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On Gulder, Brand Equity and Extension

By Olu Akanmu

The news that Nigeria Breweries (Heineken subsidiary in Nigeria) is withdrawing GulderMax, an extension of the Gulder Brand from the market offers some important lessons on brand equity and line extension. The M2 Magazine, a Nigeria leading marketing management weekly recently broke the news and did some analysis on the subject, essentially concluding and applying the Al Ries principle that brand extensions typically are bound to fail. It opined that the GulderMax saga is validation of the Al Ries principle. While one will agree with this principle to a large extent, it is also important to note that the principle remains one of the most controversial among marketing practitioners.

The history of marketing is full of many extensions that had succeeded as well as those that have failed. The GulderMax saga provides us an opportunity to look at these issues again. Without traveling far away from home in Nigeria, we have in the same alcoholic beverage industry, the successful extension of Guinness Foreign Extra Stout to Guinness Extra Smooth by Guinness (Diageo Nigeria). Guinness Extra Smooth is a lighter stout to reach those who would have found the Guinness FES too strong and rough and will typically drink a good premium beer. GulderMax was a stronger, higher alcohol, darker beer to reach typical stout drinkers who want a stronger, and rougher alcoholic beverage and will consider a typical beer too light and less macho.

Why was the Guinness Extra Smooth Extension successful and GulderMax was otherwise? The two extensions from the arch rivals in the brewery industry in Nigeria offer some important context analysis for brand extensions and potential success. I distill the contextual issues in five lessons below.

Lesson 1: Only Strong Brands Can Successfully Extend Themselves. You cannot give to an extension what you don't have as a mother brand. The Gulder brand of today is much different from the Gulder that we used to know ten years ago. A lot has happened to Gulder in the last ten years that questions the "ultimateness" of its brand claim. The "ultimateness' of Gulder seems to have been more questioned internally within Nigeria Breweries than from its corporate competitors. Nothing expresses this more than a recent "Heineken" billboard with the big single –minded copy "Chairman". Take out the entire Heineken picture and replace with Gulder, on that billboard, it could have been the Gulder billboard of 1990. Gulder used to be the "Chairman", and other brands like Star were the members of the board. Gulder was the hero, the leader, the premium, the "Ultimate". It is no longer so with Gulder. Even before Heineken in the early 2000s, the "Star" beer carried a coup d'etat against the "Chairman" by launching a new premium international bottle before Gulder. The Star brand consolidated its coup d'etat by putting itself in a limousine belonging to the Chairman and rode into the city like a SuperStar. It was good for Star but it was not good for Gulder.

In essence, the "ultimateness" of Gulder had become questionable and its extrinsic (lifestyle) character has become amorphous. Its equity had become diluted and weak, yet it sought to extend itself. The result with the benefit of hindsight is largely predictable. An extension out of a weak Gulder is unlikely to be strong.

Lesson 2: If you want to determine the Strength of a Brand and its potential to extend, look at the strength of the brands in the category you want to extend to. Compounding the GulderMax challenge was the fact that it sought to take on the very strong "Authentic" Guinness Stout in its territory. It did not matter if GulderMax was attacking the outside flanks of the Stout category. The Guinness Stout fortress was too strong. Guinness launched the 1759 campaign. It first campaigned its authenticity in huge capital letters on billboards that it has been the original stout since 1759. It followed with a contemporary lifestyle expression of the modern stout drinker who is not the old stereotype physical macho stout drinker, but a young corporate executive meeting his friends for drinks at the bar, after work at six o clock. The launch of the Guinness Extra Smooth, the lighter stout extension, was part of the Guinness defensive game. The fortress built against GulderMax by a strong Guinness range of brands was just too strong.

Lesson 3: Depending on the defining character of brand, it will look like it is easier to extend down, (though with significant risk of equity dilution of the mother brand,) than to extend up. Which one is easier to do, a cheaper form of Peak Milk to target the low premium milk market or Cowbell Gold extending upwards from the low premium milk category? If "high-ness" is the defining character of beer, it will look like it is easier to extend into lighter beer than to stronger beer. That seems to be one of the differences between the Guinness move and the Gulder move. Toyota in creating the Lexus range recognized that "quality" at the topmost end of the car market is expressed differently as Luxury which Toyota cannot express. It did not go into the luxury category as an extension but launched a different brand. If the value proposition is distinctively different, a new brand to express the new value proposition single-mindedly may be better than a brand extension. This brand will however need a lot of investment. This perhaps is the role of the Legend Stout in the Nigeria Breweries portfolio.

Lesson 4: For products and categories where the purchases are done on an emotional level, a clear expression of extrinsic character of a brand is critical to unlocking the value of its intrinsic character.While Gulder has done a lot to show its strong intrinsic character as a quality beer through a series of its "Extra-Matured/ Great beer" campaigns, it might not have fully harnessed the benefit of this intrinsic quality because it is not linked to a resonating extrinsic character and claim with its target market. The extrinsic character of Gulder has become amorphous. The man of style, the modern cosmopolitan hero is no longer very visible in its brand identity. It is this modern cosmopolitan man that knows and buys the great ultimate beer, and drink it as badge to who he is. Without the clear visibility of this modern cosmopolitan hero, the intrinsic quality claim of Gulder might just have been standing on its own.

Lesson 5: International alignments of brand portfolio may sometimes compel the change of roles of brands within the company portfolio, sending pearl attackers to the mid-field and sometimes the side-lines. This may not always be visible to those outside the company. The "Chairman" today is not even Star anymore. It is Heinekens. It is the right thing for Heinekens as a global corporation to ensure that its country and local market portfolio conform to its global portfolio. Without this, its marketing spend at the global level will be largely sub-optimized. The Gulder Ultimateness might have been a victim of the Heineken global portfolio strategy. It is nothing to be sentimental about. Heinekens did the same with Amstel when it took over from it as the sponsor beer for UEFA Champions league. Amstel's portfolio role became re-defined. This is what Gulder is perhaps going through today. For Heinekens and its Nigeria subsidiary, the Nigeria Breweries, as long as they ensure that beer drinkers who seek premium quality and Ultimateness, (even if they leave Gulder ), go for Heinekens, and even pay a higher premium for its international stature, their cash machine will keep ringing louder and louder.

Olu Akanmu has an un-usual diverse experience at very senior levels in key strategic industries including manufacturing, health-care, telecommunications and financial services, enabling a deep wealth of perspectives in solving business problems. This piece is published in his blog: which contains many of his writings, presentations and lectures on the subjects of marketing and strategy.


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