Do venture brands, created in close partnership between retailer and manufacturer, represent a new opportunity for retailers?

By Simon Preece, Director of Client Services, Elmwood Design

Have challenger brands inspired a new opportunity for retailers in venture brands? The retailer’s quest for sustainable margins is tougher than ever as price wars squeeze margins from all sides.
To compete, retailers are forced to sell leading brands on heavy promotion-it’s not unusual for 80% volume to be sold on deal-and drop prices on private label. Price match guarantees and price comparison sites only add to the problem.


But it’s not all doom and gloom out there-challenger brands are a beacon of promise in the changing retail landscape. These smaller brands use attitude and personality combined with great product delivery to cut through and escape the vicious cycle of price comparison. By offering consumers something different, these brands can compete with the bigger, more established brands with virtually no marketing support.

Making a splash

When UK retailer Tesco wanted to grow its market share in chilled fish, the retailer challenged its fish supplier, Seachill, to come up with a sales-boosting strategy. Brand consultancy Elmwood worked with Seachill to develop the The Saucy Fish Co., a brand built on a key consumer insight: people didn’t feel confident about cooking and serving fish. This was a golden opportunity to make waves in a category seriously lacking innovation, emotion, inspiration and theatre.

The Saucy Fish Co. paired fish with sauce in an innovative Dar-Fresh pack format, designed with plenty of color and personality, and merchandized upright so consumers saw the packaging head-on. In early 2010, The Saucy Fish Co. launched exclusively in Tesco and was worth £10m within a year. The brand continues to grow exponentially year on year as it moves into a wider retail market.

Challs International followed a similar path with Buster, which has become the number two brand in the UK’s plughole care sector. Both Buster and The Saucy Fish Co. have been successful enough to generate funds for substantial above-the-line campaigns.

Venturing beyond

Venture brands are the latest player to arrive on the UK retail landscape. Echoing the spirit of challengers, these brands are created in a close partnership between retailer and supplier. Venture brands aren’t “me-toos” or tertiary incarnations of private label-these brands are created from scratch to have their own engaging personality and distinct point of view.

Juliana Glassman, Deputy Managing Director of Elmwood New York, says: “Saucy Fish and Buster have generated considerable brand equity and value in their own right. Did this kind of success inspire the creation of venture brands?”
Tesco has recently introduced several venture brands across a variety of categories. In October 2011, their commercial and marketing teams teamed up with Adams Foods to launch the Mu cheese brand. Other brands like ChokaBlok ice cream, Yoo yogurt and Lathams dog food followed, with several more due to hit Tesco shelves later this year.
“Tesco is on to something here,” says Glassman. “After all, retailers have unparalleled consumer insight and can arguably pinpoint gaps in the market better than a lone supplier. Mix that with brand management expertise, excellent product delivery and brand personality, and you’ve got real potential for success.”

By bridging the gap between private label and national brands, venture brands give retailers a valuable opportunity to manage the margin mix within categories. An exclusive venture brand escapes industry price comparison and, if it resonates with consumers, can even help drive footfall into the store.

Opportunity awaits

The venture brand phenomenon is a creative example of retailer and supplier coming together to create equity.

The partnership lies in the co-creation, exclusivity and promotion-a mutually beneficial arrangement that generates volume and margin for both parties. Currently, the brand ownership lies with the manufacturing supplier. But how long until retailers recognize the true value of the brand equity created?
If retailers took ownership of venture brands, they could potentially open up a whole new revenue stream. And if the brand proved successful, it could even be taken further afield into other markets. The power of brand thinking and the creation of brand properties is an interesting dynamic in the trading mix and sure to continue to offer opportunities in the future.
Glassman says: “The real question is, when will other retailers in the UK wake up to this new trading strategy? And which big US retailer will be the first to capitalize on it here in America?