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KitKat, Smarties, Polo – Will we ever see brand launches like this again?

Posted on: December 2nd, 2013 by Will Carter

I read a recent report on the top ten brands in UK chocolate confectionery with interest; not because there were any surprises in it, but more because of the absence of any new names amongst the ten.

The average age of these Brands is 69 years and, in the UK alone they deliver an average annual turnover of £144 million. Moreover, were it not for young upstarts like Twirl & Wispa, the average would be even older and if one were to conclude that Twirl is effectively a product extension of Flake, and Wispa a response to Aero, one could revise the average age to nearer 80 years.

This raises two questions;

The first is what on earth happened in the 1930s to drive such an explosion in new brand launches? Looking at a website on the history of Rowntree’s, I note that “KitKat, Black Magic, Aero, Dairy Box, Smarties, Rolo and Polo all came out in the 1930s”. Cadbury’s and Terry’s enjoyed a similarly fertile period new brand launches in the decade leading up to WW2.

Was it down to shifts in cocoa or sugar commodity pricing and availability, or perhaps a transformation of processing technology? Or maybe it was the burgeoning access to national advertising through press and posters at exactly the time when consumers, hit by the financial crash, needed cheering up courtesy of small confectionery treats? Most likely I suppose it was a combination of all of the above, which in turn spurred on the major players to try to outdo each other in terms of bringing new products to market.

Whatever the underlying factors, the resulting frenzy of launches leads me to the second, perhaps more important question; will we ever see the like of this extraordinarily successful period for innovation in a food category again? Even if we do, what proportion of such a raft of new launches could we reasonably expect to be around seventy or eighty years hence?

This year’s Grocer New Product Award winners gives a clue in its illustration of how profoundly the world has changed in terms of the approach taken by manufacturers to managing the balance of risk and return in innovation.

Most of the list are unsurprisingly not new brand launches at all, but product-line extensions to established brands. One even represents the marriage of two established brands brought together by M&A; I refer to CDM with Oreo.

Few, one suspects, will achieve UK annual turnover of £144million, and fewer still are likely to be as deeply rooted in the national psyche 70 years from now as KitKat or Polo. The flipside is that few will have required risky capital investment in new technology, or marketing investment in building a completely new brand. Those which do represent technological breakthrough are mostly International brands where the cost of the new technology has been, or will be, amortised across multiple geographies. As for being around in 70 or 80 years, as I scan the list I see few amongst these new products which will have the asset value of the Rowntree’s 1930’s launches listed above.

My intention here is not to knock the merits of deserving award winners, but to point out how profoundly the rules have changed. The principle of “sweating assets” now applies as much to brand assets as to the kit which makes them. New brand successes are not quite as rare as hens’ teeth, but they’re heading in that direction; for every Mondelez Belvita, or Innocent Smoothies, there will be dozens of line extensions like Heinz 5 Beanz or CDM Oreos.

For marketeers this requires a rigorous understanding of where one’s established brand can/can’t stretch, and a pragmatism to sometimes follow the less sexy path of line extension rather than all-guns-blazing new Brand launch.

But for those with the consumer insight, the business plan and above all the conviction to bring genuine innovation and new brands to market the prize can be huge. With the global tide so profoundly in the direction of stretching and sweating existing assets it is perhaps no surprise that today’s new Brand introductions are so often at the hands of the entrepreneur rather than the corporates who can, after all, always cherry-pick the best entrepreneurial success stories and acquire them when their potential is clear!

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