Vimto hits a purple patch

Since its creation in 1908, Vimto has been many things to many people.

To temperance movement members it was a tasty alternative to the demon drink, to people growing up in the north of England it was usually the first soft drink to pass their lips, and to Muslims fasting during Ramadan the purple potion provides a source of strengh. To AIM-listed Nichols, however, Vimto is the anchor brand for Vimto Soft Drinks (VSD) - a brand whose recent rapid growth has been responsible for the parent company’s share price almost tripling over the past three years.

VSD currently has an annual turnover of £56m - just shy of the £60m target MD Jonathan Bye hopes it will top by the end of the year. But he’s not just relying on the halo effect from the biggest event in the sporting calendar to give the company a boost. He is also stepping up its NPD, marketing and licensing deals.

The “refreshingly different offer” of Vimto has already become “a national brand with a regional strength, where before we were a regional brand”, claims Bye. But licensing deals will enable the company to extend its reach even further. He cites its recent deal with WeightWatchers to make a nine-strong range of low-calorie soft drinks, which hit shelves in January. The appeal of the WeightWatchers brand was obvious, says Bye. “It’s got a global reach and over 50% household penetration in the UK so when we had the chance to acquire the licence it was another string to our bow.”

At a time when government is urging all food and drink companies to be more responsible, promoting no added sugar soft drinks is certainly on-message. And it’s a strategy that’s clearly working for VSD, which reported a 20% upswing in its Vimto no added sugar variant last year [Nielsen 52w/e 29 October] thanks in part to mounting consumer health concerns about sugar but also to a recipe reformulation in June 2010.

The company is assessing how zero-calorie natural sugar substitute Stevia - which gained EU approval in December - could benefit the VSD portfolio - though Bye stresses it’s still early days. Another area he is tentatively exploring is the sports and energy drinks market. VSD currently doesn’t have any presence in the market and Bye believes that presents a major opportunity - if it can add a real point of difference.

“At the moment there are a lot of brands being thrown at the market that don’t have that,” he says. “Energy and sports drinks is the fastest-growing segment of the soft drinks sector, so you can see why we want a part of it but it has to be a product people will want to drink and come back to.”

In the meantime, it has plenty of other new assets to focus on. Last April, it joined forces with Dragons’ Den entrepreneur Levi Roots to create a range of Caribbean soft drinks. Annualising the range’s current run rate would put sales at about £4m - “a fair effort”, says Bye, given that the likes of Sainsbury’s and Tesco didn’t stock the drinks until the autumn. “With the Olympics coming and the Caribbean trend strengthening there is a huge opportunity for this brand,” he claims.

But Vimto will always come first, says Bye. Despite impressive £21m growth in the past three years, Bye claims there is still significantly more distribution to be had. He plans to up ad spend on Vimto from £6m in 2011 to help drive this. The brand has already successfully shifted its focus from mums and kids to the teen market, and is ramping up its digital spend this year with a number of initiatives based on its ‘Seriously Mixed Up Fruit’ positioning.

Bye is also thinking about where the brand can stretch to next. While orange and apple flavoured Vimto cordials were a flop with consumers back in 2007, more recent variants that have stayed truer to Vimto’s ‘purple shlurple’, appear to have resonated. Cherry Vimto, launched two years ago, has already notched up £4.2m in sales and raised the brand’s profile in the south.

The company hopes its strawberry Vimto, which went on trial in Asda in April, and a new hot mulled cordial can add further momentum. And it’s not just drinks shoppers can also get their hands on Vimto ice lollies and sweets - with licensed confectionery alone worth £15m at retail. VSD’s appointment of James Nichols, who has recently moved to the role of head of brand licensing after overseeing the Sunkist brand, suggests there could be more in the pipeline.

Bye would also like to see more retailer buy-in for Sunkist, which was first sold by the company under license about 10 years ago and now sells circa 16.8 million cans a year. In 2010, VSD added orange and passionfruit, summer fruits and lemon & lime to the line-up and last year it sponsored the Glass Butter Beach festival. “A big desire is for one of the key retailers to be brave enough to try Sunkist. I’ve no doubt if it was listed, it would sell tremendously well,” says Bye.

As many of VSD’s other brands already do. Indeed they’re rather aptly enjoying something of a purple patch under Bye’s direction - and that has a lot to do with his even-handed approach both to buyers and VSD’s ever-growing portfolio of brands.

“We’re friendly but we’re quite aggressive too - it’s a competitive world out there,” says Bye. “The important thing for us right now is to keep the momentum we’ve enjoyed over the last four years and balance the drive on Vimto and adding new names. That will do us well.”