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The success of Procter & Gamble’s newest venture into the UK soft

drinks market, Sunny Delight, has shocked many adults who have tasted

the ultra-sweet liquid, and food experts who have criticised it for its

low juice content.

But it is difficult to argue with sales that have beaten the mighty

Coca-Cola in the past month, and equally impressive repeat sales. All

the evidence shows that Saatchi & Saatchi’s advertising slogan - ’The

great stuff kids go for’ - is right on the nose.

We shouldn’t be surprised that the drink is doing so well. Its success

underlines an essential truth about P&G: that when it sets its mind to

something, its years of marketing experience - Sunny Delight was

exhaustively test marketed in Carlisle for 18 months before its national

roll-out in April - and distribution muscle combine to give it a head

start.

Sunny Delight has three big selling points. First, it is cheap; at

pounds 1.19 for 1.5 litres it compares extremely favourably with other

juice brands.

Market leader Tropicana sells for pounds 1.99 a litre.

The reason that it is so cheap is that it isn’t a real juice like

Tropicana.

It is more like a squash, with a juice content of less than 5%. But

owing to its packaging and position in the chiller cabinet, shoppers

perceive it as a juice and buy it instead of other juice brands.

Sunny support

Second, it has been backed by a pounds 10m marketing support package -

the kind that only multinationals like P&G can afford. Besides TV

advertising, Saatchis has also created press and poster ads. The product

has also been backed by a significant amount of in-store promotion.

Third, it has achieved almost blanket distribution in multiples,

independent grocers, forecourt retailers and CTNs. The listings in each

shop tend to be large scale too, aided by the small shelf space that

each bottle takes up. P&G is a great believer in the Direct Product

Profitability (DPP) ratio, which equates product price to the amount of

space it takes up. Sunny Delight has a healthier than average DPP

ratio.

It is also thought to offer the retailers better-than-usual margins -

crucial to convince them to stock a product which competes with their

own-label versions.

Sunny Delight is the second food and drink product that P&G has launched

in this country, the first being Pringles. The snack brand has

experienced similar growth patterns to its new soft drink sibling (see

table) and is now the second-fastest growing brand in the Nielsen top

100.

New territory

Food and drink is a fledgling sector for the company. In Europe P&G is

far better known for its detergents and personal products. But the

success of both Sunny Delight and Pringles illustrates why the

Cincinatti-based fmcg giant is lauded as such a bastion of marketing

excellence. It also reflects the expertise of Paul Polman, P&G’s UK and

Ireland general manager, newly promoted to president of P&G’s US laundry

and cleaning business.

’Sunny Delight is a classic piece of marketing,’ observes Andrew Seth,

former chief executive of P&G’s arch-rival Lever Bros, and now

non-executive director of The Added Value Company.

’That it can come into a market which it doesn’t have much of a

background in and do so well should make its competitors feel humble.

They shouldn’t have allowed P&G to come in from left field.’

But although it looks from here as though P&G has conjured up an

instantly successful food and drink heritage, the company’s history in

the sector in the US shows its learning curve.

Over the decades P&G had acquired a disparate package of food

brands.

Its oldest, Crisco (originally a ’shortening’ product and now a cooking

oil), was introduced in 1911. It bought Duncan Hines cake mixes in 1956,

Folgers coffee in 1963 and introduced Pringles in 1972. By the early 80s

P&G had identified soft drinks as an opportunity sector, snapping up the

Crush and Citrus Hill brands.

But cracking the US food and drinks market proved difficult in the early

80s and, for a while, it looked as if P&G would abandon the sector. The

Duncan Hines brand struggled against Nabisco (it has now been sold),

while the Crush and Citrus Hill brands also failed to hit the mark.

The latter weren’t long for the P&G stable, and were sold off to Cadbury

Schweppes. That proved only a temporary hiccup, and by the end of the

decade Pringles had become P&G’s top export brand. In 1989 the company

bought Sunny Delight, at the time a small brand sold only in Florida and

Southern California. Since then, thanks to P&G’s marketing and

distribution might, Sunny Delight’s US sales have tripled.

The turnaround in fortunes for P&G in the US food and drinks sector

encouraged it to move in on the European food market in 1991, when

Pringles was launched.

For the first six years, P&G used Food Brokers to sell in the brand -

marketing and distribution was only taken in-house last year when it was

decided to roll out Sunny Delight nationally too.

Opportunity knocks

It is still not plain sailing in Europe. P&G is thought to be close to

selling its Valensina brand, acquired when it bought German drinks firm

Rolf H Dittmeyer in 1984. Sister brand Punica, a sports drink, has also

had patchy fortunes - a small-scale UK test market has now been

abandoned with no plans for a national launch.

But food and drink has been identified by P&G as a sector of opportunity

- part of its ’Breakthrough’ strategy of doubling its dollars 36bn

(pounds 22bn) turnover in the next decade. In a recent speech, John

Pepper, P&G’s chairman and chief executive, reminded the company’s

shareholders and observers of its well-established tactic of creating

global brands. He quoted Olean - the company’s revolutionary food

ingredient which causes fat to pass through the body undigested - as one

brand with global potential.

The company is now considering the feasibility of rolling out Sunny

Delight across Europe. It is thought that P&G prefers to pour all its

juice expertise into one brand, which accounts for the possible

Valensina sale.

Food and drink accounts for 11% of P&G’s turnover globally, but much of

this is concentrated in the US at the moment. If the company wants to

meet its ambitious targets for the next ten years we can expect it to

put even more effort into rolling out Pringles and Sunny Delight right

across Europe and beyond.

SNACKS SALES

Value sales           52 wks to May 97  52 wks to May 98  % change

                         (pounds 000s)     (pounds 000s)

Pringles                        75,237            99,878      32.8

Hula Hoops                      69,876            68,266      -2.3

Walkers Crisps                 426,556           412,558      -3.3

Quavers                         63,296            61,019      -3.6

Golden Wonder Crisps            50,883            48,119      -5.4

Others                         168,552           188,854      12

Total                        1,655,465         1,686,877       1.9

Source: IRI