Discount local brands faring better than premium in New Zealand

NEW ZEALAND'S TOP LOCAL BRANDS

Watties was the brand New Zealanders ranked the highest local name in the country’s list of its top 100 brands in 2019, finds research by Campaign Asia-Pacific and Nielsen. Now owned by Heinz, the food manufacturer has a strong heritage in New Zealand stretching back to the 1930s, when it was founded. Watties rose 10 places in the top 100 brands list between 2018 and 2019, from 15th position to fifth. This is a rare achievement for a local brand and means it outperformed behemoths like Google (which fell three places), Visa (which fell one) and Nike (which also dropped two spots).

What exactly it is that New Zealanders love more about Watties than Nike is hard to say: perhaps it is simply that it represents a home brand in a year in which New Zealand was forced to face the unimaginable horror of terrorist attacks on its own soil, which may have had the effect of focusing attention on nationality and what it means to be a New Zealander.

If that sounds too far-fetched to explain Watties’ popularity, Tony Bradbourne, executive creative director and partner at the agency Special Group, says budget could also play a role. Along with Watties, the lower-priced local brands Pak'nSave, the discount supermarket chain, also performed well, rising four places in 2019 to 10th position. Low-price retail store chain The Warehouse was even more impressive, jumping up from 69th position to 15th.

“Is this because consumers are feeling the pinch in New Zealand? Are they spending more time at, and with, budget brands?” Bradbourne questions. It could be so: the Reserve Bank Interest rate in New Zealand has been dropped to stimulate the economy, he notes, while doctors and teachers are striking for more money and house prices are falling from their highs 18 months ago. For Watties in particular, it’s hard to point to any new product or significant campaign that could obviously explain that jump otherwise, Bradbourne says.

Mark Jenner, Ogilvy international MD and NZ business director, says there’s more that can explain the success this year of Pak’nSave and The Warehouse. “Pak’nSave’s success is testimony to consistency of brand proposition, communicating with simple stories ‘well told’ and the power of heavy media weights,” claims Jenner.

“Their now-famous ‘stick-man’ creative campaign, featuring a cartoon stick-man that communicates the week’s grocery specials, works on a number of levels. First, its simple production values underpin and reinforce Pak’nSave’s discount proposition; second, it is creatively unique and features well-written, genuinely funny stories, so it achieves high cut-through; third, its longevity means it is instantly recognisable, driving media efficiencies and high, correct brand recall. Overall, it’s a tribute to the power of creating and, critically, continuing to use a powerful communication property. New Zealanders love ‘stick man’ and reward the Pak’nSave brand accordingly.”

Jenner says The Warehouse’s huge rise, meanwhile, could reflect the store’s return to a better balance of brand communication and retail advertising. “The retailer had succumbed to the temptation of running heavy retail advertising,” he says. “Thanks to people like [advertising experts] Peter Fields and Byron Sharp, we now know through overwhelming, global, empirical evidence that a balance of brand and retail communication is ideal.

“A return to communicating its positioning line ‘Where Everyone Enjoys A Bargain’ talks directly to New Zealanders’ love of getting a great deal,” says Jenner. “It also provides a platform to reinforce its range and store presence, two attributes on which it had lost its way and surrendered ground to arch-rival K-Mart. [K-Mart also had a stellar rise up the rankings in 2019; but it still finished way behind The Warehouse in 130th position]. Finally, winners always need a little luck and The Warehouse’s was timing. Their switch back to owning ‘bargain’ coincided with a slow-down in the New Zealand economy, in house prices and in business confidence. All these factors have contributed to a general consumer malaise, factors helpful for discounters.”

Where everyone gets a bargain... �� #2018In5Words pic.twitter.com/CPQb1iFwHr

— The Warehouse (@thewarehousenz) December 13, 2018

On the other side of the scale, more premium local brands appear to have fallen down the consumer rankings. Appliance firm Fisher & Paykel (now owned by the Chinese company Haier), for example fell four places to 16th position, while confectionery makers Whittakers dropped 22 to 38th position. Jenner says the former’s ‘local-ness’ is both a strength and a weakness. “While it continues to sell well as a mainstream brand, at the higher end of the market it is less aspirational. Consumers purchasing expensive kitchens prefer their whiteware brand to be European. Additionally, Fisher & Paykel’s strategic focus is definitely in international markets and on its health division, so perhaps this is also contributing to its drop in position.”