In May 2020 year we ran a survey across 79 alcohol beverage professionals to examine their views of the C19 crisis on their business. The results took the form of 6 articles which examined their Sentiment, Product, Communication, Distribution, Pricing and Resources Management.
As many businesses need to juggle between a 2nd C19 wave and the imperatives of high seasonality, this article explores the differences in responses between Wines and Spirits to the crisis. Indeed, these are "cousin" categories and highlighting differences in responses allows to share mutual learning.
To detect differences in responses vs. the crisis, we filtered the answers by Wines ad Spirits product category and calculated the gap in respective agreements. For instance, if 19% of Wine respondents agreed with the statement "we will increase our spending in non-digital media" and 17% of Spirits respondent agreed with the same statement, the difference of 2% pt. indicates a similar attitude on this point, i.e. a relatively low priority for this kind of investment. Overall, this is what stands out :
1 - Spirits are more proactive than Wines, especially in Distribution: Spirits show much more proactiveness than Wines to "open up new markets" (+33% pt vs. wines) and "reinforce presence in On and Off Trade" (+20 % pt.). This attitude also shows in product management with Spirits agreeing more than 20% vs. wines to "extend product range with new variants".
2 - Spirits are more confident in their Pricing than Wines: indeed, 50% of Spirits agree to "maintain the current price and promotion strategy unchanged", i.e +21% pt. more than Wines (only 29%). Before resorting to Price Promotions to increase off-take, it is worth considering that in times of stressed shopping, consumers want to find their usual brand quickly rather than wander in last minute offers, so before Price promoting, consider In-Store visibility and awareness build up.
3 - Wines are more likely to Price promote than Spirits: whilst both categories are keen to " look for efficiencies an savings in the Pricing and promotion Budgets" (75% to 80% agree), Wines agree almost 60% more than spirits to "increase budgets for Price Promotions and Discounts. This huge difference reflects Wines greater readiness than Spirits cut prices because of C19 crisis. This should ring an alarm bell as it echoes the p.2, and is a direct revenue erosion of a category with lower margins than Spirits.
4 - Wines are more likely to clean their Portfolio: indeed, with 74% of Wines agreeing to "terminate products that perform poorly" (+10% pt vs. spirits), wine show a greater predisposition in portfolio pruning.
5- Wines show more willingness to increase support the environment and to reinforce marketing teams: on these 2 criteria, Wines agreement is 10% higher vs. spirits. This perhaps highlights a stronger connection of wines with harvest and terroir vs. spirits, as well as a desire to improve their marketing capabilities (often regarded as not a good as spirits').
6- Wines are are less confident about their future than Spirits: with only 17% and 7% of respectively Wines and Spirits agreeing that "the crisis threatens the existence of our brand", this shows that alcohol beverages are rather confident about the future. However, this is less that 1 out of 10 Wine respondents and 10% pt., more than spirits.
In conclusion, whilst Spirits are full of challenges (import tariffs, lo / no alcohol entrants, ...) they seem more confident about their future and more proactive on business initiatives. On the other hand, Wines are more willing to use Prices and Promotions to drive business, and as this hits directly the bottom line, it may explain the lower confidence in the future.
Brand Reveal is a network of Senior Marketing Experts. Since 2014 we have carried out nearly 50 projects in Wines and Spirits all over the world, and are placed in a unique position to appreciate what Wines and Spirits do at their best. If you want to grow your business and tap into seasoned experts knowledge, do give us a call. [email protected]