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Pernod Ricard launches premium drive

Pernod Ricard is seeking to drive growth within premium spirits with the launch of a new cross-channel initiative that aims to capitalise on the resilience of the premium end of the spirits sector.

“Premium Edge” has been rolled-out across both the on- and off-trades and will provide assistance with display, limited edition packs and education in order to bring premium spirits consumption in the UK, which stands at 31% of the total spirits market, up to US consumption levels of 46%.

According to the company, £1 in every £4 spent on spirits is currently spent in the premium sector, which Pernod Ricard classifies as spirits with a recommended retail price of £13 or above for a 70cl bottle.

Simon van Moppes, commercial director – spirits at Pernod Ricard UK, said: “Premium spirits present a major opportunity; despite total spirits value decline in the on-trade of -3%, premium spirits continue to grow at +3%.

“We’re confident there’s further headroom for growth due to the broad consumer appeal of premium spirits, the category’s relevance to a wide range of occasions and the segment’s overall profit potential.”

It’s in the off-trade, however, where premium spirits are enjoying the most success, according to van Moppes.

“In the off-trade alone, premium spirits are growing ahead of total spirits (+12% value and +9% volume, versus +7% value and +1% volume) and this growth has accelerated over the last two years,” he said, highlighting the sector’s resilience during the economic downturn.

The aim of the initiative is to encourage consumers of standard spirits to trade-up to the premium sector.

Van Moppes added: "The opportunity to trade up confronts us every day in every aspect of our lives.

“All major spirit categories have the potential to trade shoppers and consumers up from standard spirits to premium, you’ve only got to look at the US.

“Premium spirits in the US already command a 46% share of total spirits volume, in comparison to 165 in the UK.”

The initiative will focus on four premium attributes: heritage and provenance, quality products, exclusivity and style.

Pernod Ricard, which owns brands including Absolut, Chivas Regal, The Glenlivet and Beefeater, surveyed 4,000 consumers over the past 12 months and, as a result, the company believes trading up within the spirits category could be worth as much as an extra 20% or £6 above the average price, leading to bigger margins and higher price points for retailers.

One of the major findings of the research was the difference in the views of consumers compared to bartenders.

Bartenders felt that the whisky category offered the best opportunity to convince consumers to trade up, consumers themselves said they would be more willing to trade up in the vodka category.

Indeed, on-trade venues which have trialled upselling on vodka have seen sales rise by as much as 50%, according to van Moppes.

In order to drive trial, Pernod Ricard is going to push its 35cl bottle range as well as offer training though its Bar Excellence school, whereby brand ambassadors will visit venues to train staff.

An above-and-below the line marketing campaign will support the Premium Edge initiative, with details to be revealed later in the year.

Alan Lodge, 06.04.2011

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