ANALYSIS: Is NPD stale at McVitie’s? - McVitie’s new product development initiative appears to have crumbled. Last week Marketing revealed that it was slashing its programme in half. Danny Rogers investigates the biscuit company’s

Last year McVitie’s flooded the biscuit market with a range of new brands and product variants. Forty-one new biscuit products arrived on supermarket shelves, following on from 35 in the previous year.

Last year McVitie’s flooded the biscuit market with a range of new

brands and product variants. Forty-one new biscuit products arrived on

supermarket shelves, following on from 35 in the previous year.

But McVitie’s last week announced that it has seen the future and it is

not NPD (at least not on such a large scale). Instead, it is slashing

its new product development by 50%.

The large sums of money which will be saved by cutting back on NPD will

be channelled directly into greater advertising support for core


And it is from these core brands that McVitie’s now sees its main NPD

efforts stemming.

McVitie’s countlines marketing director, Mark Horgan, explains that the

firm’s marketing effort has been spread too thinly. The biscuit market,

of which McVitie’s owns five of the top ten brands, has become lumbered

with a reputation for launching underperforming products.

Industry estimates indicate a success rate of less than 10% for all NPD


Finding the core

Horgan is the first to admit to McVitie’s own patchy form in NPD. While

the Ace countline and the Go Ahead low-fat range are both heading for

core brand status, the countlines United and 54321 ranges have been axed

and the Masterpieces range is set to follow.

David Jones, chairman of DMB&B, an advertising agency with a strong

portfolio of FMCG clients, supports McVitie’s move.

’There has been too much wasted time and money on fruitless NPD.

Marketing directors are rightly asking, ’Why are we launching 40 new

products a year when we can only really afford to invest in one or two’

Companies have been allowing brand managers to have too much fun.’

The concentration on core brands, believes Horgan, is the only way for a

market leader to stimulate a stagnant biscuit market.

Overall, the sector is growing by a mere 3.8% per annum and Horgan says

retailers perceive it as ’boring’. The top ten brands, on the other

hand, are growing by a more encouraging 6.7%.

But there could be another factor behind the strategy. That the

challenge of own-label has brought home to McVitie’s the need to protect

its core brands.

One senior ad agency source points to the high-profile copycat battle

between McVitie’s Penguin and Asda’s Puffin bars earlier this year. ’The

Puffin case highlighted the weakness of Penguin and made McVitie’s

realise that you’ve still got to build old, established brands,’ says

the source.

Tim Potter, FMCG analyst at Merrill Lynch Pierce Fenner and Smith, says

that the biscuit manufacturer has done well to develop the Go Ahead

range of low-fat biscuits and cakes, and indicates that this is the kind

of strong branding it should pursue.

Backing a sure thing

’There’s no need to commit major resources elsewhere. You can’t

criticise the firm for focusing on core brands. In stock-market terms it

makes sense to back winners.’

Indeed, in a corporate sense, McVitie’s has moved in line with other

parts of the United Biscuits group.

Over the past 18 months, under pressure from the City, UB’s KP arm has

similarly concentrated on its strengths.

It has thrown its marketing muscle behind corporate-branded nuts and its

five core crisps brands at the expense of its underperforming


To many observers, McVitie’s strategy looks right for both the company

and its market. But what is good for McVitie’s does not necessarily

apply to other sectors or even other companies within the biscuit


Julie Davidson, group product manager for NPD at Cadbury, which launched

its Astros confectionery product this week, says: ’We have a tradition

of consistently high NPD and have no plans to change this. Innovation in

our market is critical but it is always a question of striking the right

balance between new and existing brands.’

McVitie’s biscuit breakdown

Year       New            Advertising

           products       spend

1995       35             pounds 6.3 m

1996       41             pounds 7.6 m

1997       20             pounds 9.0 m

1998       Fewer          pounds 13m+

           than 20        (projected)


- Washing Powders

Manufacturers in the washing powder sector such as Procter & Gamble and

Lever Brothers have refocused on core brands. The threat of

supermarkets’ own-label products, the withdrawal of Lever’s Persil

Power, the failure of concentrated products to establish a large market

share and fears that consumers were confused by too many product

variants have forced a move back to ’big box’ products.

- Alcoholic drinks

Brewers have been prolific. A stream of new products has hit the beer,

lager and alcopops sectors. Bass has developed the hybrid-ale sector

with its Caffrey’s Irish ale and revitalised the lager sector with

Carling Premier. It has also found success with its alcopop, Hooper’s

Hooch, while Whitbread, Carlsberg-Tetley, Allied Domecq and Matthew

Clark are not far behind. However, the life span of many new products in

the alcopop sector is likely to be short.

- Confectionery

Cadbury and Mars have been looking outside their core brands because

supermarkets have yet to make an impact with own-label. Cadbury launched

Fuse, Wispa Gold and Astros. Mars, which has a reputation for

concentrating on core brands, has stepped up NPD and launched

low-calorie chocolate bars Flyte and Mars Lite and Galaxy brand

extension Swirls.

- Soft drinks

The soft drinks market has been awash with new flavours, but not all

will achieve core brand status. Coca-Cola and Pepsi have been hit by the

arrival of own-label products. Coke withdrew Fruitopia from the UK last

year, but it has launched two products in the US, Citra and Surge.

PepsiCo invested in repackaging Pepsi last year with marginal returns,

but has had success with Pepsi Max.