Promoted on a diet of free PR, relying heavily on the support of the
grinning face of its bearded founder, but with distribution of just 30%,
Richard Branson’s Virgin Cola has been viewed as little more than an
irritant to Pepsi and Coca-Cola over the past two years.
When it launched in the UK in November 1994, Coke sent a can of Virgin
Cola to every employee labelled ’The Enemy’. It has since spread abroad
selling, albeit in limited amounts, in Australia, France, Japan, Ireland,
and on test in Philadelphia. But critics say Virgin Cola has been more a
PR success than a threat to the cola giants.
Now it’s getting serious. Last year it spent just pounds 500,000 (MEAL)
on ads. This year it claims it will spend pounds 5m through Rainey Kelly
Campbell Roalfe, which will be predominantly TV. This puts it within
reach of last year’s Pepsi spend (pounds 6.9m, MEAL September 1996).
Virgin is also in talks with major multiples, and will break its
exclusive deal with Tesco by seeking distribution through other
supermarkets. In January, the European Commission outlined restrictions
on Coca-Cola & Schweppes Beverages which will make it easier for smaller
players to compete. Virgin is the first soft-drinks firm to take full
advantage of this with plans for rapid expansion until distribution
levels match Pepsi’s in the UK.
This is Virgin’s entry into the big league. Its distribution and ad
budget will be on a par with rivals. Virgin claims that its sales can be
Each cola maker is able to produce favourable, if widely varying market
research sales figures, but Virgin’s latest suggest its rivals should be
nervous. Although its national share is only around 3%-5%, Virgin claims
that where its cola is sold in direct competition with Pepsi, it outsells
the boys in blue.
According to AC Nielsen quarterly figures to January, in the Tesco stores
where Virgin is stocked it had 21.3% volume share against the 9.6% taken
by the combined sales of Pepsi brands. Coke’s brands had 37.2% and
Virgin Cola’s marketing director James Kydd says Virgin is already making
a trading profit and believes it is capable of matching its rivals in the
off-trade sector if given equal distribution and support.
Virgin has, however, always been prone to grandiose claims. Richard
Branson said in 1995 that he would shave off his beard if he couldn’t
equal Pepsi’s 20% total market share by the year 2000, and he must still
be far from confident that he won’t have to reach for the razor.
Pepsi is spending millions trying to buy into its youth audience. It has
bought up the Trocadero, The Chart Show and even reportedly had a shot at
the Spice Girls - but all the street cred it is trying to buy has always
been automatically associated with the Virgin name.
Virgin, though now competing with the big boys, retains the fleetness of
foot of a smaller player. It decided on and produced its Pammy bottle
within weeks. Any attempt by Pepsi or Coke to model their brand on a
pneumatic blonde starlet would have been met with objections by an army
of advisers, country chiefs and marketing heads.
But this is still the territory of the PR coup and smaller players can
always have more flexible marketing.
Virgin knows that the launch hype is over and it must now make the
transition from noise-making wannabe to a serious rival to the cola
giants. That means getting onto more shelves, and greater marketing
muscle to support sales.
The industry will watch the next few months with interest to see whether
Branson’s entry into the cola wars has more than just PR fizz.