Virgin steps up cola campaign

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The Independent Online
Richard Branson's Virgin Group is accelerating its attack this week on the giant cola manufacturers. The move follows its decision to enter the financial services sector and is matched by an expansion of the company's recently launched Vodka oper ation.

Virgin cola will now be available through independent shops. The cola, launched in November and sold mainly through Tesco, Iceland and the Thresher chain, has an estimated market share of about 10 per cent, which Virgin now hopes to increase rapidly to 15 per cent.

Tesco has exclusive rights for six months among the big supermarkets, after which it can be sold in other chains. Virgin also plans to launch further soft drinks on the back of the cola drink, which is made by a Canadian company, Cott.

Virgin is also planning within weeks to begin nationwide marketing of Virgin Vodka, which was launched in London on a trial basis last month. The group has now formed a separate vodka company with William Grant, the manufacturer of Glenfiddich malt whisky.

The expansion coincides with Virgin's latest planned diversification, this time into personal financial services through a 50/50 joint venture with Norwich Union. The company, Virgin Direct, will kick off in February, subject to regulatory approval, by marketing personal equity plans. This will be followed in the autumn with a wider range of services including life pensions and investment schemes but avoiding traditional banking services.

The company promises no hard selling or cold calling and no commissions. All marketing will be done by telephone, initially in Norwich but later from a head office in the Yorkshire area, employing about 250 people. It will be headed by Rowan Gormley, formerly with Electra, the venture capital and fund management house, who has worked on the project over the last 18 months.

A spokesman for Virgin said the products would not be re-badged offerings from Norwich Union but would be entirely specified by Virgin, with Norwich Union acting primarily as funds custodian.

He said: "These products will be the cheapest ever offered in Britain. The financial services industry is still run like a cartel. The products are all remarkably similar and dominated by gobbledygook." He said Virgin Direct intended to take advantage ofchanges in the regulation over the next few months that will force financial services companies to be more transparent about costs and commissions.

Mr Branson is thought to have been approached by at least a dozen potential partners in the sector over the last few years but chose Norwich Union because it agreed that Virgin Direct would be autonomous and because Norwich has already taken a proactive stance against hard selling. He was also prompted to go ahead by the changes faced by the industry.

Mr Branson said: "Financial services is one of the classic British businesses that have not changed their distribution structure over the last century. As a result customers pay inflated prices for products which it is not always sensible to buy." He wants Virgin Direct to keep products simple and understandable as well as low-cost.

"What we are offering is a genuine revolution in the financial services sector. Now that the Government is forcing companies to make charges transparent we feel that we should go into the market because for the first time we can demonstrate the value of the products we are going to offer."

While this is expected to be Virgin's last big sweep into an entirely new area for some time, the group will continue to launch new ventures within its existing core businesses - the airline, retail, communications and trading. The group says the aim of trading, which encompasses the latest joint ventures in drinks and financial services, is to expand the brand where it can add value and help market products.

The spokesman said: "According to our research, people relate the Virgin name with innovation, competitive prices and quality of product. However we do not intend to over-diversify."