Advertisements
Tag Archives: cannibalise

Long live Smith’s chips: Short lived product line extensions, long term gains

13 Mar

Smith’s chips do it again, bringing out three brilliant product line extensions including new flavours of American pulled pork, Chinese Peking duck and Mexican burrito, with the tag line ‘take your tastebuds on a holiday.’

The flavours of the world range introduction came at perfect time to coincide with Chinese New Year of the Dog. And as it’s Easter in two weeks time, another perfect way to get the mind dreaming of better things to do! And eat! While chip traditionalists might call this crazy, the marketers of Smith’s are right on track with their long term strategy.

2ba904c0-9a43-41e3-8f62-1d71063bec53

The chip market in Australia was worth around A$872m in 2017 (IbisWorld, 2017). And it is dominated by two players: Smith’s and Snack Brands. Smith’s own brands including Red Rock Deli, Grain Waves, Doritos, Cheetos and Twisties to name a few. On the other side of the chip corner stands brands like good old Samboy, Thins, Cheezels, Natural and Kettle. Snack Brands Australia was bought by Philippines food company Universal Robina, delivering a big pay-out for a cleaver group of investors who bought the business from Arnott’s a few years before.

There is a large war in the chip isle, as the fight for your snacks is large. Back in 2011, Smith’s started with their 75% less saturated fat chip, and the healthy rollercoaster hasn’t stopped. We’ve seen introductions in different vegetables including beetroot, and the amazingly popular (and very scrumptious), sweet potato ranges due to changing consumer tastes. As well we’ve seen the growth and the demand for the premium chip. There are also gluten free and vegan ranges. Smaller players Tyrell’s is distinctively English and have differentiated themselves with old style packaging

Smith’s have been bringing out new and short lived product lines since 2003, when they teamed with big and well known brands to create Aussie flavours such as Bega Cheese, Heinz Big Red Tomato Sauce & Meat Pie, and Ham & Keen’s Mustard.

Smiths

Product line extensions are a perfect strategy for products such as chips where the growth of the category is very slow. It is predicted that the sector will only grow at 0.7% per year, and when you take into account Australia’s GDP being 2.5%, then this sector is underperforming.

So how do Smith’s and Snack Brands for that matter, maximize profits? By doing the un-natural thing and cannibalizing their own products by introducing product line extensions. Why would a brand do this you ask?

Bringing out short lived ranges of incredibly delicious and creative chip flavours is a great strategy to keep customers interested. It creates buzz and allows for perfect use of a seasonal chip introduction. And top that off with asking your consumers to create a flavour is even more engaging.

For example, to celebrate the footy finals, Smith’s launched Hot Wings that are buffalo wing flavoured. Doritos also now has their Blaze range, introduced during Super Bowl 2018. If you haven’t seen this TVC, watch it here. The rap battle between Peter Dinklage and Morgan Freeman is incredible.

The beginning of the Australian Summer at the end of 2017 saw the introduction of lamb and mint and Summer BBQ flavours. What a perfect way to sit back by the pool, or get out the cricket set and team that with chips!

Smith’s think tank and researchers obviously have THE best job in the world, and must have a great time designing new flavours, but they have also been smart and put them out to the public in competitions to allow their audiences to be involved and create new flavours. The top flavours have been voted on within social media, again creating hype and excitement. This has allowed for community building and connecting with consumers, as well as creating brand loyalty.

S3

Let’s go back in time and see some other fabulous things Smith’s have done (we can’t mention them all but share with us your favourite memories). In 2006, Flavours of the Commonwealth were launched to celebrate the Commonwealth Games being held in Melbourne.

Picture1

In 2008, comedians Hamish & Andy came out with the People’s chip.

S4

Smith’s have gone into this as a long term strategy, and while they may be cannibalizing their other chip varieties, it creates engagement and excitement, and bottom line profits. I don’t know about you, but I’m hungry for some chips. Long live the chip!

 

Advertisements
%d bloggers like this: