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Send  Share  RSS  Twitter  25 Aug 2009

BEVERAGES: Spirits On A Down-Down In Recession

 



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A recent retail survey shows that alcoholic beverages too, are feeling the pinch.  Rumours that South Africans are drowning their fiscal sorrows are greatly exaggerated.

Darron Swersky, joint MD of Cape Town-based Picardi Rebel says that category sales in the past three months are as much as 20% down in some categories – especially premium products.  “It is the first time in my 35 years in the liquor industry that I have seen a 2% negative trend in manufacturing, as recently verified by SAB Millers’ figures.”   There is also a migration away from premium brands.  In the beer category, even though there has been a resurgence of beer drinking (mainstream brands) the premium brands are under pressure and those which are selling, are doing so because of very low prices.

Riaan MacGillicuddy, National Group Accounts Manager, South African Breweries says that although beer is quite resilient in difficult economic times, off premise outlets definitely perform better than broader on premise outlets. “In hard times, people tend to entertain and consume liquor at home.”

And yes, spirits are definitely down,” says Swersky.  “Whisky drinkers - a big sector of the market – are trading down, which means either dropping down a level on their preferred brand or switching out of the category completely.” It does not surprise Swersky that people are switching from expensive premium brands, he feels it has been a while coming.  He says, “For the last 5 to 10 years the world has been driven by consumerism (and a little hedonism too) buying brands they cannot really afford - on credit. Consumer spending right now is more realistic and aligned with their ability to afford it.”

It seems it was not just Yeats who yearned for ‘a cool draught of vintage that hath been cooled a long age in the deep delved earth.’ Wine consumption is on the up. Consumers are moving back to this old time favourite and as Swersky says, “Getting extremely good value out of wine buying at the moment.” He suggests consumers experiment and also trust the judgement of the retailer with respect to choice.  With export orders down and world markets in Europe and Russia canceling orders, wine is being offloaded locally. “It’s a great opportunity for consumers to try different wines at good prices.”

If sales are down and times are hard, how does the liquor industry stay afloat, during recessionary times?  Innovative marketing and pricing seems to be the  key.

Swersky says, “It is interesting to see a change in buyer attitude. We are a diverse group – 90 stores in different sectors - and the main driving factor used to be convenience (location, parking, range, service). This has become of secondary importance now with price being the biggest factor. We try to offer consumers the best value we can but margins are very thin, much thinner than the food industry.  We also know that although consumers want lower prices they are still looking for added value, be it a free mixer with a purchase, in-store tastings, a delivery or party service.” 

In-store retail advertising is working, although the message is important.  “It needs to draw your attention,” says Day. “It is an extension of a marketing campaign and must be used to close the deal. It is an effective, single point of contact for advertisers to increase communication with consumers.  Where it counts. Brands create awareness through mainstream media but when a consumer walks into the store you have to give them a reason to buy your product – then and there.

In-store is a unique market so it is important for brands to realise its potential, to have a call for action and to attract attention, not just feature another advertisement. Retail digital TV in-store acts as 24-hour promoter, interacting with the brand and consumer.  Feedback from dipstick research is proving that this is effective by changing buying choice where it matters – in store.  Buy in from big brands like Distell, Brandhouse and SAB and informal feedback has been extremely positive,” says Day.

MacGillicuddy agrees. “We believe that retail digital TV is growing due to the fact that it drives a clear message amongst clutter at the point of purchase and engages the consumer by highlighting the best offer and key brand packs. But it shouldn’t replace traditional advertising.”

So, while alcohol was previously seen to be recession proof, it is not only seeing a downturn, but there is significant change in buying habits.  Not only do consumers want ‘more booze for their buck’ but premium brands are stuck on the shelf for the moment. 

But we hope that rumors of an upsurge in the economy towards the end of the year are true.  That we can all drink a toast to the recovery of our economy with a glass of premium (vintage) French Champagne.


 

Darron Swersky, joint MD of Cape Town-based Picardi Rebel says that category sales in the past three months are as much as 20% down in some categories – especially premium products.  “It is the first time in my 35 years in the liquor industry that I have seen a 2% negative trend in manufacturing, as recently verified by SAB Millers’ figures.”   There is also a migration away from premium brands.  In the beer category, even though there has been a resurgence of beer drinking (mainstream brands) the premium brands are under pressure and those which are selling, are doing so because of very low prices.

Riaan MacGillicuddy, National Group Accounts Manager, South African Breweries says that although beer is quite resilient in difficult economic times, off premise outlets definitely perform better than broader on premise outlets. “In hard times, people tend to entertain and consume liquor at home.”

And yes, spirits are definitely down,” says Swersky.  “Whisky drinkers - a big sector of the market – are trading down, which means either dropping down a level on their preferred brand or switching out of the category completely.” It does not surprise Swersky that people are switching from expensive premium brands, he feels it has been a while coming.  He says, “For the last 5 to 10 years the world has been driven by consumerism (and a little hedonism too) buying brands they cannot really afford - on credit. Consumer spending right now is more realistic and aligned with their ability to afford it.”

It seems it was not just Yeats who yearned for ‘a cool draught of vintage that hath been cooled a long age in the deep delved earth.’ Wine consumption is on the up. Consumers are moving back to this old time favourite and as Swersky says, “Getting extremely good value out of wine buying at the moment.” He suggests consumers experiment and also trust the judgement of the retailer with respect to choice.  With export orders down and world markets in Europe and Russia canceling orders, wine is being offloaded locally. “It’s a great opportunity for consumers to try different wines at good prices.”

If sales are down and times are hard, how does the liquor industry stay afloat, during recessionary times?  Innovative marketing and pricing seems to be the  key.

Swersky says, “It is interesting to see a change in buyer attitude. We are a diverse group – 90 stores in different sectors - and the main driving factor used to be convenience (location, parking, range, service). This has become of secondary importance now with price being the biggest factor. We try to offer consumers the best value we can but margins are very thin, much thinner than the food industry.  We also know that although consumers want lower prices they are still looking for added value, be it a free mixer with a purchase, in-store tastings, a delivery or party service.” 

In-store retail advertising is working, although the message is important.  “It needs to draw your attention,” says Day. “It is an extension of a marketing campaign and must be used to close the deal. It is an effective, single point of contact for advertisers to increase communication with consumers.  Where it counts. Brands create awareness through mainstream media but when a consumer walks into the store you have to give them a reason to buy your product – then and there.

In-store is a unique market so it is important for brands to realise its potential, to have a call for action and to attract attention, not just feature another advertisement. Retail digital TV in-store acts as 24-hour promoter, interacting with the brand and consumer.  Feedback from dipstick research is proving that this is effective by changing buying choice where it matters – in store.  Buy in from big brands like Distell, Brandhouse and SAB and informal feedback has been extremely positive,” says Day.

MacGillicuddy agrees. “We believe that retail digital TV is growing due to the fact that it drives a clear message amongst clutter at the point of purchase and engages the consumer by highlighting the best offer and key brand packs. But it shouldn’t replace traditional advertising.”

So, while alcohol was previously seen to be recession proof, it is not only seeing a downturn, but there is significant change in buying habits.  Not only do consumers want ‘more booze for their buck’ but premium brands are stuck on the shelf for the moment. 

But we hope that rumors of an upsurge in the economy towards the end of the year are true.  That we can all drink a toast to the recovery of our economy with a glass of premium (vintage) French Champagne.



 
 
 
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