Taming the Wild West

For brands trying to get a foothold in the fiercely contested on-trade, it can be like a bar room brawl. It’s a bitter fight for survival, where the groundrules are ill-defined and anarchy reigns

Ian Humphris Life

Compared to sectors, such as supermarkets, where promotional activity has been ‘media-ised’ with buying centres guiding brands’ marketing investments, executing in the on-trade can seem like a lucky dip. Where once POS kits and competition mechanics were popular means of gaining prominence, they are now largely unwanted and unloved. Promotional compliance is hard to gauge with many kits simply ending up in the cellar or the bin.

It’s understandable that drinks marketers often have their head in their hands at the challenges of the on-trade, but the time is right to try and bring some order to this chaotic sector. After years of seemingly non-stop bad news, the on-trade is suddenly a good place to be again. Following a lengthy period of decline, it is seeing growth in sales and the worst of the tough times seems to be over.

But in taming this Wild West, brands have to wrestle with its particular challenges. The UK pub estate is massively diverse – in terms of the sophistication of systems and processes, target drinkers, styling and pricing. A one-size-fits-all won’t cut the mustard and will actually piss people off.

Unlike supermarkets, the trade can’t be expected to stock multiple mainstream beers or every variant of trendy flavoured ciders. There’s a finite space and customers want to stock lines that are popular and will sell. Position is hard won through relevance to drinkers and ability to deliver sales.

Brands need to understand the different business models, motivations and audiences of the main elements of the on trade: managed, non-managed and independent outlets. They are all looking for different and conflicting support from brands, however there are all affected by four key trends that are affecting drinking behaviour.

Premiumisation has seen drinkers looking for better quality more interesting brands that the traditional favourites. The meteoric rise of Peroni is a great example of how brands can succeed by adopting a premium strategy.

Choice proliferation means there has never been such a wide array of drink types, flavour variants or combinations. Brands need to help the trade navigate this choice, curate it and provide the right range to satisfy their guests. The brands stocked by venues are a projection of the brand the outlet wants to portray. Stylish premium bars want stylish premium drinks brands; mainstream pubs want popular, good value brands that they know the punters love.

At the same time, palate preference is changing with under 30 drinkers preferring sweeter drinks than previous generations hence the rise in flavoured ciders and cocktails while lager has declined.

Meanwhile health concerns, weight concerns and strict drink drive laws have created a society that needs to moderate its alcohol content. Soft drinks aren’t the only answer, with brands now producing low ABV and zero ABV variants to help consumers enjoy their favourite drinks while moderating their intake.

Cutting across these trends is the need for brands to reinvent how they do business with the trade. A useful analogy is how banks and energy companies have reframed the way in which they work. Instead of being suppliers of a commoditised service, they have focussed on how they can help their customers grow their own business – delivering a true added value benefit. Drinks brands have to make the same leap and represent how they can help their business customers sell more and get more people through their doors.

Brands are being disarmed in the trade as outlets are largely uninterested in running themed activity. Venues have never been so strict about maintaining a stylish environment, the traditional tools of brands to drive visibility aren’t being used (compliance). Brands need to work with the trade to develop new, mutual beneficial ways of creating brand visibility and driving rates of sale.

This doesn’t mean that brands are completely emasculated, but they have to learn to fight smarter. In essence, it’s about delivering the right brands, in the right outlets with the right range and choice.

16 February 2015