Wednesday, November 7, 2007

Pumpkin Patch VS Burger Fuel

Sitting in the Takapuna KFC today eating my 3 piece quarter pack I got to thinking about brands again.

Putting the Colonel's badly run brands in this country aside I would like to discuss two up and coming brands that have their genesis in New Zealand and both with ambitions on a global scale.

Image result for pumpkin patch clothing

Pumpkin Patch(PPL) the trendy kids wear manufacturer and retailer and Burger Fuel (BFW) the trendy Gourmet Burger maker share few traits with the well established KFC brand as operated in NZ.

Both PPL and BFW are in the infant stage as far as size and brand awareness go, although Pumpkin Patch seems to have a very high brand recognition even in areas where they don't have stores and one could assume on that fact alone it could become a true global brand.

BFW are well established in New Zealand, with two stores in Australia and the brand is seen as the place to buy quality fast food.

PPL are similarly ensconced in NZ and Australia and have a small presence in the US and UK. They are represented in other international markets via department stores and mail order.

PPL have a total of just over 200 stores and BFW just over 20 and both had their beginnings in the early 1990s.

Both companies have had their images carefully nurtured over the last 15 years or so and that attention to the brand has paid off and will continue to sustain growth as they look to go global.

While BFW only listed this year PPL got the jump in 2004 and has grown substantially since then, entering the US West Coast and now in Texas and New York.

The biggest risk for PPL is the cost factor, as they expand from a small base, likewise ,BFW will struggle as they enter new markets. This is likely to be ameliorated as economies of scale kick in and the brand gets additional awareness.

Strong branded companies like Starbucks have expanded this way. From their local area of Seattle they quickly spread their well managed brand across the US States and then globally.

Burger Fuel and Pumpkin Patch will attempt something similar in reverse. Probably harder to achieve than Starbucks but with their strong brands both these companies have a great shot.

The US market is arguably the most important market for both companies and the scale and exposure that will be available to them will either make or break them.

The cost of expansion will be high and must be done carefully and with much thought and planning. Getting it wrong in the US could well mean the death of either company. It is a very competitive market and there are giants there ready to match your product.

Thankfully, as management of Burger Fuel and Pumpkin Patch have been careful to keep their brands as strong as they are, as they have grown, this has given them an edge as they expand overseas and any company with an edge on the competition through strong brands and therefore brand recognition will have a better chance of surviving in a though market like the USA.

The possibilities for growth of these companies is truly mind boggling.

With around 100 Pumpkin Patch stores in Australia and a population of 20 million, it doesn't take much to extrapolate the figures in the US alone, with a population of 300 million.

The possibilities in India and China, while probably many years down the track, is enough to make ones eyes water.

Burger Fuel's future growth story isn't as easy to gauge as they have just started their foreign expansion although it will probably be tougher for them to expand than PPL as the fast food sector in which they operate in has a lot more competition. Their strong brand and differentiation to the competition will make this task easier however.

While not guaranteed global success and the associated riches that would surely follow, Pumpkin Patch and Burger Fuel have put their global expansion plans squarely in the hands of two very strong brands in the markets in which they currently operate.

Their success will hang largely on how new consumers respond to their carefully crafted brands and the backup management give them.

Disclosure I own PPL Shares

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