After a year out in the cold, New Covent Garden soups are back on Tesco’s chiller shelves. And there’s barely a trace of New York Soup Co., with Tesco’s venture brand, managed by Bakkavor, effectively axed three weeks ago.
The demise of New York Soup Co has raised questions about the future of Tesco’s tertiary strategy - and particularly the so-called ‘venture brands’, like New York Soup Co, which were launched by Tesco in 2011. These were an evolution of Tesco’s ‘discounter’ brands, introduced at the onset of the recession. With names like Ping, Chokablok and Halo, they were positioned outside Tesco’s good-better-best own-label architecture, featuring names that could work not only across Tesco’s global estate but - with no reference to Tesco on pack at the time - outside the Tesco estate, as well.
Tesco venture brands
Chokablok: the highest-profile venture brand, it began as ice cream tubs and was extended. Not all extensions stuck, and it now comprises confectionery and ice cream tubs and sticks.
Parioli: arguably the other big venture brand success, new cooking sauces were added to the Italian food range this year.
Naturally Powered*: this household cleaning range appears to be going strong, with the six lines launched two years ago still on shelf.
Llamas: the bagged snack brand launched in spring 2012 as share bags and extended into multipacks this year.
Lathams & Nutricat: the petfoods have struggled more than their stablemates. Both ranges were cut this year, with Lathams losing seven of its 17 lines and Nutricat eight of its 19.
Halo: this feminine hygiene brand dropped from 14 to six lines in March this year.
New York Soup Co*: fresh soup range axed in October.
* New York Soup Co and Naturally Powered not always considered venture brands
New York Soup Co behaved in many ways like a genuine brand, with its own website and social media channels. Today, its website is ‘currently unavailable’, while its Facebook page - which announced the demise of the brand to distressed fans last month - has been abandoned. So what went wrong? How are other venture brands performing? And is the whole ‘venture’ approach doomed?
Tesco is keeping quiet about its plans. On the axing of New York Soup Co, it says: “We’re always listening to what our customers want and that includes reviewing and developing our range.”
And some observers suggest “a made-up soup brand” was never likely to take the place of an established player with a strong heritage.
Shore Capital analyst Clive Black described New York Soup Co as a “me-too in a well-supplied category.”
But branding experts argue Tesco’s venture brands aren’t brands at all. “They are simply named products and have not been cared for and marketed as brands in the way that real brands would be,” says Claire Nuttall, at Thrive Unlimited.
Don Williams, CCO at Pi Global agrees. “They have little credible personality and don’t have the [marketing] clout to promote any personality or USPs they might have outside the store.”
“Venture brands create interest, as do acquired brands such as Giraffe, services such as Blinkbox and innovation including Hudl. A failure rate is to be anticipated but the thinking is sound”
Marketing support is vital to a brand’s success, adds Ed Garner at Kantar Worldpanel. “In the 1990s, Sainsbury’s launched a cola-based venture brand. As soon as they stopped supporting it on TV, sales crashed.”
But venture brands do at least help Tesco to differentiate its offer, adds Garner. “The middle ground either side of Waitrose and Aldi is looking a little samey, and venture brands offer shoppers exclusivity.”
And Black believes venture brands should be viewed in the same vein as new retail formats like Giraffe restaurants, Harris + Hoole coffee shops and Euphorium Bakeries, offering the customer exclusivity and disruptiveness. “Venture brands create interest, as do acquired brands such as Giraffe, services such as Blinkbox and innovation including Hudl. A failure rate is to be anticipated but the thinking is sound.”
And some venture brands are working. Chokablok, which started in ice cream, has extended into confectionery. And through venture partner R&R Ice Cream, Chokablock ice creams have even been sold into zoos, theme parks and piers (as well as gaining listings in Tesco Central Europe stores and some One Stops). Likewise, Italian food range Parioli, which includes canned tomatoes and cooking oil, has been expanded into cooking sauces.
On the other hand, Tesco’s petfood venture brands and the Halo feminine hygiene range appear to have been less successful (see box). “Venture brands haven’t been flawless, but some have been well done and have generated loyalty,” says Bryan Roberts, insights director at Kantar Retail. “It has certainly been a partial success and it is understandable Tesco may look to recalibrate parts of it.”
So what’s the difference between success and failure? Williams suggests credibility is in the eye of the beholder.
“Parioli and Chokablok have credible brand names. The other venture brands have obviously made-up names pretending to be brands. Consumers see through this”
“Some have brand credibility from a purely visual standpoint and feel like they could be real brands with a personality, a heritage, a brand heart,” says Williams. But some don’t: “Halo looks cheap and if I were a woman it would give me zero reassurance that I could trust it. Lathams petfood looks like a ‘me-too’ Science Plan and steals cues from other pet brands - ergo, I don’t believe it.”
The names have also been a factor, suggests Claire Nuttall of Thrive. “Naming is key to their success as they have not been cared for and marketed in the way real brands would be. Parioli and Chokablok have more credible brand names. The other venture brands have obviously made-up names pretending to be brands. Consumers see through this.”
So are Tesco’s venture brands doomed? One Tesco own-label brand supplier argues that Tesco’s thinking has moved on, and notes that with Tesco branding now added to the likes of Chokablok, it no longer even refers to venture brands.
“Tesco want to stand for great food. They will use a tertiary brand to bring a different design and tone to the fixture. But Tesco’s is a name they want to use.”
“Tesco is in a turnaround situation, and the brave and right thing to do is experiment,” adds Aidan Bocci, CEO of consultancy Commercial Advantage.
While it was unlikely every element of Tesco’s “brave experiment” would work, the venture brands initiative will make Tesco stronger, Bocci believes. “The long-term result may not be that they have created standalone fmcg brands, but i If they have learned more and built capabilities for creating premium own-label offerings then that can be considered a success.”