The UK’s number one cigarette brand. The bestselling bottled water in France. China’s leading washing powder brand. And Germany’s favourite beer. What do these four brands, sold in four different countries, have in common?

The answer: from a standing start, they have established a market-leading position in their respective categories, in a decade or so, without consumer advertising and PR. Almost overnight, Richmond Cigarettes appeared to overtake the likes of Benson & Hedges, Silk Cut and Marlboro, to become the number one brand in UK tobacco. In France, Cristaline outmanoeuvred Perrier, Evian and Volvic. In China laundry detergent Diao started off as the poor cousin to Henkel and P&G and is now top of the tree. And in Germany, after a debut in 2000, Oettinger is a bigger beer brand than Beck’s, Lowenbrau and Paulaner.

These are the ‘stealth’ brands: the silent but deadly operators that have built market share without the fanfare and fuss of consumer ads using a masterful appreciation of market dynamics. There are other examples of brands eschewing consumer advertising, such as Kettle Chips in the US. Here, the most feted story of recent times is Innocent; before that there was Ginsters.

But where these examples created new categories, what singles out the first four is their entry into highly competitive categories, where market leaders had built positions with years of painstakingly planned, lovingly crafted and expensively produced advertising and PR.

So how did they do it? How does a brand build enough awareness to become a mainstream household name without any kind of traditional marketing? And what is to stop others from taking the same route?

“Stealth brands spot opportunities others haven’t grasped,” says Chris Outram, chairman of strategy consultants OC&C. Take Cristaline. It had a 22.1% share of the bottled water category in France by volume in 2006. No mean feat considering th
Oettinger: distribution
It’s a case of ‘brewers’ drop. The Germans love their beer. But attempts to consolidate the market have been frustrated by the industry’s focus on the on-trade, with costly and inefficient drop-offs at local inns. Oettinger launched exclusively into the off-trade. Stripping out the on-trade distribution costs, simplifying its packaging (all 14 variants use the same bottle and the same packing crates) and cutting advertising, Oettinger is both the cheapest and the biggest-selling beer brand in Germany. 
e heritage and marketing muscle of Danone’s Evian (10.2%) and Volvic (8.3%). In May, French wine group Castel cashed in on the water’s success, selling its 60% stake in the Alma Group, which owns the Cristaline brand, to joint venture partner Pierre Papillaud for €600m – more than enough to offset the losses from its less successful venture into UK retailing with Oddbins.

Cristaline’s strategy was simple. To develop a brand selling for less than half the price of the other main brands. Says Outram: “Cristaline’s hunch was that all the French want from their bottled water was a good product that wouldn’t poison them.” Its hunch was right.

Cost base
But while price has been a major factor in the story of Cristaline (and indeed in the success of all these four products) price alone does not explain its success.

“If you want to launch without advertising in a competitive market, being cheapest is not enough per se, as you’ll face rivals with deep pockets for trade promotion as well as advertising. You need a completely different cost base,” says Outram.

Cristaline could offer a quality product cheaply because of a shorter supply chain. Whereas rivals source from one location, Cristaline uses 17 springs throughout France. Sourcing closer to the point of consumption means it doesn’t have to transport a heavy product all around the country. This saves vast amounts of cash.

“Cristaline reinvented the bottled water supply chain and ploughed what it would have spent on marketing into saving money for its consumers,” says Outram. “It became a real brand not through advertising but through usage." Critically, it didn’t skimp on packaging either. “There’s nothing ‘value’ about the product or packaging. It looks great,” Outram adds.

The importance of the supply chain was also critical for Oettinger. In a country where there seems to be a brewery in every hamlet, Oettinger realised consumers were paying a huge premium for the high-cost structure of each brewery’s ‘local drop’. By launching exclusively into the off-trade, Oettinger stripped out a massive cost layer. It has also been strict in keeping packaging simple. While Oettinger has introduced 14 variants to suit German tastes, they are all in the same-size bottle, come in the same-size crate. And with no ads, Oettinger has been able to pass on savings and efficiencies to supermarket and discounter shoppers, so Oettinger has become the biggest beer brand in Germany by volume. In 2007, sales of Oettinger Original hit 6.73 million hl, some way ahead of second-placed Krombacher’s 5.16 million.

It’s not always the supply chain that creates opportunities. Spare plant capacity was the opportunity identified by Diao. It noticed that when Western fmcg giants such P&G and Henkel entered the market, the factories they used had excess capacity and Diao bought it up at a discount. This enabled it to sell its detergent 30% cheaper than other brands. In less than 10 years it had a quarter of the market.

Legislation can also play a part. With increasing restrictions on advertising and sponsorship – leading to an outright ban on both – Imperial Tobacco saw it as an opportunity to launch into the lowest-priced cigarette sector in 1999. After just nine years, Richmond now accounts for almost 16% of total cigarette sales in the UK, contributing £1.6bn to retailers’ turnover every year – all without consumer advertising. Two other factors helped its success. The first was striking price-marked and special-edition packs. The second was its principal channel: the independent.

"Sorting your distribution channels out in tobacco is more challenging than most because the independent retail sector has a far bigger market share than multiples,” says Iain Watkins, Imperial’s UK trade comms manager. What Imperial didn’t spend on consumer marketing, it used to support the trade. It primed the market using trade press a month ahead of launch to create awareness. It also put together a big trade exhibition programme. But its most potent weapon was the sales force.

“We ensured each rep was armed with good category, technical and legal knowledge," says Watkins. “They aren’t sales reps, they’re category experts, much needed by retailers who feel isolated and penalised for making revenue through tobacco sales." So is it possible for other brand owners to build big brands without the use of advertising and PR? Are supermarket shelves the new media space, with trade promotion and the product and its packaging replacing advertising?
Cristaline: supply chain
It’s the largest bottled water in France, with more than 20% of market share by volume. How has it raced to top spot since its launch in 1992? Easy. It’s sold at 50% of the price of Evian, Volvic, Badoit et al. How? Instead of sourcing from one spring, Cristaline uses 17 springs around France, reducing the amount of costly transport needed. Advertising? No need, the price of the product on shelf is all the mouth it needs.

It’s well known that a high proportion of shop decisions are made at the point of purchase, as high as 75%, according to POPAI. And as early as 2001, P&G CEO AG Lafley predicted 50% of P&G’s spend would be in-store by 2010, with new tools being developed to guide its understanding. At the same time, trade investment is at a record high, with 30% of groceries on promotion at any one time [Nielsen]. With pressure from chains such as Asda to invest in pricing as opposed to advertising, will the multiples stock new lines based on price and novelty alone?

Don’t believe a word of it, says Aidan Bocci, CEO of trade investment expert Commercial Advantage Consulting. Only in the most exceptional circumstances (ie on the most unfavourable terms) is a supermarket likely to stock a launch without advertising and PR.

“Supermarkets are in the business of managing risk attached to 20,000 lines. If a brand owner with no track record isn’t going to back a product, the only way the supermarket is likely to stock it is with margins of 60%-70%.”

Outram agrees, for a different reason. The UK has a highly developed own-label market, he argues, so the arrival of new ‘value’ brands may not sit comfortably with the major multiples. “The multiples already offer all the classic brands at a high price and similarly stock all the own-label brands at a low price. Value brands such as Richmond and Oettinger would be priced between the two and brand owners can find it hard to persuade multiples of the need for that middle price offer.”

But Outram says smaller chains could be interested in new ‘value’ brands. “The next tier after the majors often can’t afford an all-encompassing own-label range and will be more open to a new offer.” A sound platform for further growth So, what are the lessons from the success of stealth brands? As Imperial proved with Richmond, using the independent channel can make a huge difference, enabling companies to build a platform before moving on to the big time.

That was a method used by Ginsters, the St Austell-based pastie and meat products company, which set up offices in London, Winchester and Bristol to meet response from customers who had savoured its pasties on their holidays in Cornwall. But arguably the key to its success was Ginsters’ move into a field few other manufacturers targeted at that time – forecourts.
Lakeport: legislation
In the Canadian beer market – historically dominated by Molson and InBev – the price of beer had increased dramatically. But after the Canadian government stepped in, offering tax breaks to small brewers in Ontario and Alberta, smaller brewers were able to discount heavily. Launched in 2000, Lakeport grew its volume market share from nothing to 2.6% in its first five years. It has since been sold to Labatt

“The environment in many forecourts was nowhere near as clean and hygienic as you see today,” says Larry File, brand communications manager at Ginsters. But the self-contained Ginsters Snack Centre installations ensured presentation was consistent from store to store to help create a quality offer consumers trusted. The concept was welcomed by forecourts.

“The fuel market was going through periodic price wars, making it tough to earn decent margins from petrol,” says File. “Being able to tap a new market and earn good margins was a huge bonus.” In a similar fashion, in the early 1990s, Müller launched Fruit Corner into the UK largely through c-stores, as it couldn’t get major listings in multiples. And the choice of distribution channel has also been essential to Innocent.

Innocent targeted those one-off delis, health food shops and posh sandwich bars where opinion-forming consumers shop and where the person behind the counter is the decision-maker, as it is their store. “Conversations about trade spend and PoS are much easier with independents,” says Bocci. “They are more used to being asked by customers for your product.”

Bocci credits Innocent for seeding its brand gradually, keeping distribution localised, aiming to touch 100 people powerfully. “Innocent created a local fanbase of die-hard evangelists in a small area of West London and made sure stores there couldn’t afford to be without it. It built distribution quite slowly at first, until it reached a tipping point. By the time you do come back to the multiples, you are presenting a brand in demand and they’re more likely to play the game," he adds.

Innocent co-founder Richard Reed believes success would have been impossible without the support of the independent trade. “We could have taken orders and delivered ourselves, but we knew we would make lousy van drivers. I crashed our van six times in the first six months. Instead, we would do the initial sell and then pass on the account to the wholesaler.

“People think Innocent has been successful because we had good PR, but that’s the wrong way round. We’ve only had good PR because we have been successful. Getting stocked came from having a better product that was well packaged and on trend, but also from us doing everything we could to keep promises to customers, even if that meant getting up at 5am and driving to Scotland as retailers had run out.”

Reaching the tipping point
Once a company has reached a certain size, however, experts agree it needs advertising. Says Ginster’s File: "If you have ambitions to build a major national brand, advertising quickly becomes a must-have. The uniqueness of our product gained it an initial consumer following, which then opened the door to wider listings, but creating the national reputation it has today eventually required a fairly hefty spend.”
Ginsters: forecourts
When truckers get hungry, they don’t look for the nearest supermarket, they pick something up when they stop for petrol. This was the market Ginsters targeted, and with its branded fridges and microwaves it was one of the first companies to take the forecourts seriously as a channel. It was only when it reached a tipping point with its move into supermarkets that Ginsters started to spend heavily on consumer advertising.

Innocent didn’t advertise properly until 2006. “Our marketing budget in the first two years was zero,” says Reed. “And in the next five years it was about £500,000, almost nothing by market standards.” Now, however, it’s on TV regularly basis. Indeed, with Tropicana heavily promoting its new smoothies, “it has had to up its game”, says Bocci.

In the case of Richmond, of course, Imperial is now restricted in its advertising. That’s where trade advertising and exhibitions are important, says Watkins. “It’s very good value and effective, as we rely on the trade for support.” Imperial also attends 50 trade shows a year in the UK. Similarly, Ginsters and Innocent have been strong supporters of the trade press. “We looked to the trade press for publicity from the start. And when we did our first advertising, a £30,000 campaign, we included The Grocer,” says Reed.

So can you build a brand without ads or PR? Even brands that benefit from the most inspired advertising-free launches are likely to eventually need some kind of support, agrees Outram. "You may have to spend some money on advertising to reinforce the values you have established. But,” he adds, “it won’t be anything like the amount a brand solely reliant on advertising and PR from launch has to spend.”