Sleeping giants they are not. The big brand owners swept the board again in The Grocer’s Branded Suppliers Survey 2007, with the likes of Unilever UK, InBev UK, Procter & Gamble and Masterfoods wowing their retail, wholesale and c-store buying group customers in 14 hard-fought grocery categories.
A handful of champions - PepsiCo in crisps, nuts and snacks, Warburtons in bread, and Coca-Cola Enterprises in soft drinks - are celebrating winning for the fourth year running. This demonstrates buyers’ lasting appreciation of consistently excellent account management, innovative NPD, operational efficiency and powerful marketing. But there are a few names new to the Branded Suppliers Survey too, including Beiersdorf in personal care, Bahlsen in biscuits and cakes, and Schwan’s in frozen food.
This year we have winners in 14 categories as voted for by buyers from the supermarkets, wholesale groups and c-store buying groups. Winners were chosen because of their collaborative work with retailers in categories ranging from hot beverages and soft drinks to household and canned foods. The winner of each category also goes through to the final stage of The Grocer Gold Awards, held on 13 June, where they will compete to become Best Branded Supplier.
Buyers felt the finalists not only proved their worth by providing fantastic brands and growing sales, but also demonstrated true commitment as business partners, willing to flex their services to the needs of each individual business customer. Top marks were scored for helping retailers sharpen up category management, embracing new market trends such as healthy eating and sustainability, and innovating in packaging and the supply chain.
“Ten or 12 years ago the leading brands could be quite arrogant about their market position, intimating ‘you need us more than we need you’,” says Marcel Hayden, category buyer at Somerfield. “Now they know it’s in their interests to be more flexible and proactive. The relationship has evolved to the point where they now strive to give us what our customers want, and they also think very carefully about what we need as retailers.”
Dan Jago, category director for beers, wines and spirits at Tesco, says the difference between good and great suppliers boils down to time and energy committed at the retail end, which is where resource-rich market leaders have an obvious advantage over smaller operators.
“Buying teams don’t have unlimited amounts of time to deal with merchandising around promotions and launches, so the suppliers that are fully involved in the supply chain, right through to point of purchase stand out as the best,” he says. “The bigger ones tend to have a better understanding of the whole process, from production through to making things work in-store, while smaller suppliers step back once product is delivered.”
This year’s alcohol category winner InBev UK, which has taken gold for the third consecutive year, impressed with its slick launch of the Peeterman Artois beer into stores. “Its execution was excellent, with great merchandising support and operational confidence,” says Jago. “It shows InBev UK is really committed to far more than just selling us beer.”
He also singles out for praise smaller suppliers that emulate the big players. “Hall & Woodhouse, which brews Badger Ale, behaves in a similar way to the big boys by being involved as much as they can and really supporting us,” says Jago.
One c-store trading manger also appreciates suppliers willing to invest in frontline manpower so merchandising and promotional activities work as well as possible in the CTN or c-store environment. “Suppliers such as UBUK [winner in biscuits and cakes] win favour in the c-store sector because they are proactive in driving sales across the national account base,” he says.
Successful brands tend to respond well to retailers’ needs, agrees Andy Carling, category buyer at Somerfield. “Dominant players in confectionery, such as Masterfoods and Cadbury Trebor Bassett, have a very high turnover and can make huge investments to support their brands,” he says. “But they do more than think of their own business goals. They tailor their businesses to our needs. Their flexibility is crucial to our success, and our view of them improves every time they support us.”
Masterfoods has the edge over CTB in confectionery this year, calling a halt to CTB’s three-year reign at the top. “Masterfoods seemed to have lost its way for 18 months but now it is really focusing on its brands again,” says Carling.
David Bell, sales director for confectionery and snack food at Masterfoods, says: “Like a lot of big fmcg businesses going through internal change - looking at our cost base and getting our business model right - there is a risk of being more internally focused than is ideal, which was possibly the case during 2005.” During 2006, however, significant headway was made collaborating more closely with trade partners, he says.
A strategy to focus on high-profile, event-led marketing campaigns, such as the Mars ‘Believe’ campaign during last summer’s World Cup, also proved its worth.
Smaller suppliers in confectionery also impressed, such as Haribo and Ferrero, notes Carling. “To keep the category fresh and exciting, we need to have smaller, niche players working alongside the big brands. They have many good points. However, the big players can offer us brand muscle, investment, strong NPD and smart new ways of doing business.”
Similarly in hot beverages small companies including Twinings and Clipper cropped up in the voting, but the winners’ rostrum is dominated by the big players. Unilever UK, Nestlé and Tetley come first, second and third respectively. Tetley took the cuppa crown last year, so how has Unilever UK, owner of PG Tips, managed to leapfrog into the top spot from third place?
“Unilever UK has helped us to reduce the number of different pack and jar sizes and increase our range of speciality teas, flavoured teas and decaffeinated products to maximise the appeal of the range,” says Hayden, who gives it full marks for its pivotal role in Somerfield’s category rationalisation project, which aims to make ranges more consumer-focused in an environment with limited shelf space.
While all three hot beverage suppliers have been good at sharing their customer information to help make these range decisions, Unilever UK has the edge in terms of collaboration and market intelligence, he adds. “Perhaps this is down to its knowledge across other categories and the depth of research it has access to. It can give us excellent recommendations on the market, sometimes even suggesting we should drop some of its own lines in order to make the category work harder for us. We are also impressed by its willingness to help on layout and fixtures, and its deep understanding of how the consumer shops.”
For Unilever UK, 2006 was a challenging year following the upheaval caused by its internal reorganisation. Even so, it won the hot beverages and personal care categories, came second in household and ambient meals and third in dairy and yellow fats this year.
Tony Smith, sales director, says scale is important but it’s not a formula for success. “We only need look at the rise of Innocent to see just how much we big players can learn from the small newcomers to the market.”
In frozen, McCain Foods reclaimed its position as ice king after losing out to Unilever last year. McCain was on a winning streak for three years prior to that, and associate director for brand management Simon Eyles puts this return to form down to a year of focused product improvement, marketing and in-store execution driven by the ‘It’s all good’ campaign, reinforcing frozen chips as a healthy eating option. “We wanted to be loud, proud and unapologetic in our advertising and in-store communication, which shouts about our product being totally natural and low in saturated fat.”
Eyles says McCain never takes its position as market leader in frozen potato products for granted, particularly when food quality is such a hot topic for consumers. “There are some really innovative smaller players out there who can be more agile than us. We have to continually improve, innovate and move with the times, always with an eye on what the shoppers want,” he says.
Making an impact will become even more challenging for small, niche players as the brand giants forge ahead and own-label continues to invade shelf space. “New product development is incredibly expensive today, because of the need to back it up with massive advertising spend and in-store support, so it’s not really an option for the smaller suppliers,” says Steward Waldie, category controller for household at Nisa-Today’s.
Waldie believes small suppliers do best when they exploit their particular niche. “In household it might be limescale removal, or specialist polishes, for instance.”
But the reality is that for supermarkets and c-stores to grow sales they are almost wholly dependent on the big brands. “There’s a widely held view that those retailers that back the big brand leaders ultimately perform better,” says Mark Sugden, director of customer marketing at UBUK. “If a retailer wants to have a serious impact in a category, and achieve, say, two or three per cent annual growth, it will have to come from the major players.”
Sugden says UBUK can deliver sales success thanks to its hefty media campaigns, investment in R&D and product innovation, and comprehensive market knowledge.
“The retailers need to be dealing with the experts in the categories on so many levels,” he says. “Our research into shopping and eating means we can provide impartial category expertise, which will guide retailers in ranging decisions, store layout planning and promotions.”
UBUK works closely with retailers to help rationalise their ranges. One programme on biscuits and snacks with a c-store operator resulted in 37% growth in 12 weeks. “This sort of achievement is possible by joining forces but it requires retailers to trust us enough to make the partnership work.”n
based on results submitted by buyers from supermarkets, symbol groups and wholesalers.