The highly competitive spirits industry is directing its marketing efforts
toward the powerful twenty-something contingent for the next mega-hit.
Marketers in the highly competitive spirits industry are looking to the powerful twenty-something contingent for the next mega-hit.
Every generation experiences a couple of monumental distilled spirits "mega-hits" that redirect the course of consumer purchasing habits. The mega-hits have proven to be single products that influence the entire distilled spirits sector by attracting drinkers who are in their 20s and early 30s, and are enthusiastic, open, informed and willing to spend money.
As a result, spirits brand managers and marketing executives in concert with their product research teams and advertising agencies willingly risk their business reputations to uncover and develop the next spirits mega-hit to seduce the trendier drinking market. The hunt for the next enchanted elixir is relentless, expensive and an endless reality. But the rewards of new spirits categories are tremendous.
Smirnoff Vodka, the initial modern-age mega-hit, took the United States marketplace by storm in the 1960s and 1970s by running an advertising campaign that promised to leave hip spirits drinkers "breathless." The clever implication was that by imbibing odorless vodka at an infamous "three-martini lunch," one's old fuddy-duddy, whiskey-loving boss wouldn't have a clue that you had been drinking at all.
In the wake of this ubiquitous campaign, Smirnoff replaced popular blended whiskeys, most notably, Seagram's Seven and Seagram's VO, as the drink of choice by the 21-to-35 age demographic. In a series of well-conceived marketing strokes that took a decade to cash in, young, legal-age consumers gravitated from drinking brown, smelly and heavy to light, fragrance-free and clear. The American distilled spirits playing field hasn't been the same since.
In the mid-1970s, a whiskey-based liqueur from Ireland altered the distilled spirits landscape by appealing primarily to a neglected audience: young female consumers. Launched in 1974, Baileys Original Irish Cream Liqueur, which contains a modest 17 percent alcohol, caused a major ruckus in the spirits trade by offering a light, slightly spicy, creamy, "comfort food" alternative to heavier after-dinner spirits. Three decades later, Baileys is still the world's best-selling liqueur with sales in excess of 6 million cases a year. Since its introduction, Baileys has spawned an astounding array of imitators, in the process creating a vibrant subcategory within a spirits category.
In the mid-1980s, DeKuyper Peachtree Schnapps, developed by Flavor Scientist Earl LaRoe, captured the imagination and disposable income of impressionable, fresh-out-of-college drinkers by offering what LaRoe described as "the big, fresh-peach profile." As author and New York Times staffer William Grimes writes in his book, Straight Up or On the Rocks: A Cultural History of American Drink (Simon & Schuster, 2001), "With virtually no advertising, Peachtree Schnapps caught on and became the first spirit since [Prohibition] to sell more than a million cases in its first year. Before long, 40 different brands of peach schnapps were on the market."
Contributing to the peach schnapps craze, of course, was the well-calculated invention of peach schnapps-based cocktails. The year 1987 was rife with mixed drinks like the Fuzzy Navel, Silk Panties and the Slippery Nipple. Silly concoctions with ridiculous names, no doubt, but they were enormously effective. Among the younger drinking crowd, word of mouth proved to be exceptionally robust for this brand—it was sweet, one-dimensional and only 24 percent alcohol by volume. Within 12 months, DeKuyper Peachtree Schnapps exploded into a million-case phenomenon.
At about the same time that the Fuzzy Navel was in full swing, the Swedish vodka brand Absolut caused an about face in the spirits industry when master marketer Michel Roux unleashed the most compelling spirits ad campaign this side of Smirnoff Vodka. Young, urbane, image-conscious drinkers in America's metropolitan areas glommed onto Absolut, a good but hardly great vodka, with astonishing brand loyalty due to Roux's efforts. Roux had created a sophisticated, arty, "in" image of Absolut and more importantly, used the textbook dual application of generating "image" and "on-premise endorsement" and convinced bartenders in the nation's most chic bars to pour it. The method of using bartenders who, in the eyes of receptive young consumers, know their spirituous liquids, fashioned a real revolution in how new spirits brands were (and still are) researched and marketed.
This groundbreaking quartet of post-World War II spirits phenomena attracted a curious, adventurous, if somewhat inexperienced audience that was generally younger than 35 years of age. Three of these brands, Baileys being the exception, find virtually equal appeal among male and female drinkers.
Since 1950, spirits marketing in North America has been crystallized to one critical component in the desperate, fever-pitch search to discover the next mega-hit brand: consumer age, in particular, those consumers under the age of 35. Boiling it down even further, the most coveted group within the group is the 21-to-29 age bracket.
Where and why do trends take flight? Why currently are the targeted drinkers only twentysomething consumers when statistics show that older consumers are more affluent? Where in the U.S. do these supposedly desirable young consumers reside, and why are some locations "hotter" than others? Finally, how are third-millennium spirits marketers presenting their new brands to this consumer sector?
Marketing researchers claim that even though consumers over 35 may be more affluent and sophisticated, it's the under-35 group that can make a spirit a bona fide sensation. Researchers think that this is due to the younger set's superb networking abilities, their openness to new things, and their still-developing senses of self-image. Data depicts the majority of consumers over 35 as being relatively set in their ways and therefore less prone to experimentation.
Describing the active 21-to-29 year old demographic, Tony Abou-Ganim, founder of The Modern Mixologist beverage consulting company, says that, "younger consumers are like sponges for knowledge. They are also impressionable and fickle. Everything is about 'attractive.' They want to be hip, want to have answers."
The prominent spirits-industry marketing executives that I spoke to made it clear that today's favored marketing techniques are much more face-to-face and "in-the-street" than those programs that were successful before. Chris Willis, a vice president of marketing for Pernod Ricard USA, says that, "our focus is on targeting a sophisticated consumer with events that are educational but also extremely engaging. For example, Chivas Regal does mentoring events in target markets where consumers are introduced to the blending process. We use a lively, knowledgeable brand ambassador and make sure [consumers] enjoy a memorable and educational evening."
Kate Latts, director of marketing for Heaven Hill Distilleries, markets the hottest spirits brand currently in the nation, Hpnotiq Liqueur. Latts views the young demographic with respect, saying: "This age group is a savvy and canny one, one that doesn't necessarily respond to the type of mass marketing and promotions that worked in the past. You need to make your product relevant to them in many different contexts and in many different environments. Special events and sponsorships can help bring your brand to life in a credible way, as can brand ambassadors who can interact directly with consumers."
Kay Olsen, managing director of Spirit of Hartford in Hartford, Connecticut, which markets fast-rising brands such as Inner Circle Rum, Velvet Falernum and Foursquare Spiced Rum, believes that the days of massive advertising campaigns are limited. "Event marketing has become more important…People are interested in brands that participate in things that they are interested in. If they are avid golfers, [brands should] participate in charity golf tournaments…People will identify your brand with things they like or like to do. It works very well…so long as the brand fits the venue."
"I feel that the focus and the dollars have been weighted too heavily on advertising at some beverage companies," warns Dale DeGroff, president of King Cocktail, an independent consulting company to the liquor industry. "They need to swing back more support to the bars and restaurants that carry their products. They should be reallocating money back into regional sales staffs that will go into bar-and-restaurant operations and support them."
Added Tony Abou-Ganim, "Information today is delivered better through event marketing. Besides, you can't taste a billboard."
So, does that mean that old-fashioned print advertising campaigns are obsolete? Not necessarily, says Rennie Solomito, a vice president for Allied Domecq USA. "One-to-one interaction solicits a response immediately. Traditional advertising should support events and sponsorships. It's all about balancing the marketing mix."
But not all spirits producers and importers have the kind of cash reserves that can fund both aggressive event marketing and national or regional advertising campaigns. Jim Nikola, vice president of marketing for Crillon Importers in Paramus, New Jersey, said this about the balancing act: "Advertising is a very expensive luxury. It's nice to have, but for suppliers who work with modest budgets, the grassroots type of marketing is very efficient. It takes longer to build success, but if you asked me to choose between a big advertising campaign versus street tactics, I would choose the street tactics."
And as for the hottest markets in the U.S., the metro areas where trends develop? "New York, Chicago, Los Angeles, San Francisco, Dallas and Miami are markets known for driving trends, defining sophistication and image," replied Senior Brand Manager Nicole Ertas for Jim Beam Brands.
Solomito says that today, spirits industry marketers even focus on particular neighborhoods and bars within trendsetting cities. "New York, Los Angeles, San Francisco, Miami and Chicago are places where trends tend to start," says Solomito. "These are upscale, 'trend corridor' markets, with specific neighborhoods that breed style, like SoHo in New York and South Beach in Miami. We launched WET by Beefeater in South Beach, focusing on a handful of bars and clubs where the target audience was spending their nights out. As WET became a brand associated with a certain lifestyle, it allowed us to expand to new places."
Creating the next spirits mega-hit requires different, more innovative types of marketing and advertising skill than in the past. But the payoff for uncovering the next big spirits trend far surpasses the hard work and dedication it takes to get there.
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