Are the Americans to blame for the collapse of Golden Wonder?

By Alex Singleton | 12 January 2006

A once-great British institution went into administration this week. Golden Wonder Ltd was the first company to sell crisps packaged in plastic bags. They invented the first flavoured crisps in 1962 (the cheese and onion) and by 1964 they ran the largest crisp factory in the world. By 1966, they were the UK's crisp brand leader and the country's fifth largest grocery company.

The message being put out is that it's all the fault of PepsiCo which, through its Frito-Lay subsidiary, owns another British institution, Walkers Crisps. In other words, it's all the fault of an American transnational company. Walkers has been advertising heavily for years with former footballer Gary Lineker as its front man. Paul Saxby of niche crisp manufacturer Jonathan Crisp was quoted in the Daily Telegraph saying: "How on earth do you compete with the marketing might of Walkers?"

That's an interesting question. If there are profits to be had in competing against Walkers, then surely you go after venture capital, or find a buyer (Unilever? Nestle?) who's prepared to put the investment in.

The problem with Golden Wonder is that its product range is stuck in the past. It owns mostly unpalatable brands like Wheat Crunchies. Consumers have shown they are willing to pay more for premium crisps. Walkers introduced its Sensations brand and KP Foods introduced McCoy's Specials. Golden Wonder, once the most innovative of food manufacturers, largely ignored this trend. Yet according to Mintel, between 2002 and 2004, sales of standard crisps declined in value by 7 per cent, whereas premium crisps increased in value by 15.8 per cent.

Golden Wonder's unimaginative product line up has been combined with a loser mentality on the marketing side. The success of the Lineker advertising clearly upset the company: it introduced adverts with the slogan: "Employ celebrities to sell crisps? We'd rather use newsagents." It sneered at the rise of premium crisps, adopting the motto: "Where a crisp is a crisp". The problem for Golden Wonder is that consumers weren't buying it. Literally.

PepsiCo's management of Walkers has been excellent. It has continually improved its product range and followed a first rate marketing strategy. But that's exactly what it should be doing. We should not blame them for the failure of Golden Wonder whose wounds are surely self-inflicted.