Posted on | March 25, 2013
Written by | BevNetwork
The Beverage Network sits down with Bryan Fry, Pernod Ricard USA’s new President & CEO, to talk about selling to Millennial consumers, cross-category innovation and, yes, Irish whiskey.
ABOUT THE U.S.
THE BEVERAGE NETWORK: You have spent time in Asia, Australia and Brazil. What excites you most about the opportunity to run the U.S. market for Pernod Ricard?
BRYAN FRY: It’s the most lucrative market in the world for wine and spirits. Also, if you look at trends and new products, they almost always start here. There is a tremendous willingness among young people—the Millennial generation—to try new things. A study recently showed that spirits represent a much greater share of consumption in that demographic compared to beer and wine, which is a big shift from Generation Y and the Baby Boomers, where wine is more significant.
TBN: What is the most challenging aspect of doing business in this country?
BF: It’s a very complex market. You might have a hot brand in New York that isn’t at all popular in Louisiana. Regional differences, combined with different state laws make the U.S. more like 50 separate countries. But it is a fascinating, rich opportunity if you can understand the nuances of each place.
TBN: Pernod Ricard has unveiled a number of new products that don’t necessarily fit into one category. What is the goal of this type of innovation?
BF: The Millennial generation again, has been our biggest motivation to innovate across categories. For example, Absolut Tune is a vodka and sparkling wine; Avion Espresso is a blend of Italian espresso and tequila; and Malibu Red is a rum and tequila. When Malibu Red launched in the U.S., some external parties were skeptical; now that it has succeeded, other markets have followed. It’s currently launching in South Africa, the UK and Australia.
TBN: Absolut Tune is a new direction for the brand. Where and when do you envision it being consumed?
BF: We are aiming for two demographics with this product: Women ages 21 to 32 who are enjoying a night out with the girls, as well as an older demographic who has been drinking Absolut for years and has a very strong affinity for the brand. There is nothing to benchmark it on, since it is such a unique product, but early indicators are encouraging: One bar in Miami did 70 cases in 3 hours! At $32 (SRP) it’s less expensive than Champagne but still very premium.
TBN: What else is new with Absolut?
BF: Absolut remains the most iconic vodka brand in the world, and the number one call brand on-premise. We’ve maintained our premium position without discounting, and the brand’s profitability has increased every year since we purchased it five years ago. Flavors are still strong for us—Absolut essentially created the flavor phenomenon; we just released Hibiskus and we have a new flavor coming out this spring with a Hispanic tilt.
We are also launching an ultra-premium expression, called Elyx, for $49 (SRP). It’s a single-estate, hand-crafted vodka from a small farm in Sweden. We’ve been working on it for two years, and believe it’s the best-tasting vodka out there—I love drinking it straight. Look for it in April.
TBN: Unlike vodka, the cordials/liqueur category is quite flat. How does a brand like Kahlúa find growth there?
BF: Like Absolut, Kahlúa has tremendous brand equity, but the challenge here is that the brand is constrained to the occasion. In the past, Kahlua was focused on two or three drinks which aren’t quite as popular anymore, so our innovation has been designed to widen its usage and bring in new consumers. Kahlúa Midnight is less sweet and targets the shot occasion on-premise.
TBN: Another innovation you are first-to-market with is a low-calorie rum sweetened with zero-calorie Truvia.
BF: Our research on the female demographic revealed that they enjoy spiced rum, but they drink vodka and soda instead because it’s lower-calorie. And we also felt that the low-calorie products on the market just don’t taste very good. We developed Malibu Island Spice to meet this need; and we put “70 Calories per Serving” prominently on the label to make it very clear to consumers.
The great thing about innovations like these is that they elevate the base brand as well. Malibu is showing strong growth.
TBN: Irish whiskey—thanks to Jameson—has been exploding for some time. Do you see this continuing?
BF: If you look at the whiskey category in general, you will see that Irish is still a very tiny part of that, so we see tremendous opportunity for growth. There are many markets across the country where we still need to introduce people to Jameson, and lots of multi-cultural opportunities. Another exciting trend is that people are coming into whiskey in general—more than ever, Americans are opening their hearts and wallets to whiskey, and we see huge potential to move them into Irish whiskey. People feel very close to the Jameson brand—it is accessible and not at all pretentious.
ABOUT WINES & SPIRITS
TBN: What are Millennials looking for in wine?
BF: We have done a lot of research into how young people shop the wine category and we have found that traditional wines aren’t as appealing; details like country of origin and grape variety don’t really matter to them. The younger demographic is looking for simplicity, which is why blends (rather than single varietal) are doing so well. A strong package—something that stands out—a good price and a delicious taste profile are the crucial attributes.
Also, the taste profile this generation prefers is different: What their parents may perceive as very sweet, they find not-too-sweet at all. Acidic wines are not appealing. We actually developed a new blend called Deadbolt—our first California still wine—with the Millennial consumer in mind.
TBN: What is your opinion of the word “luxury” and what role do you believe it plays in the wine and spirits industry today?
BF: In the U.S. there is a very large group of people who appreciate the finer things and are prepared to pay for it. We have one of the finest luxury portfolios in the business and plan to be doing more in the high-end segment going forward, with Perrier-Jouët Champagne, The Glenlivet and Chivas. If you look at how luxury consumer goods are sold, they all have strong stories about craftsmanship and history to back up the price. If you pay $200 for a bottle of Scotch, you want to share the story about how it was made, and why it is special.
The most effective way to sell premium brands is to engage people—consumers generally don’t come into a new category because they saw an ad, they come in because a friend or relative introduces them.