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Commercial genius or commercial suicide?

Jan. 24, 2012 by John Collingwood

Once in a while a piece of drinks-related news is announced that truly does cause a stir and controversy around the globe.

Last week Chivas Brothers, the premium whisky and gin division of Pernod Ricard, announced that there was going to be:

“a new look for its Plymouth gin brand, re-positioning it above Beefeater 24, as a “super premium-plus”.

My initial thoughts on this matter were mixed, but the word that kept cropping up in my head was that this decision was a very bold and I mean very bold indeed.

On face value

If you broke this re-positioning exercise into its simplest form, then you can understand why some people are a little confused by the issue,

1. The liquid inside is going to be exactly the same as before
2. The only changes will be the design of the bottle …which by the way looks awesome
3. The price will be increased by approximately 40% to £25ish

See what I mean about bold? An increase of 40%, when we are watching our pennies at the moment and they are not even changing / improving the gin itself.

The key for me is the term that has been used to explain this decision…Plymouth Gin was undervalued! Is this a fair point?

The fine line

To me there is a fine line between confidence and arrogance.

I must confess that I admire them making this positive move, as if you do feel undervalued, then sometimes you have to dust yourself down and confidently pronounce I think I am worth this much. It has the heritage, its a tasty gin, so who are we to question their decision?

If you look at the gin category as a whole, it is being flooded with a wealth of new brands, all are different from one another, some have been received better than others. But there lies a key problem…how can you stand out from the crowd, when all that is happening is more and more competition is coming your way, in a specific price range?

A bar can’t possibly list every single gin. So how do you make your brand a must stock and not a may stock?

The bigger picture

The fascinating thing for me, is that sometimes as bartenders we neglect to think of the drinks industry on a global scale, I am the first to admit I can be guilty of it, but more and more I am beginning to look at things in a completely different way.

Why?

There is a really cool resource you can download called Millionaires 2011. This identifies the spirits that sell over one million 9 litre cases around the globe and showcases the trends that are currently happening.

The thing that really grabbed my attention was the effect that the emerging Asian, Pacific & Russian markets are having. These have a truly monumental effect on the manner in which spirit companies think and market themselves.

We are all aware that times are hard, people are not going out as much, preferring to go to the supermarket to buy their alcohol, instead of going out 2–3 times per week.

However, did you know that:

1. In Russia there has been a 40% increase in premium imported whisky sales in 2010, 80% of which being Scotch
2. Martell (owned by Pernod Ricard), was the fastest growing international brand in the world (19.9%), Courvoisier was 3rd (17.6%). These have both been helped by the strong growth in China and other Asia Pacific Markets

*all figures supplied by Drinks International Millionaires 2011

This to me reinforces the point that we have to stop thinking insular and consider the affects of the huge populations of people that live of the other side of the world.

Reuters state that Asia will add 1.66 million dollar-millionaires by 2015, taking the total number of wealthy to 2.82 million as the world’s fastest-growing major economies of China and India continue to mint millionaires.

Looking at figures like that, hammers home their is a necessity for super premium products in the world.

Showing off

Imagine you have been spending most of your life on the bread line, then all of a sudden the economy picks up, you luck starts to change and you come into money. What will you do??? Go out and celebrate of course!

We have all heard the stories of Bankers spending £1000s on bottles of expensive Champagne, Magnums of Grey Goose and not giving a monkeys. Are we now seeing this happening on the other side of the world? The difference being that there is a greater number of people doing it.

The difficulty with being submerged in the drinks industry for so long, is that we are aware of product life cycle of spirits, I for one have seen countless products reinventing themselves. But that is my point, there is a whole lot more people that have not!

Therefore if there is such an abundance of newly rich people, wanting to spend their money, what will they look out for…in my opinion the bottles that look cool and are the most expensive.

I have seen first hand the ceremony that goes into buying a bottle of spirits…the sparklers come out, as the waitresses parades through the crowd to your booth. Eyes are on you…who are they? What do they do? The difference being is that there is always someone else in the room wanting to out do you, so what happens, they buy a bigger bottle, maybe 2 or 3. With money sometimes brings egos!

Questions?

This brings us full circle back to the re-positioning of Plymouth Gin. To me its first test will be how the re-positioning will be received in Spain, which is currently going through a Gin renaissance at the moment!

Are they looking to be the Grey Goose of the gin world?

What I am really looking forward to seeing is the creative marketing literature? How they are going to communicate the changes not only to the trade but to the general public?

All in all I am just excited to see a spirit brand believing in itself and confidently pronouncing I am worth it!