By Deborah Jackson, Editor National Liquor News
The spirits category is in a period of growth with a trajectory that is improving, so at the recent ILG Conference in Bangkok, Riley Fisher, Key Account Manager at Diageo, spoke about how suppliers and retailers can work together to ride that wave.
Fisher told delegates that there has been impressive growth across both full sized bottle spirits (FSBS) and RTD over the last 12 months.
“If I was talking to you at this time last year, I’d be telling you that spirits is growing at about 1.7 per cent, which is pretty good. But I’m talking to you this year, and in 2018 we’re growing at 5.4 per cent.
“We’ve seen FSBS double in its growth to four per cent and we’ve seen RTD go from one to seven per cent growth in the last year alone.”
So how do we unlock future growth?
Fisher told attending ILG members that with the strength of both businesses combined, further growth can be leveraged.
“At Diageo, we bring our leading brands, our breadth of portfolio, our data, and our insights across the market. ILG brings the strength of retail coupled with the wholesale expertise, the strong brands, the consumers, and last but not least the retailers.
“We use this combined capability to find actionable insights. We find these insights, and we turn these into opportunities that turn into growth for us.”
The three main insights Fisher identified were excellence in innovation, retail transformation and excellence in execution.
Innovation:
Fisher spoke about winning in low-tempo occasions and how today’s consumers are looking for refreshing, lower alcohol drinks.
“Traditionally we’ve seen mid-strength being kind of over-indexed in this space, and not only with the likes of Great Northern. Now there’s Iron Jack and recently Corona mid-strength as well, so there’s more competition.
“We’ve also seen spirits come into play in that space as well. If you think about in the on-premise the likes of Aperol Spritz, the likes of Pimm’s, these products are coming into the market and really starting to penetrate that afternoon and low-tempo occasion.
“For us when it comes to premix we’ve been seeing Bundaberg Lazy Bear go from strength to strength in the three years since its launch.”
He also spoke about the growth of the ‘Sunday session’. He said that in the on-premise, Friday and Saturday trade is in about three to five per cent growth, but Sundays are actually double to three times that, with the majority of dollars spent between 12 and six o’clock.
“This challenges us to think, what are the offerings we are bringing to our consumers to cater to this trend? What afternoon offerings do you have? What offerings do you have for that low-tempo occasion, whether it be in the on-premise or in your retail stores?”
Fisher also spoke about the premiumisation and health and wellbeing trends, saying that we need to be “winning” in those areas too.
“I want to touch on winning with the health-conscious. This is a large growth area and we’ve seen consumers finding new ways to enjoy alcohol in a little bit of a healthier way. People still want to indulge, but they want to do it in a smarter way. We’re seeing now that six out of 10 people believe that consuming alcohol could be part of a balanced healthy lifestyle,” he said.
“One of the ways we’re embodying this experience at Diageo is with the likes of Smirnoff Pure. That insight is exactly where this product came from. People want something with natural ingredients. They want to know a bit more what they’re putting in their bodies.”
Retail transformation
Fisher spoke to delegates about five trends Diageo has identified to help change shopper behaviours. These trends are connected shopping, experimental, convenient, value-driven and specialised shopping.
“Advances in instant delivery means the shopper’s mindset has been changing from a stock up to an in-the-moment mindset.
“We’ve seen a really big shift in the reason that shoppers are choosing a liquor store and this has only changed in the last couple of years. Traditionally it’s been driven by price but now we’re actually seeing convenience as being the number one reason people are choosing a liquor store.
“This raises a question for us, are we meeting these expectations of the customer? Do we have the right range? Do we have the right pack sizes? Do we have the right formats for the occasions for this increasingly impatient customer?
“Secondly, value-driven shopping. I think there are no surprises that sensitivity to price is very much prominent, but what we’ve seen in this space is actually what people are seeing value in. It’s now not as much all about being the cheapest. People see values in different elements of their shopping experience. When it comes to having the right product at the right price, the right promotion, it’s not all about just being the cheapest anymore.”
Execute with excellence
Diageo recently ran a trial in an independent liquor store and created what they considered “the ideal spirits bay”.
The upgraded spirits bay was designed to be easily navigated, has a focus on education and clever lighting to illuminate bottles from below, making the space more approachable to the shopper.
This trial took a store that was in decline in spirits, to one year on now being in double digit growth.
“With all this in mind I’d like to challenge us to think a little bit differently in this space. Consider a new layout. Maybe it’s not a full overhaul, but there may be some little tweaks, little things that you could change about your shelving, about your range that could turn the dial on your spirits bay.
“Execute with excellence. Shoppers are becoming more educated and they’re expecting more from us. Are we meeting those expectations? Be a big part of the theatre. Ask yourselves what can I do to capitalise on all that advertising that’s out there? What can I do to turn that into some extra incremental dollars going through my till? And then keep open to new opportunities.
“We will bring them. Trust me, we will bring them. Some of them will work, some of them won’t. But to give them the best chance, it’s about us working in partnership.”
