BITTER COMPETITION : THE HOLLAND SWEETENER COMPANY VERSUS NUTRASWEET

- Submitted by Dheeraj Reddy Budamala

The “branded-ingredient” strategy

The strategy that Searle adopted in order to take Aspartame to the market, branding it as
NutraSweet, is more commonplace now, easily found in products ranging from food to
computers (“intel inside”) to entertainment (“dolby”) to garments (“lycra”). I would just like to
make a brief discussion of it here in this note, and analyse how it can be effectively utilized by a
company to market an ingredient.

There are many advantages to ingredient branding, one being an added credibility to the host
brand by virtue of the popularity of the ingredient brand. If the ingredient brand has a follower
base, it might even succeed in providing a ‘ready-made’ customer base for the host product.
Especially in a case where the ingredient is very pivotal to the performance of your product, like
maybe lycra for a high-performance athletic sportswear segment, the ingredient can even be
one of the strategies for a host company to enter the segment. In other ways, the ingredient
can be a passport for entry into that segment. That’s how powerful ingredient branding can be,
if done the effective way. And apart from these advantages, there’s also the added benefit of
optimization of costs in the form of research, distribution and promotion for both the
ingredient manufacturer and the host company.

But it’s not to say that the branded-ingredient strategy is for everybody or for every ingredient.
There are risks involved. For example, if the host brand is an established leader in the segment
already, the adoption of a branded ingredient may even downgrade its status from premium to
a brand that has the ingredient, just like other brands in the segment. Therefore it is generally
accepted that branded ingredients work great for bottom-end players and doesn’t help the top-
end players much. Then there is the risk of the ingredient brand upstaging the host brand itself.
And also, it complicates the process for the host brand as they need to find an ingredient brand
that does not conflict with their core values.

So, for a company looking to brand an ingredient and market it, I think these are the
considerations to be made. It needs to be ensured that the partnership of the ingredient brand
with the host brands is win-win, otherwise it may not really have many takers. Also, care should
be taken that the brand doesn’t become too generic following which it may lose its value in the
consumer’s minds, and as a result, the B2B marketplace.