Once a static market, the yellow fats sector has undergone a recent
renaissance. Brand owners are piling money and marketing effort into
grabbing a share of the pounds 788m market, writes Claire Murphy
Which top-five grocery sector is set to receive the most attention from
brand owners this summer? Snacks? No. Cereals? Try again.
The market that is keeping marketers, designers and advertising agencies
working late at the moment is the dubiously named but lucrative yellow
fats market, worth pounds 788m last year.
Dairy Crest has announced plans to treble the advertising spend for its
Clover dairy spread to pounds 7m. Last week, news emerged of a major
shake-up at Anchor’s marketing department aimed at increasing the
consumer focus to capitalise on the brand’s growing market share.
And two weeks ago, Unigate-owned St Ivel confirmed it is to pump pounds
4.5m this year into relaunching its low-fat spread Gold. Rumours also
suggest Van den Bergh Foods is preparing a massive promotional kick for
Flora, the number one brand that has seen its value share of the market
fall from 11.4% to 9.8% in the past year (IRI).
So what has prompted this flurry of activity? It can be traced back to
the launch in 1991 of I Can’t Believe It’s Not Butter by Unilever’s Van
den Bergh Foods. Followed last year by St Ivel’s Utterly Butterly, these
are two brands that, through skilful marketing and a product
proposition that was exactly in the right place at the right time, woke
up consumer interest in a previously dull market.
Yellow fats is one of the few markets to come full circle in the past
few decades. In the 60s butter was the thing; margarine was seen as
cheaper and more down-market. Then came the 70s, with the beginning of
doubts about cholesterol levels in butter.
Manufacturers started pushing margarine as a healthy alternative. Van
den Bergh’s Blue Band was the archetypal 60s margarine that was soon
overshadowed by the advent of polyunsaturated margarines, including
Flora, and Kraft Jacob Suchard’s Vitalite.
A battle to launch brands with ever-decreasing amounts of fat began.
Even supposedly ‘healthy’ brands like Flora were extended into ‘extra
light’ and ‘reduced salt’ variants.
St Ivel launched Gold as a healthy spread but subsequently added the
word ‘light’ to the brand to emphasise the positioning.
By the late 80s the health debate had reached its height and butter
sales were at an all-time low. Then, just as it looked as if butter and
every product akin to it was doomed, consumers started to yearn for the
taste of butter again. Dairy Crest was the first to come up with a
‘dairy spread’ in 1983, with Clover.
The watershed was Van den Bergh’s decision, in 1991, to bring over from
the US its I Can’t Believe It’s Not Butter brand. It provided a bridge
for consumers still worried about their fat intake but fed up with
‘margariney’ tasting products.
It grabbed 2.3% of the margarines and low-fat spreads sector in nine
months, and was followed by St Ivel’s Utterly Butterly last year. The
only volume growth in the entire market now comes from this sector,
which each of the main players - Van den Bergh, St Ivel and Dairy Crest
- have a presence in. Butter is seeing healthy value growth but mainly
because of increases in prices. Low-fat products, led by St Ivel’s Gold,
dropped 8% by volume and 5% by value last year (IRI data).
St Ivel’s marketing controller yellow fats, Dave Hall, describes the
sector as ‘static’ rather than declining. He maintains there is still a
sizeable number of consumers who, while not being health freaks, choose
to limit their fat intake.
Hall denies St Ivel is cannibalising Gold with Utterly Butterly,
pointing to the 5% value drop in the polyunsaturated sector, led by
Flora, as the most likely area to lose consumer loyalty. St Ivel has a
product in this sector - Mono - but Hall describes it as a niche brand.
Observers suggest Van den Bergh, though still the largest fats producer,
has lost the marketing high ground. The company is left with Flora in a
declining sector and I Can’t Believe It’s Not Butter still number two to
Dairy Crest’s Clover.
The challenge for Van den Bergh is to grab the innovation mantle again
and re-assert Flora as the top yellow fat in consumers’ eyes. A
spokesman said the company will spend pounds 16m this year on
advertising, through agency Ammirati Puris Lintas, ‘to maintain the
brand’s relevance and strength’.