Brand Failures

People failures 199
tortilla brand to take on Guiltless Gourmet. And given Frito-Lay’s wellestablished
distribution network, it wasn’t too long before its new product –
low-fat Baked Tostitos – was available in supermarkets across the United
States. Straightaway, Frito-Lay’s offering was chomping its way through
Guiltless Gourmet’s market share. Within a year, Guiltless Gourmet’s
revenues reduced to US $9 million, and the company was forced to shut
down its factory and start outsourcing. Its workforce slimmed down from
125 to 10 employees.
Although it is easy to see this situation as unavoidable from Guiltless
Gourmet’s perspective, there are always ways in which a brand can protect
itself from outside threats. For instance, some have said that Guiltless should
have broadened its product line into other relevant categories or outsourced
production at an earlier stage.
There is also the issue of Schall’s decision to work with Frito-Lay as a
consultant. When Business Week magazine enquired, Frito-Lay wouldn’t
discuss the aborted buy-out nor the suggestion that it may have just been
scouting for competitive intelligence. Of course, we can only assume that
Frito-Lay are ‘guiltless’ but even they admit that the information provided
by Guiltless Gourmet was helpful. ‘Guiltless Gourmet provided us with a
great benchmark to get our product better-tasting,’ admitted Frito-Lay
spokeswoman Lynn Markley.
Although Guiltless Gourmet’s low fat tortilla chips are still on sale, the
future of the brand is still in doubt. Schall still believes the best route may
rest with a buyout. ‘Our brand has great value,’ he told Business Week. ‘It
would be good to become part of an organisation where that brand can be
leveraged.’
Lessons from Guiltless Gourmet
Be aware that success breeds competition. Guiltless Gourmet’s success within
a niche product category was inevitably going to catch the attention of
larger rivals.
Have a Plan B. Brands need to prepare for such an eventuality and have
a back-up plan.