Tesco's trial of its new, non-Tesco endorsed brand creations was front page news in Marketing last week. These so called "venture brands" include ChokaBlok ice-cream, La-Thams dog food and NutriCat cat food. Brands development director Sidonie Kingsmill said "Our own-label business is very mature, so we’re looking at what’s next."
Well, there was similar news from Sainsbury's. Breathless headlines reported "The group's first serious push into 'super-brand' territory", with a washing powder called Novon.
The key difference is that Sainsbury's launched Novon in... 1992. And a search of Sainsbury's online shop suggests that 19 years on this range is no longer on sale.
What chance do Tesco's venture brands become a major business? How worried should Ben & Jerry's, Whiskas and Pedigree be? After all, the report in Marketing goes on to say "The ultimate goal (is) products that will be successful enough to be sold in non-competing retailers such as petrol stations and garden centres."
A recent trip to France shows how this approach can work well. Intermarche have a whole range of brands across different categories including dairy (Paturages), ham (Ranou) and pet food (Canaillou). These are packaged and promoted on the website to look like "real" brands, each with a distinctive proposition and personality. And this approach has worked well, with Intermarch having the biggest share of business in own label of any French supermarket, according to industry observers.
My guess is that Tesco's venture brands won't grow to be as strong as Intermarche's.
1. Tesco own label is already very strong: Tesco, like Sainsbury's, has a strong own label brand portfolio covering "good, better, best", with Tesco Value, Tesco and Tesco Finest. These ranges all leverage the brand equity of Tesco and the sub-brands like Finest.
Tesco Finest alone is the UK's biggest grocery brand, with sales of £1.2billion!
2. True brand creation needs investment: its one thing to come up with a product, pack and name. [Although I'm not sure ChokaBlok or La-Thams will win any brand naming prizes ;-) ]. Its another thing to invest time and money to create some real equity. At the moment, ChokaBlok ice cream would struggle against Tesco Finest on the one hand and Ben & Jerry's and Haagen Dasz on the other.
Is Tesco really prepared to divert resources from the Tesco brand to grow these venture brands? After all, the report in Marketing talks about "Marketing for the products includes press ads, websites and sampling."
The big difference with Intermarche is that they have no Intermarche own label, only their selection brands. So they have to make it work.
3. New brand creation needs new skills: nurturing and growing a portfolio of brands is a different job to retailing and its "mono-branding" approach. Have Tesco really go what it takes to make venture brands work? Well, the lady leading the drive, Sidonie Kingsmill, has worked at P&G and Nestle petcare. And if she has a few more FMCG folk in her team, that's a good start. She's has also started close to home with dog and cat food brands, markets she knows well from her time at Nestle
However, the challenge will be making this new approach central to Tesco's plans, not peripheral. Chances are the Venture Brands team will be a small sailing boat of brand marketers amongst a huge navy of hard-core retailers.
Net, I expect Tesco's venture brands to be interesting experiments that don't grow to be significant in size. The launch is starting in Eastern Europe, not the core UK market. It will be interesting to see if they make it here.
But what do you think?
As a brit I actually love going to gierorce stores whenever I travel abroad. Yes I shop at tescos here in the UK but I,m the opposite, I love american grocerys actually its more like I love 'brown sugar cinnamon pop tarts' I,m heading out to L.A in may and cant wait to start food shopping;)
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