What's in a name?
Baby product company Heinz-Remedia has decided to erase the Remedia brand name from the baby accessories it markets, including bottles and pacifiers. The company made the strategic turnaround approximately eight months after a scandal in which a deficiency of Vitamin B1 in Remedia infant formula was blamed for the deaths of three babies and serious injury to several others.
The company had stressed in the past that it had no intention of removing the Remedia brand from its infant formula.
Till now, Remedia marketed baby products in Israel under the brand names Silik-Remedia, NUK and Playtex, but will now only market products under the NUK brand.
Remedia, founded by the Miller family, who later sold a 51-percent controlling stake to foodstuffs multinational HJ Heinz, said the move didn't stem from a desire to eradicate the Remedia name, but a decision to fully exploit the NUK brand name, particularly in light of the similarity of the NUK and Silik-Remedia product lines. The change to the NUK brand name will take place in the coming months.
NUK, with operations in forty countries, sees Israel as a strategic market and plans to invest substantial resources here in the next two years, including the launching of new products in tandem with their global launches.
"No efforts are being made to hide the name, Remedia. The company decided to stride forward with a single brand name and adjust Remedia's performance to market changes due to a substantial increase in consumption of products that support breastfeeding, an area in which NUK is a market leader," a statement from the company said.
In May 2002, the company decided to brand all the Silik accessories with Remedia. VP marketing Dalit Zur said then that the company decided to rebrand all its ancillary products in response to increased competition as new brands penetrated that market. "Market research we conducted indicated that Remedia is a stronger brand and is immediately associated with baby products," Zur said at the time.
Heinz-Remedia estimates the size of the ancillary baby product market at about NIS 40 million annually, and, prior to the Remedia scandal, it had a 50-percent market share in pacifiers and 20-30 percent of the overall market. At the time, the company had a 37-percent market share in infant formula, but this has plummeted to just 10 percent. Formula sales are estimated at NIS 270 million annually.
Formula constituted about 70 percent of Remedia revenues just prior to the November 2003 crisis involving Remedia's soy-based formula. The company, which had been the largest in the market, quickly lost ground to rivals Materna and Similac. These two companies benefited substantially from the Remedia scandal, with Materna's market share climbing from 37 percent to 54 percent and Similac, marketed in Israel by Promedico, growing from 26 percent to 38 percent.
Heinz-Remedia has stated a number of times in the past that the company had no plans to change the Remedia brand in infant formula. However, its weakened status, coupled with the fact that the market was reduced to just two significant players, led several companies to consider entry into the field. For instance, pharmaceuticals and cosmetics company Dr. Fischer, controlled by Debra and Eli Fischer, is in talks with a number of global players, planning its entry into the infant formula market, apparently using the Dr. Fischer brand.