses are built on supplying supermarkets could be a barrier to greater use of white spaces. 'Companies will get higher margins with alternative distribution channels, but the supply chain will be a challenge,' says Anthony Lucas, senior director and retail specialist at professional services firm Alvarez & Marsal.
Pursuing this strategy through wholesalers will eat into margins, but building a direct-sales arm brings its own costs, adds Lucas. A brand owner he once advised had plans to create its own white spaces by starting up a cafe chain. It then decided this was too far outside its normal business.
However, in the US, FMCG brands have found another way to target consumers. Alice.com, which rolled out in June, sells nearly 7000 products, including brands such as Bounty, Neutrogena, and Pampers. Delivery is free and the site's prices undercut those of supermarkets by about 20%.
Alice.com makes its money not through its margins on product prices, but by providing advertising space and accessing spending data from the consumer-product manufacturers.
It also takes a cut from the coupon and loyalty programmes run by the companies on the site.
If a similar situation arises in the UK, although admittedly it will not happen overnight, the supermarkets may come to rue their treatment of brands as they could ultimately find themselves being bypassed.
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