Posted on | August 21, 2013
Written by | BevNetwork
The Beverage Network sits down with Beam Inc. President Bill Newlands to talk about the future of flavor, the popularity of bubbles and how to make the most of consumer trust.
THE BEVERAGE NETWORK: How do you explain Skinnygirl’s runaway success, while so many other products marketed toward women have failed?
BILL NEWLANDS: The Skinnygirl brand works on many different levels. First, it matches up with a lot of megatrends that are bigger than our industry: The interest in low-calorie is huge—women want to enjoy a cocktail without having to indulge in an 800-calorie Margarita. There is also the growing demand for premium as well as convenience. And there was the interest in creator Bethenny Frankel, whose following got the brand off to a tremendous start because there was a loyal group of people who were very interested in what she was doing, and why.
But it has moved beyond that now, and its widespread appeal is due to the fact that it is sleek, simple and understandable. Many products aimed at women try too hard to be cute or corny. Skinnygirl does all it needs to do to resonate with female consumers without going over-the-top about it. Our hope initially was to become the Diet Coke of cocktailing and that is how we’ve approached it.
TBN: Skinnygirl has since expanded into wine and vodka. How easily does that brand equity transfer over to other categories?
BN: I believe people look first to the brands they trust. We knew Skinnygirl was becoming a trusted brand, and we wanted to apply that trust across multiple scenarios women enjoy.
There are 8 million women in this country who drink margaritas, 26 million who drink vodka and 42 million who drink wine. So if you’ve created a trusted brand, then the number of occasions and the number of people that you can appeal to, if you have your megatrends right, just expands exponentially when you broaden into related categories. That’s how we thought about it as we looked at the initial brand.
We recently asked ourselves: What does the Skinnygirl consumer want that we don’t currently offer? Prosecco. So we will be launching one this fall. It’s light, refreshing, tasty, and we’re pretty excited about it.
TBN: The world of flavored vodka seems so crowded. How do you believe this category will evolve?
BN: The flavor consumers today are very specific about the flavor they want. If somebody wants açai, they are not really going to want to listen to you explain that grape serves the same purpose. I believe there will continue to be a proliferation of flavors. But the hot flavors—peach, coconut, whipped cream—they will dominate. (Pinnacle’s Whipped Cream flavor has a high vanilla component—surprise! The American consumer likes vanilla!)
It is incumbent upon us as an industry to deliver flavors that are accurate—products need to reflect the flavor they represent. I believe in the future consumers will be even more demanding about this. We released Pinnacle Pumpkin Pie last year as a limited edition SKU, and we were blown away by how much people loved it—because it tastes exactly like pumpkin pie.
TBN: People doubted your flavor pioneering the world of bourbon, yet Red Stag took off immediately.
BN: It’s true—people thought we were off our rocker when we first talked about developing Red Stag. But when you think about it, it’s not so revolutionary. Cherry Garcia is Ben & Jerry’s best-selling flavor, Cherry Coke and Pepsi are huge—the consumer likes cherry. We weren’t asking them to understand some new or different concept.
TBN: The term “lifestyle beverage” is used frequently today to describe an array of products across different categories. How do you define it?
BN: It’s about creating situations and formats that match up with the way people are living today. People are short on time and are looking for convenience, yet they want premium—this is not unique to our industry. When people decide what they will drink, it’s no longer as simple as “I’ll have a beer.” Consumers want a variety of flavor and intensity of flavor. Lifestyle brands fill needs often before people even realize they have them.
Sauza Sparkling Margarita is a good example of a lifestyle brand that combines categories and various desirable attributes. We drink a lot of things with bubbles—soda, beer, sparkling water—because they are refreshing and cleansing on the palate. We combined this with the number one drink in the country and it’s off to an amazing start, far beyond our expectations.
TBN: Bourbon is huge right now, with a growing global footprint. How do you see the American bourbon consumer evolving?
BN: Bourbon really has become the single hottest category in our industry. As a subset, the craft business is very popular. We helped start that trend with Knob Creek, Booker’s and Basil Hayden’s. With the number one bourbon in the world, Jim Beam, we felt like we were in a position to show that the largest producer can also do things that are craft and unique, so this fall we are unveiling Jim Beam Signature Craft, an 86-proof small-batch bourbon. Again, we know that Jim Beam is a trusted brand, and we believe that when people look to trade up, they gravitate to names they have confidence in.
The bourbon consumer wants variety and opportunities to experiment. Before we released Maker’s 46, we saw that when people wanted to trade up, they left the brand. Now they can stay. On both Maker’s expressions we have experienced supply issues, but we recently were reminded of a very important lesson: You can’t go wrong when you listen to your consumers.
TBN: Innovation seems to be at an all-time high in the beverage alcohol business. How can retailers avoid cluttering their shelves?
BN: Innovation is extremely important to us. We aim to have one quarter of our growth come from innovation. But a lot of innovation—as retailers well know—doesn’t work. We have worked very hard to achieve a success rate that is off the chart; the vast majority of the products we launch succeed. It’s a tough call for retailers, because they simply can’t take everything. They want to bet on the companies that have shown success at creating things that pull through on- and off-premise. At Beam, when we bring something new to the table, we find ways to help pull it through.