Why would you sell a brand? Or keep it?
The importance of brand architecture
Recently, companies like Unilever and Nestlé have critically reviewed their brand portfolios. Unilever announced the potential sale of some of its Dutch brands, such as Unox and Conimex.
At the same time, Nestlé is restructuring its water brands, including Perrier and Vittel, into a separate entity. These moves highlight a clear trend: brand restructuring is becoming essential to remain competitive.
But how do you determine which brands become core brands? And how do you maintain flexibility for future growth?
The answer lies in the strength of a strategic brand architecture. By focusing their portfolio, companies can strengthen their core brands, maximize marketing efforts, and stay relevant in a rapidly changing market. But how can your company apply these lessons? And what are the essential steps to strategically manage your brands?
The Complexity of Brand Portfolios
Managing a brand portfolio is an art in itself. Many companies face critical strategic decisions: consolidate or expand?
Major players like Unilever and Nestlé often opt for consolidation, merging or divesting brands. From a cost and operational perspective, this can seem like an attractive choice: fewer brands mean less complexity and greater focus on core activities. However, consolidation isn’t always the best answer. A shifting market sometimes demands boldness and vision—the courage to create a new brand, explore a different positioning, and invest in growth.
A strong example of this is our collaboration with Arvesta, where we helped streamline their existing brands while also creating space for innovation by developing new brands within their portfolio. This strategy not only delivered immediate benefits, such as improved positioning and greater market segmentation, but also ensured future flexibility.
In a dynamic market, a well-established brand can later be divested or sold. For example, the creation of Equitone for Etex introduced a new brand within the existing portfolio, giving it a unique identity to stand out and differentiate itself for potential partners or buyers.
Similarly, to allow the outdoor taps in Aqualex's portfolio to stand more independently, we assisted in creating a separate entity for this product line under the name ‘ALASQ.’ This repositioning not only gave the outdoor taps their own identity but also allowed them to establish a stronger profile within a specific market, all while maintaining the core essence of the Aqualex brand.
When managing brand portfolios, we often encounter three major challenges:
- Fragmentation: How do you prevent brands from overlapping and diluting resources?
- Synergy: How do you ensure brands complement each other rather than compete?
- Flexibility: How do you anticipate future growth or changes in the market?
We believe that a strategic balance between consolidation and creation is key. By making clear choices and organizing your brand portfolio around core brands and supporting brands, you not only build a strong brand but also secure a resilient future.
Tips to Optimize Your Brands
- Start with an Audit: Map out your brands and evaluate their current value and potential. Understanding where each brand stands is the first step to optimizing your portfolio.
- Focus on Core Brands: Allocate your resources to the brands that deliver the most value. This doesn’t always mean the brands with the highest revenue but those with the greatest strategic impact.
- Plan Ahead: Protect your brand portfolio for future activities and remain prepared for change. As we've seen with our clients, flexibility is key—creating space for both growth and strategic divestments ensures long-term success.