The alcoholly and the ivy

At Christmas it is better to focus on adding value, rather than cutting prices, to preserve the year-round integrity of premium drinks brands, says Robyn Lewis

THERE’S A POEM about Christmas by Pam Ayres entitled Goodwill to all Men. Give us your money and, as mercenary as this may seem, for those of us in the drinks trade this is how we need to view a season that has a sales potential of Santalike proportions.

Categories such as non-cream liqueurs, for example, enjoy 50% of annual sales over this period (AC Nielsen).

Likewise, last year’s Nielsen figures for November and December show that 26.7% of the volume of spirits that were bought in 2002 were purchased in this two-month spell and that cream liqueurs, vodka and malt whisky recorded a significant market gain over this period. Vodka did particularly well with a £4.5 million increase in value and malt whisky also grew by a healthy £3.3m in value (blended whisky was down £2.6m).

Figures like that prove just how vital Christmas sales can be and it is no wonder that the November/December period is a frenzy of promotions and marketing activity. The question is how to get your brand to stand out?

During this season, as in any other, it is the multiple grocers that dominate, accounting for 66.6% of value in the total off-trade liquor market in 2002 (Nielsen) and that shows an increase from 63.6% the previous year.

There is no reason to expect this growth not to continue this year and so brand owners and managers need to take heed of what the multiples want in terms of Christmas promotions if they are to fully capitalise on the potential the season offers them.

So, is it price cuts, value-added promotions, twofor- one offers, BOGOFs or fancy packaging that works best at this time of year? "At Christmas people tend to gravitate towards brands, rather than something cheaper or an own-label, and so they are naturally keen to look for good value.

Consumers these days are very supermarket- and offer-savvy," says John Spurs, licensed trades director at Morrisons supermarket. Helen McGinn, wine buyer at Tesco, echoes these sentiments: "Over this period we will run different types of promotion but success can only be achieved by understanding what the customer wants.

There is too much tacky packaging around at Christmas and what consumers really desire is a product that delivers real added-value."  Budgens, in the convenience sector, has similar reservations about the effectiveness of gift-boxes and the like over the period, although for slightly different reasons.

"At Budgens, we really don’t have the shelf-space to offer gift-boxes or tins and the like," comments buyer, Christine Sandys.  "As a result we don’t get involved in this part of the market. I have found that there is no one type of promotion that works best – customers are looking for the best deal on offer.

In the past we have had success with a selection of promotions, including case deals and multisaves, offering customers really significant savings.  However, I would say that because the nature of our business is mainly convenience, straightforward money-off promotions still generate the greater volume.

People tend to have to budget for Christmas and so are looking for good value, this also presents a challenge to instigate impulse purchasing. We tend to position our offers in key trafficflow areas of the store to encourage this."

So the message from the multiples is very clear: consumers like price-cutting as much at Christmas as at any other time of year.  But there is evidence to suggest that while the period enjoys enormous volume growth, value is slipping.

For categories that rely heavily on the season this must be stemmed and other methods of attracting the consumer need to be employed.  It is also unpalatable to cut prices significantly for many of the products that sell well at Christmas because of the luxury element involved.

The Champagne houses, for example, need to be wary of price-promoting over this period. "The trouble is there is a price to pay in terms of image and the long-term strategy of the brand," says Peter Ferguson, vice president of Marne Champagne Diffusion, distributors of Lanson Champagne in the UK.

"Too often it [price-promoting] gives off a bad impression and it erodes the luxury elements of the brand, but Taylor’s packaging will focus on traditional seasonal cues there is pressure to go down that route over high sales periods like Christmas and there’s no single brand that never does price-promotions.

From the point of view of a brand, though, the best form of promotion is a value-added one," he argues.  For some this will mean gift-boxes.

"Our research indicates that 30% of Champagne consumers would switch brands if their brand wasn’t gift-boxed," reveals Moët-Hennessy senior brand manager, Vincent Gillet.

"You also have to remember that for us the corporate market is huge for Champagne and that is very driven by gifty elements," he adds.  For this market Moët has released an "Older Vintage" range of Moët & Chandon in oak gift-boxes and for the more style-conscious consumer, the company has commissioned a limited edition Champagne bottle-stopper from hat designer Philip Treacy, to be sold with a bottle of Moët & Chandon Brut Imperial Rosé.

The Waiters Friend company, which supplies POS and promotional ideas to the industry, applauds the idea of a gift element that fits in so well with the fashion connection that the brand has established, but warns that looks aren’t everything.

"It sounds like a great idea but only if it works," advises commercial manager Mark Williams.  "If it leaks after a few times of using it, it will just end up in the bin.

I haven’t seen this particular bottlestopper and so it’s impossible to comment on whether it would work or not, but in my experience Champagne houses tend to go for what looks good over everything else."

 Williams’ advice on developing promotional material and brand POS is clear.  "Brand managers must begin to value these aspects more highly.  It is the one mechanism to provide a reminder of the brand every time it is used.

Good quality, customised accessories generate a positive brand association through clever design, longevity of function and playing a key role in the ‘theatre of wine’ but the key is function as well as looks," he warns.

Another of the categories that does particularly well during this period is Port. Seen as a traditional Christmas tipple by many, it is a highly seasonal product and both volume and value need to be driven through this crucial period.

"Research shows that up to half of Port purchases over Christmas are for other people," says Andrew Hawes, sales director at Mentzendorff.  "This means that while price-promoting is still important, packaging and valueadded schemes almost certainly help."

For the Fonseca and Taylor’s brands the Christmas packaging this year, as any other, will focus on the more traditional seasonal cues.  "We have experimented with our Christmas packaging," explains Hawes, "but people feel happy with the traditional elements for this period and so it is important not to do something off the wall or very designery."

For the Fonseca Vintage Port range this year there will be an educational element to the gift offering.  "Since Port is such a complex category we have put decanting funnels and an explanatory leaflet about decanting in our Vintage boxes.

This means there is value-added but it is also educational," says Hawes.  Spurs at Morrisons, like McGinn at Tesco ("too much tacky packaging") has reservations about some of these promotional elements and gift-boxes that are offered to consumers over this period.

"The value-added schemes and packaging can work sometimes but they have a very short lifespan and create a lot of logistical problems," he explains. "You need to stock enough, obviously, but do not want to be left with a load after Christmas.

Also I think it is important that brands remember to ring the changes.  Just because it worked last year doesn’t mean it will work again."  If, however, you have planned your value-added functional elements to perfection and are raring for the off, be aware that without marketing support you may still be last to reach the Christmas tree.

"Most consumers will make a purchase at this time of year, whatever the price," says Cathryn Sleight, marketing director of Allied Domecq Spirits & Wine UK (ADUK). "It’s about laying solid foundations for each brand during the year and then building on them with the right mix of marketing support," she argues.

Last Christmas both Tia Lusso, the (at the time) newly launched cream liqueur brand, and Malibu were the star performers for ADUK.  "Tia Lusso successfully established itself as the number two cream liqueur brand within multiple grocers both in volume and value terms.

The cream liqueur category itself grew by 30% over the eight weeks of Christmas and we estimate 34% of this growth was down to Tia Lusso," confirms Sleight. "This year we will be supporting the brand with an £8m investment package to include TV advertising, sampling activity and consumer PR over the period, to further engage the consumer."

With both the Teachers and Laphroaig brands in the ADUK stable as well, the increase in the whisky  market at this time of year is also significant for the group.  "We are planning a new consumer PR campaign for Laphroaig to kick off just pre-Christmas and we fully expect the growth of Teachers to continue during the festive season.

We will be maintaining our focus on the 12.5m core 45-plus, male Scotch whisky consumer to do so," says Sleight.  Whyte and Mackay is similarly focused on using marketing and PR support through the Christmas period to drive growth for its whisky and other spirits brands.

"In terms of the Whyte and Mackay brand we are planning a new national press execution, with a £250,000 media spend planned for London, the Southeast and Southwest over the period. Scotland will benefit from the launch of a new TV execution over Christmas," explains Glen Gribbon, brands director at Whyte and Mackay.

The company’s vodka brand, Vladivar, is also set to reap the rewards of a TV campaign at the same time, spread over terrestrial and satellite channels, and press ads in titles such as Heat.   "Christmas last year was all about price for vodka," says Gribbon.  "This is likely to be the case again, with volume driven through the multiple grocers. 

There is some evidence of shoppers holding back until the last week of December, perhaps due to the timing of Christmas day last year, and with it falling on Thursday this year, timing may well influence the figures again," he reasons.  It seems, then, that promoting a product over the Christmas season is very much a balancing act. 

There needs to be an equilibrium between the element of luxury a consumer wants at this time of year and the value they expect; a counterbalancing of the brand values that are built in every season and the price promotion that is now expected, and finally there is a fine tightrope to be walked between the needs of the supplier, the needs of the retailer and the needs of the consumer.