Analysis: Virgin goes for bust - Virgin Cola made its mark through bubbly PR. Now it has pounds 5m for marketing. Sharon Marshall writes

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.

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

too.



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

own-label 31.8%.



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.