Bega Cheese: How human values can still win against price discounting

Agency: Clemenger BBDO Melbourne
Advertiser: Fonterra Brands (Australia) Pty. Ltd.
Authors: Michael Derepas & Mandy Henderson
Total Campaign Expenditure: $5 – 10 million

Strategic communications challenge

With increasing competition, aggressive discounting, commodity-fuelled price rises and retailer rationalization, the outlook for Bega at the start of 2010 was bleak.

The everyday cheese category in Australia is fiercely contested with 11 brands making up 70% of sales. Multiple brands fight within a flat commoditised category. When market leader fighting for every dollar, the last thing you need is a global player fighting for share. That's the situation Bega faced.

Kraft, the market leader in processed cheese and a household name to Australians for over 100 years, hit the shelves with Kraft natural cheese in August 2009 to fight for its share of the $1.8b segment, and boy did they discount. In Woolworths, they launched at a price point of $7.99/kilo vs Bega's $11.79/kilo, and continued to undercut throughout the year. To make matters worse, in a direct bid to steal share from Bega, Kraft's pack designs looked outstandingly familiar.