Magazine article Marketing

HP: A True Brit Hits Back

Magazine article Marketing

HP: A True Brit Hits Back

Article excerpt

The products don't claim to be chic, but HP is grabbing new markets by the tastebuds with tons of tang, spice and, of course, that ever-popular sauce, says Alan Mitchell

Question: what would you do if a) your biggest brand was stuck in unfashionable and static markets with little or no potential for international expansion, and b) if your second biggest brand is a pathetic little also-ran compared to the brand leader which has something approaching ten times your market share?

At a time when the modern marketing role model is all to do with the glamour of pan-European and global brands, most marketers would probably answer along the following lines: "Put your old brands out to pasture and milk them for as much cash as possible. Use that cash to buy your way into faster market-growing sectors with more potential."

But it's a striking fact about BSN, the huge French drinks and food conglomerate, that it is not rushing with the crowd down the road of internationalisation. Indeed, it sees an opportunity to exploit the shortsightedness of those who see the greener grass of quicker profit growth in areas outside their own back yard. As Chris Bruce, marketing director of BSN UK outpost HP Foods, says, "Other people's cash cows are fertile opportunities for market entry and new product development."

Since HP was taken over by BSN in 1988, it has had the funds and the resources to pile into production innovation. The erstwhile "really conservative style and strategy" has "changed its orientation" under BSN. But it is still putting its faith in tried and trusted traditional, national brands.

"If you keep your base business in good shape, you can generate the commercial freedom to attack new business. If you put it to one side, you'll soon find you've got a problem," declares Bruce. "Our strategy is to grow the core and extend it into other market sectors, using the values of our brands to make it stick."

There are two planks to HP's strategy: heavy advertising designed to show the relevance of old brands to modern habits ("It's not particularly our objective to be share of voice leader, it is not particularly our objective to grow our share at the expense of Heinz table sauces. There is a market there to be stimulated"); and product and packaging development.

A stream of new products, formulations and packages has been rolling out of HP's Market Harborough headquarters: HP Baked Beans relaunched with a new recipe and new graphics; ketchup went into larger 567 gramme bottles and brown sauce into plastic bottles; the HP Fruity recipe was revised and the brand extended into barbecue-flavoured sauces; an entirely new range of Lea & Perrins vinaigrette salad dressings (taking on Kraft in the process).

But "growing the core" is the crux of HP strategy -- and it's problematic. Take brown sauce. The company's two brown sauce brands, HP and Daddies, together command nearly two-thirds of the |pounds~42m dollop-on-the-good-old-British-fry-up market. Highest consumption is among cash-strapped C2Ds. Volume growth last year was minus 2%. The pan-European roll-out potential rating must be snowball-in-hell. The products' association with buzzwords like modern, healthy, ethnic, adventurous is remote.

Yet HP is pouring nearly 50% more advertising investment into brown sauce than rival Heinz is putting into tomato ketchup (a market nearly twice the size), and it's refusing to accept there's not a lot more potential to be scraped off this particular plate. "There aren't sleeping areas of the range. We don't sit on our hands with HP or Daddies and say 'Well really our opportunity is to find new market places that are sexier, and we'll just take profit from these brands'," says Bruce.

Brands like HP Fruity have been relaunched with new recipes. And a five-year-old ad campaign using Frank Bruno has rammed home the message again and again: many modern dishes, like burgers and fried chicken, benefit from a dollop of brown sauce. …

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