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.
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
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.
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?”
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.
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?