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LONDON-There is a bottle of inky liquid on James Kydd's windowsill. Cola, it turns out-a contender for the brand name Virgin that lost out when it was judged to be lacking in certain key areas.

"It tastes disgusting," Mr. Kydd said.

A newer, improved version is now being marketed in the U.K. For Mr. Kydd, general manager-marketing of Virgin Trading Co., the challenge isn't just creating a better cola.

He must create a point of difference for Virgin cola and other planned products, with seemingly nothing to differentiate them from the competition except the airline's name that is the foundation of the parent $2.3 billion Virgin Group.

As charged by Virgin founder, chairman, balloonist and entrepreneur Richard Branson, Mr. Kydd's job is to orchestrate an audaciously Branson-esque scheme to put the Virgin name to work selling cola.

And vodka. And mineral water. And "energy drinks." And, oh, yes, a range of other consumer goods, including sportswear. These are categories, pitched to Virgin by possible partners, the company decided to pursue.

Virgin Trading was set up in August to move the parent company into fast-moving consumer goods. Three months later, the first two products, Virgin cola and Virgin vodka, were introduced in the U.K. Privately held Virgin won't discuss sales for the division.

Distribution is being cranked up cautiously. Virgin cola is available from 90% of U.K. wholesalers and in limited quantities at certain Virgin music store locations such as Paris and Los Angeles. The vodka is only available in the London area.

Sales of both have exceeded expectations, Mr. Kydd said, adding that Virgin cola accounts for 9% of cola sales in the Tesco supermarket chain, the cola's exclusive supermarket distributor for the launch.

Both products are 50-50 joint ventures, as all future Virgin Trading consumer products will be. The cola is being produced by Toronto-based Cott Corp. The company won't disclose sales for the vodka, made by U.K. distiller William Grant & Sons, but they are tiny.

Mr. Kydd plans to expand the distribution of Virgin vodka throughout the U.K. by this summer and to begin selling the vodka in other countries this year. There is also talk of rolling the cola into other countries, but Mr. Kydd won't say where or when that might happen.

"We could go international with Virgin cola tomorrow, but our philosophy is not to go out there for the sake of going out there," Mr. Kydd said.

He also won't disclose what other products might carry the Virgin brand, except to say that an "energy drink" and a mineral water, both produced by Cott, are likely this year.

In expanding, Mr. Kydd is walking a tightrope. To be taken seriously, Virgin's new branded products must get significant market shares outside the U.K. But moving too quickly with the wrong kinds of products could also be disastrous for the Virgin brand.

"There is strong attention to what happens to the Virgin brand," he said. "That is one of the things that we are paranoid about. We don't want to just plunk a logo on anything."

At first glance, the soft-spoken Mr. Kydd might seem an odd choice for the job. As he slouches tieless around his loft office in scuffed brown shoes and cotton trousers, his demeanor mellow, Mr. Kydd seems the very antithesis of a hard-charging consumer goods pitchman.

But Mr. Kydd is well-equipped for his high-wire act. At Euro RSCG, he served as board account director until 1993, overseeing accounts such as Wilson Sporting Goods Co. and Procter & Gamble Co.'s Old Spice fragrance. He joined Virgin Trading from Virgin Airways, where as planning manager he acted as troubleshooter for a number of sticky marketing problems.

He said he believes Virgin is special because its name has a value that transcends the businesses Virgin is in. He agrees that "Delta cola," for example, would be a bad idea, but he thinks Virgin cola makes sense.

"In the U.K., Virgin has become sort of a consumer champion," he said. "In the States, Virgin is seen as a young pretender. In France, it is trendy and sophisticated all at once. In Japan, the entrepreneurship of Virgin is seen as a huge benefit."

His conclusion: "The Virgin brand is more in tune with the people who drink cola than Coke and Pepsi are."

Perhaps. But Coke and Pepsi have more money. Neither the nine-employee Virgin Trading Co. nor the joint ventures it works for can afford to outspend their entrenched competitors. When Virgin cola's first TV and print campaign starts this spring, the ad spending on the Rainey Kelly Campbell Roalfe effort will be about $8 million.


James Kydd (sidebar)

BIRTH: September 17, 1959.

EDUCATION: Undergraduate, M.A. in English and sociology from Aberdeen University; Post-graduate, diploma (1st class) in Advertising from Watford College.

CAREER: Currently general manager of marketing for Virgin Trading Co. Ltd. Came to Virgin Trading in 1994 from Virgin Atlantic Airways, where he worked as planning manager, and, before that, advertising manager. Joined the airline in 1993 after leaving Euro RSCG, London, where he was board account director. Started career as a graduate trainee at Colman & Partners, a London agency that was acquired by the agency that became Euro RSCG.

FAMILY: Married, sons ages 7 and 9.

HOBBIES: Good food and wine.

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