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Brand Health Check: Magners

Marketing, October 27, 2007

The over-ice cider brand has become a victim of its own success as imitators steal its share, writes Gemma Charles.

Magners, the pioneer of the over-ice cider category, is being forced to cope with a decline in its fortunes after a startling period of growth.

Earlier this month, Magners' Irish owner, C&C Group, announced that operating profit in the six months to 31 August has dived by a third to EUR67.9m (£47.4m), with sales flat at EUR375.6m (£262m). These figures were preceded by two profit warnings in July.

It was so different when Magners launched in 2005. It took the UK by storm and transformed the image of cider through ads that emphasised the drink's high apple-juice content and over-ice positioning.

Suddenly, drinkers in trendy bars and pubs who would usually have turned up their noses at the idea of supping cider were flocking to buy bottles of Magners; in the year to 28 February 2006, C&C's UK cider sales volumes had jumped 130%. In short, Magners succeeded in making cider fashionable.

Magners' success led to copycat products, eager to grab their share of this emerging market, being rolled out at an alarming rate. The biggest threat to the Irish brand came in 2006 when Scottish & Newcastle (S&N) relaunched its Bulmers Original brand with a similar bottle and label to Magners and, in case anyone was in any doubt, claimed in an ad campaign that it was also best served over ice.

Bulmers Original benefited from a lower retail price, being 6%-7% cheaper in the on-trade and as much as 20% lower in the off-trade. S&N applied further pressure on Magners, with its launch of the first draught variant of its Bulmers Original that can be served over ice as well as the addition of a pear variant.

Meanwhile, Heineken is eyeing up the market. It is testing a cider-based beverage in Holland called Charli, which is aimed at women and is expected to roll out in the UK.

In response to these threats, Magners has attempted a fight-back with the launch of a lower-calorie variant, called Magners Light, also aimed at women. In addition, it has pledged to keep up levels of spending on advertising and promotion, but will this be enough?

We asked Mark Hopper, commercial controller at SHS Sales & Marketing, which owns the Merrydown cider brand, and Sarah Essex, senior partner at strategic consultancy Prophet, who has worked for Diageo as a strategist, for their views.

DIAGNOSIS 1 - MARK HOPPER COMMERCIAL CONTROLLER, SHS SALES & MARKETING

Magners has done a fantastic job at creating a brand image from a standing start, and this has led to a strong consumer franchise.

One of Magners' core challenges remains getting the pubs and bars on-side. There are still distribution gaps it needs to fill and it must persuade the trade that its high cost-price translates into high margins and turnover at the point of purchase.

Magners must remain focused on engaging the consumer with innovative marketing ideas, such as its rugby sponsorships, but it should also rebalance investment into integrated marketing. In particular, on-trade theatre at the point of purchase will differentiate Magners, leading more consumers toward the brand. This will enhance sales and send out a powerful trade message.

Holding its nerve will be hard for the brand in the short term, especially in the current tough trading environment. But consumer loyalty, innovation, investment and expanding distribution will deliver long-term brand equity.

REMEDY

- Continue to engage with consumers via integrated campaigns and refresh the brand's advertising message.

- Launch a PR offensive within the trade to gain support and commitment.

- Realign the brand spend to connect with and inspire the consumer at outlet level.

- Innovate with revamped packaging and point-of-sale materials.

- Invest in consumer understanding to ensure targeted spend.

The marketing for the Magners brand, while seen as innovative and forward-looking by consumers since it created 'over ice', has remained focused on awareness and the intrinsic characteristics of the brand. But owner C&C has been insufficiently prepared for competition from entrants such as Bulmers Original.

By the time Bulmers Original launched a year later, Magners had not built a distinct personality or an emotional relationship with consumers, which may have defended it from me-too entrants. Moreover, Bulmers is addressing additional consumer needs, such as launching on draught in August, while next month, it will roll out the first of its
flavour variants, Bulmers Pear Cider.

While all long-drink brands are susceptible to poor summer weather, brands such as Guinness Draught, Guinness Draught Extra Cold, Pimm's and Pimm's No. 3 Winter Warmer have addressed issues of seasonality, weather and indoor versus outdoor drinking. So it can be done.