You’ve had Mega Brands for over a year now. How has the relationship developed?
Dominic Geddes: It’s obviously a major part of our strategy and it’s a big acquisition for us. It’s a gap in our portfolio as we’re entering construction but at the same time, we’re entering an incredibly competitive category, with one manufacturer already owning a large share.
To get into the category and make a mark is quite a challenge, but the excitement is that there are parts of that business where we think there are some fantastic opportunities for ourselves and the trade including First Builders and the licensed side of the business.
Now we’re starting to integrate, we’re seeing big opportunities in bringing the Mattel magic to construction with our marketing and distribution expertise.
There’s a big difference between having a small sales team and having the stretch that Mattel has across the UK and Ireland. For lots of different reasons, we feel it’s really exciting and the reception from the trade has been very strong. They’re looking for a complimentary brand.
Wendy Hill: We’ve got big plans for the Mega business including strong growth targets that we want to put into play over the next five years. It’s about growing share and driving that business.
First Builders is really important to us. It’s the entry into the brand and where it all begins. We think we have a real point of difference because it’s age appropriate and the blocks are easy for pre-schoolers to build.
It’s about building that relationship and dialogue with mums and making that connection, similar to what we have built on the Fisher-Price side of the business. We know that mums and parents relate to the construction category as it is a play pattern that is creative and imaginative.
It’s about making mums aware there is an alternative brand out there and driving that harder through our marketing message.
Elsewhere, we have some fantastic TV drivers on really exciting items. We’ve got a great item for autumn/winter this year within First Builders which has a great TV ad. We also have the licensing business including Minions, and you just can’t get away from Minions. The movie is going to be phenomenal.
And does this cross into First Builders or are there no licensed elements within First Builders?
WH: There’s First Builders and then there’s Thomas as we head into pre-school licensed construction. Our core Thomas business is having a fantastic time this year and we’ll be TV advertising Thomas within Mega this autumn/winter.Then we move into the older age toys like Minions. The block size changes as children get older and more dextrous.
There are different licences coming in the next few years which we can’t reveal at the moment, but next year we’ve got a really exciting licensed portfolio, which is where Mattel is making a difference to the Mega business.
There are partnerships we have that Mega may have struggled to secure, so it’s very exciting.
When does the marketing activity around First Builders kick off?
WH: It’s already started. We put First Builders onto TV in spring/summer, so we’ve started to expand the marketing programme.
It’s not just about TV advertising. As we do with Fisher-Price, it’s about having that dialogue with mum and making sure we’re reaching her in the right place where today’s mums are. Digital is a big part of that mix because that’s where she’s spending a lot of her time.
We want to say that Mega is there and it’s different. Mums get construction and obviously LEGO do a fantastic job communicating that. We want to say we’re here too and there’s value to be had in our product.
DG: The Milkshake sponsorship has been very successful, and that’s an example of that Mattel firepower and the influence we can have there.
The other thing is the licence application. It’s exciting and there’s an awful lot to come. The trade support is also very good too.
The colleagues we managed to retain from Mega’s Oxfordshire premises have settled in really well and are doing a great job. I think they’re really pleased to be a part of the Mattel family and they’re able to use the bigger resources of Mattel to leverage what they’re doing.
Of all the acquisitions we’ve made in recent times, we’ve managed to retain more colleagues from the acquired company than we’ve ever been able to do since the Fisher-Price acquisition. That has been very valuable in the continuation of success. The current Mattel sales team are getting inducted into the brand and understand the new category.
From an independent point of view, Mega Bloks had limited penetration of the independents. We’re now able to go directly to firms like Toymaster, who we see as a very valuable partner moving forward. They’ve engaged the brand very well and it’s almost completely new distribution.
We see all those things as areas we can get to because of our distribution network that Mega weren’t able to access. The same applies to the Irish market too. We have a relationship with Smyths that is slightly different to the rest of Ireland.
Wendy and her team will be able to deliver on the brand marketing and brand activation plans and Michael [Hick] and his team will be able to get the distribution for us. There are some quick wins just by doing what we do, let alone the product, R&D and licensing applications that are on the way.
Has anything you weren’t expecting arisen from the acquisition?
DG: You’re always going to find things; it’s a bit like when you acquire brands. With something like the sell-off period from the previous incumbents of Thomas, it can take you quite a long time to work through some of these. There are always pockets of inventory you find that you perhaps weren’t expecting.
Mega was an acquired business and there were levels of inventory in certain retailers that were probably a bit high than we thought in some cases. We expected it, but you just don’t know where to expect it until you get live on the pitch as it were. But there’s nothing that we can’t cope with.
In lots of respects, it’s business as usual. The Montreal factory is still there and the relationship with the retailers is still there as well so there’s a lot of continuity.
Will the Mega Barbie sets continue?
WH: There are exciting new developments next year for Monster High. Barbie will still be in the range, but there’s more to come from Barbie in future years. The exciting developments within Mega’s girl portfolio in 2016 are around Monster High.
Mega has some exciting Minions lines on the way...
WH: It’s always difficult to predict the life cycle of entertainment properties, but it’s definitely not just a movie. It has greater longevity than that. People love them as characters. It doesn’t matter how young or old you are, you can’t help but find them intriguing and amusing.
And where do you see growth areas?
DG: It’s in Europe where we see some really big gains with Mega. Athough the UK team was relatively big, in Europe it wasn’t.
David Martin, Mary Price and the team in the UK were operating out in Europe trying to get distribution, with probably no more than one person per territory.
So there are big gains in Europe, albeit off of a very low base. The UK market was by far the most developed market for Mega outside of North America. They did a great job in the UK with very limited resources. There were some territories that were untouched completely and areas where we’ve just had a distributor presence, such as Russia.
What do you want to achieve by the end of 2015 with Mega?
D: By year-end, we want Mega to be a really credible challenger in the industry and that First Builders gets the authority we think we can achieve at Mattel. There are two initial opportunities. There’s the First Builder statement, to accelerate growth and gain presence at retail, and then there’s the development of the licensing business, which will come through.