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The Quest For The Next Big Thing: Pernod Ricard Takes Innovation to a Higher Level

Posted on  | March 26, 2012   Bookmark and Share
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Here’s a fascinating statistic: Roughly two-thirds of the annual volume growth in the U.S. is the result of innovation. Here’s another: Almost 50% of the innovation value in the world comes from the U.S. It seems Americans are uniquely hungry for a steady stream of new products. And this means, according to Tim Murphy, Vice President, Marketing Innovation at Pernod Ricard USA, that “any global organization interested in operating in the U.S. market today needs to have a clear and aggressive innovation agenda in order to grow.”

It’s an exciting market, the U.S. It has one of the most evolved super-premium segments in the world; American consumers are some of the most sophisticated; and distilled spirits sales are showing impressive growth. The challenge? Operating in an innovation-saturated marketplace requires finding ways to stand out in the crowd. “In order to break through, you must truly captivate consumers, which demands tremendous creativity and planning,” says Murphy.

“My focus here is identifying areas of innovation across the spectrum and implementing them in the ever-changing landscape of our industry,” says Murphy. But innovation isn’t simply new products, he adds: “For my colleagues and I, innovation could be activating new touch points, developing new sources for insights or targeting new consumer segments.”

Pernod Ricard is cautious about new releases, scheduling launches only after ample lead time ensures that a fully comprehensive support platform is ready to go. “As innovation becomes more aggressive, we are seeing as an industry that we must find a way to do it without overwhelming our distributors and retailers,” Murphy explains.

Phasing is everything in the value chain, all the way down to the retailer. “We have an ambitious agenda and some items require more time and preparation than others,” he points out. For example, the release of Malibu Black and then Malibu Red, as well as the release of Malibu’s cocktail pouch, were all big departures for the brand and demanded more time and attention than other flavor introductions. “Most flavor extensions don’t require a new commercial strategy or communication platform—it’s pretty straightforward.” Pernod also tries to group together the less-demanding line extensions, to make it more efficient for wholesalers and licensees.

Digital Revolution

“Digital as a medium is extremely broad, growing and very important to our target—the LDA to 29-year-old consumers who are digital natives,” says Murphy. He believes other companies make the mistake of keeping their digital marketing separate from other marketing plans. “We aim for total integration between our traditional PR, email, social media, web presence and advertising campaign. We strive to build digital seamlessly into each brand strategy. For Malibu, for example, we have the Malibu Beach Club, a Facebook game which engages consumers in a viral way. We launched Dublin 1780, an immersive game on the Jameson website, and Chivas 1801, a pop-up club for the Chivas Brotherhood integrated digitally at every touch point.”

Last year, Malibu asked its consumers to choose the next flavor for the brand. Through the “Malibu U Choose” sweepstakes campaign, consumers voted via Facebook or by sending a text message for one of three flavors—Citrus, Cranberry-Cherry or Mint. Promoted through Facebook and retail POS materials, the program also included daily prizes like surfboards, coolers and clothes.

Reaching the Hispanic Market

It doesn’t take a marketing genius to see the demographic shifts in the U.S.—key multi-cultural segments are growing twice as fast as the general market and will create a new general market in five to ten years in certain key U.S. regions. “Multi-cultural consumers spend $22 billion on alcoholic beverages,” says Murphy. “But success isn’t automatic—it demands tailored communication.” Simply translating general market ads and messaging into Spanish is far too simplistic, though speaking to these groups doesn’t necessarily require creating something entirely new, he explains, wherein lies the challenge.

“What is the key insight in the community that links to the brand’s proposition? What is the wink that signals to your Hispanic consumer that you understand them, without pandering?” Murphy explains. Pernod is reaching out very aggressively to Hispanics with the Chivas brand, which is strong in Latin America and with Hispanics in the U.S. “There are Hispanic elements to everything we do with Chivas and as a result we are seeing solid growth in the Hispanic community.”

For brands like Jameson, which does not historically enjoy a particularly strong following in the Hispanic market, the methodology is different. “We are communicating a very emotional message to the general market with the legend of John Jameson, and that doesn’t necessarily resonate with the Hispanic consumer in Texas,” says Murphy. To appeal to that consumer, the company took a less emotional approach, emphasizing Jameson’s triple distillation and its smooth, drinkable taste profile—qualities that happen to meet the demands of the Hispanic palate perfectly.

Another example is Absolut. The brand’s messaging—Cocktails Perfected—has focused on the mixibility of Absolut and its role in the burgeoning mixology culture. Hispanics aren’t as big on the cocktail culture—but they are very open to mixing and versatility. “Hispanic social occasions are bigger, broader and more impromptu,” says Murphy. “For this community we have positioned Absolut as making the best simple mixed drinks and provide them with easy solutions—Absolut and fresh pineapple juice, for example.” 

The Wide World of Irish Whiskey

The Irish category’s phenomenal growth is still led by Jameson—representing 7 out of 10 bottles of Irish whiskey sold. “We need to constantly remind ourselves that Jameson is still in its infancy in the U.S. It cleared the million-case mark less than 12 months ago and is still in the recruitment phase in many markets,” says Paul Di Vito, Brand Director, Jameson. “We are not recruiting drinkers from other Irish whiskies—we are recruiting them from other whiskey categories. The demand and momentum of the brand has been truly amazing.”
But the brand does consider innovation a key driver of growth—“innovation for Jameson is not just about launching new SKUs” says Di Vito. Launching this fall, Jameson will continue its innovative approach to marketing the brand in the US in the form of a new television/360 marketing campaign bringing to life the legendary stories of John Jameson and the love he has for his Whiskey. Outside of the brand’s more mature markets, Jameson has made major headway into smaller (yet high potential) markets, including Hispanic markets like San Antonio by communicating the simple (recruitment/trial) message “Triple distilled, twice as smooth, one great taste.” In these markets Jameson is truly in its infancy and meeting consumers for the first time.

And Jameson unveiled “Black Barrel” in November in New York to “bridge the gap between Jameson Original and the Jameson 12 Year and 18 Year Old.” At roughly 35% higher in price than Original, Black Barrel is only distilled once per year and made with whiskies up to 14 years in age for more flavor.

In fact, all of Pernod Ricard’s Irish whiskies are on fire. The company has rejuvenated the art of single pot still Irish whiskey—“the Irish answer to Scotland’s single malts,” Patrick Caulfield, Regional Director, Irish Distillers, explains. Redbreast is growing at 26% and recently debuted Redbreast 12 Year Old Cask Strength to rave reviews (it was just named Irish Whiskey of the Year by Whisky Advocate). Midleton is also releasing the Barry Crockett Legacy (launching at WhiskyFest New York this Fall). “The demand for Irish Whiskey is truly unrivaled at the moment, and Pernod Ricard is fortunate to have such a vast portfolio to cover the spectrum of consumers entering the category,” says Di Vito. To keep up with demand, the Irish Distillers facility in Midleton will be doubling its capacity with a $130 million expansion.

The Many Faces of Malibu

One of the most fertile of all Pernod’s brands, Malibu has unveiled a flurry of line extensions in recent years, with more on the way. “It’s obvious that the brand is very focused on summertime and the beach and we want to drive innovation that speaks to those target occasions,” says Murphy. Malibu’s trend-setting cocktail “pouches” introduced last year fit perfectly with the casual nature of the brand and outdoor consumption opportunities. “Consumers are looking for convenience, and even though the cocktail culture has evolved, they still don’t know how to make cocktails at home,” says Anna Battiloro, Senior Brand Manager, Malibu.

With the goal of broadening its market to new occasions and consumers, Pernod released Malibu Black last year as well—a higher-proof version at a more premium price point designed for on-premise.

Most recently, the company released Malibu Red, a 70-proof blend of coconut rum and silver tequila—a never-before seen combination. It will also retail at a premium and the launch will be supported by one of the brand’s largest global marketing initiatives for Malibu. In addition, singer/songwriter Ne-Yo (who helped design the package) has signed on to a long-term partnership with Malibu Red. He wrote a custom song about it, and Malibu will be sponsoring his 2012 tour.
“It’s very important for Malibu’s growth to target new segments and brand territories,” says Battiloro. “Malibu Black’s higher alcohol content allows it to compete with higher-proof rums at later-in-the-day drinking occasions. Malibu Red allows us into even higher-energy accounts—shots at the bar, table service at clubs—the occasions when consumers are dressed in their best clothes and out for the evening.” With all of the brands innovations, it’s about “keeping Malibu top of mind all year long; so far, they are having the halo effect we were looking for and the base brand is up.”

The Latest from Aberlour

Aberlour just launched a 12 Year Old Non Chill-Filtered expression in the U.S. The absence of chill-filtering results in an extra-rich Speyside whisky with a more textured mouthfeel. It still showcases the Aberlour signature taste profile, the result of double maturation in rare sherry butts and bourbon casks. Bottled at 48% abv, it’s packaged in a modern-style bottle with wax artisanal seal (SRP: $59.99).

Absolut Miami

Next up in Absolut’s much-celebrated City Series is Absolut Miami, the sixth limited-edition city-themed flavor. In the market since January, Absolut Miami is characterized by bright citrus, passion fruit and orange blossom flavors. Miami is a city known for its progressive and eccentric take on the creative process—from its legendary nightlife scene to neon street art and globally renowned concert series and gallery shows,” said Maxime Kouchnir, VP Marketing for Absolut. The bottle design features colorful images of palm trees, flamingos, music tunes and martini glasses. In 2007, Absolut introduced Absolut New Orleans and every year since it has introduced a limited edition flavor—Los Angeles, Boston, Brooklyn and San Francisco.

A New Upscale Look for Plymouth

Plymouth Gin is sporting a new look as of March, one that Pernod Ricard believes more accurately reflects its super-premium quality and rich heritage. The new rounded bottle shape and antique style pay tribute to the unique heritage of the gin, while the oval label is based on an earlier example of the packaging, enriched with copper accents and a copper cap. The bottle honors the city of Plymouth, England, as it has been distilled on the same site since 1793, at the oldest working distillery in England. “Plymouth Gin has gained the respect of spirit aficionados across the globe because of its complex flavor profile and smooth texture, and is often regarded as the ‘single malt of gins,’” says Paco Recuero, Chivas Brothers Brand Director for gins. “This new packaging and increased price point reflects its rightful position in the super-premium gin category.” (New SRP: $32.99)


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