Posted on | May 1, 2011
Written by | Kristen Wolfe Bieler
The Beverage Network sat down with Matt Aeppli of Pernod Ricard USA, to talk about category management, the increasing importance of convenience packaging and how the spirits industry can better communicate with consumers.
The Beverage Network: Pernod Ricard invests heavily in bartender education and promoting mixology culture. What’s the return on your investment?
Matt Aeppli: Cocktail culture is as dynamic as it has ever been, and it opens new doors for every tier in our industry as the largest driver of innovation. Our Bar Smarts program, which gives bartenders the basics on mixing, cocktails and serving, offers real added value for the trade—so far we’ve had over 2,000 graduates. We’ve taken it a step further with Pioneers of Mixology for our Bar Smarts graduates who want to continue to the next level. The key aspect to these efforts—and a big reason they get so much respect in the trade, is that they aren’t about our brands or our company. We are perceived as a leader in bartender education and that’s where we get the value.
ON THE SHOPPING EXPERIENCE
TBN: How can suppliers better equip retailers to enhance their consumers’ shopping experiences?
MA: We can do so much more as suppliers to provide a more premium experience for consumers and shoppers. When you compare our industry to other consumer goods industries, we are behind, but that is starting to change. A lot of suppliers (including us) are developing more engaging strategies for our brands that will enliven the store environment, such as our new Malibu activation with flop flops that puts consumers in the mood of that brand, while making it fun to shop. Category management is about bringing solutions to retailers that aren’t simply self-serving to a supplier’s own brands.
TBN: What about better shelf management?
MA: This is another area of opportunity for our industry. When I put myself in the average consumer’s shoes, it is challenging to orient yourself in many stores. There are so many different products, what do you choose? There’s still a lot of opportunity for retailers to optimize shelf management. Shopper insight suggests that better shelf management can help consumers better navigate the stores and get the product they want.
TBN: Why has Pernod Ricard refocused its marketing efforts on- and off-premise around occasion marketing?
MA: Consumers shop by occasion, then they choose brands. What is the occasion and who am I with? Am I home on a weeknight with my partner? Are friends coming over for a casual evening? Or is it a connoisseur situation where I am trying to impress someone? We as suppliers could suggest ways for retailers to design their stores according to occasions, which would dynamically change the shopping experience. We encourage on-premise licensees to follow this best practice as well.
TBN: How have you seen the vodka category impacted by the economy?
MA: Every fourth drink is a vodka drink and the category is currently growing 5 to 6%. It’s not the fastest growing category, but it has the largest incremental volume increases because of its size. While there was some trading down and intense price competition during the height of the recession, the premium segment has rebounded nicely in recent months, as it always does after economic downturns. We’ve also noticed some momentum in the on-premise. Both of these developments are good news for Absolut, which has returned to growth. We continued to invest strongly in the brand over the past few years, and history shows that well-supported premium brands emerge stronger after recessions. Also, even as the premium segment comes back, the value segment continues to do well. For example, our Fris Vodka is growing fantastically, as we continue to roll out more distribution.
TBN: How can retailers apply savvier category management to their vast array of vodka offerings?
MA: There is unbelievable innovation in this category, hundreds of flavors and dozens of vodkas launch each year—so category management is incredibly important. I think many retailers are overwhelmed and lack an effective category management strategy, and I believe it’s the suppliers’ responsibility to provide it. It’s our job to bring perspective and insight on consumer behavior, not to just randomly offer different products and flavors to stack on shelves. Who is the shopper I’m targeting? How do I speak to them? These are the sort of questions we need to be asking ourselves.
TBN: Speaking of target consumers, who does Absolut speak to?
MA: Absolut is so large it touches almost every consumer, but our target core consumer is the up-and-coming professional who is already successful, interested in trying new things and staying on top of trends. In the old days, we would go with pure demographic segmentation—men between 25 to 35, for example—but today we are looking for psychographic segmentation, trying to understand consumers and shoppers’ habits and attitudes. The vodka category has segmented so much. Absolut has established itself as the leader of the premium segment, which is where consumers go when they want quality that always delivers. Our current communication strategy for the brand is all about cocktails.
ON OTHER OPPORTUNITIES
TBN: Jameson is driving phenomenal growth in the Irish whiskey category. How are you positioning this brand?
MA: Jameson has carved out its own category, similar to what Patrón has done by transcending the Tequila category. We call it the third way of whisky: it’s not an American whisky which can sometimes have a rugged or entry-level image, but it doesn’t have the rules or formality of Scotch. Jameson is serious, but approachable and smooth, and the most recommended whisky by bartenders. Ideally, I like to see retailers position it exactly between Jack Daniel’s and Johnnie Walker.
TBN: What about Scotch?
MA: The Glenlivet, the leading single malt in the U.S., maintained steady growth during the recession, and now is growing at an accelerating rate. We also have enjoyed significant growth on Chivas 18, which has been the primary target of our Chivas Regal marketing efforts in recent years, and now are seeing a good recovery for Chivas 12.
TBN: Malibu’s RTD offerings represent a major packaging innovation. How have they been received in the marketplace?
MA: The success of Malibu RTDs for the first three months after release—it was the fastest-growing new product according to Nielsen—is driven largely by its convenience packaging. It is not just a premium mixed cocktail, but a convenience solution which is why consumers and retailers have been so interested in it. It’s such a natural territory for the brand, with its summertime, outdoor usage occasions. We will start to see more innovation in the convenience packaging realm I believe.
TBN: How will Malibu Black be positioned in the market?
MA: It’s a higher-proof, less sweet rum which we believe will create new possibilities for the franchise, get Malibu used in even more cocktails and open up the brand to even more evening occasions. Currently, Malibu is more about daytime and pre-dinner consumption.
TBN: What is the communication goal behind Kahlúa’s new campaign, Delicioso?
MA: We learned from our research that a lot of people didn’t know what Kahlúa is—they thought it was cream-based, or had chocolate in it, or was from Hawaii because of the name. We concluded we needed to bring the brand back home and let our consumers know it’s a premium coffee and rum liqueur from Veracruz, Mexico. We also wanted to open it up for different cocktails and increase its versatility to many more occasions.
TBN: Plymouth has become one of the most exciting brands in the gin category. How do you explain its success?
MA: Plymouth was the original dry martini. It’s an old brand, but it’s a young brand in the U.S. and its growth is on-premise driven. The bartender community has truly embraced it. Connoisseurs also appreciate its great history and authenticity, and its production-made in Plymouth with batch distillation in copper stills.