Driving relevant newness

With an increasingly diverse traveller demographic, understanding your data and sharing with the different stakeholders is key, according to Pernod Ricard's Mohit Lal. The Drinks Report finds out more

Mohit Lal Pernod Ricard

Mohit, I often hear people say, “Travel-retail is at a crossroads”, however this never seems to go away. Would you agree with the notion that the sector is at a crossroads? What challenges are there?

So, the first thing about travel retail as a challenge is that you probably have the most diverse set of consumers in a specific retail location. 

You wouldn’t get that kind of diversity in any other sector. From a retail standpoint you must have a singularity for your message to a very diverse audience. So, how do you then try to bring sharpness to your messaging?

Of that large and diverse audience, you must select which is your target audience. That’s always a challenge. Diversity happens in many ways; profile, language, tastes. You have to convert that diversity into sales. That’s one of the key aspects that’s a challenge; but if you find ways to deal with it, then it converts into an immense opportunity.

 

Is the sector a little static at the moment? With retailers and producers just doing the same time-tried efforts of before?

Yes and no. Are some aspects static? Definitely, however we have progressive ideas starting to come through in this channel. Progressiveness individually and also progression in terms of collaboration. 

However, it’s early days where it’s starting to happen and it’s starting to bring movement with it. So I do believe that the change is something that will continually build and will start to get more visible in time. Is the pace of change strong enough? Perhaps not. That’s also because of the eco-system being more stressed than ever before and we have seen that stress continue over a period of time. That’s a hinderance to progress.

The way to overcome that stress is to change and adapt to what’s being demanded. If I was to look at it from my own standpoint and our interaction with key retailers across the world, for setting up a new organisation we will need phenomenal strides in starting to stimulate change and we must question our current approach.

 

I’m going to stick my neck out a little bit here, but as drinks producers, when you talk about innovation, do you think it’s tangible for the consumer? Perhaps sometimes what the trade considers to be innovative, or something different, I’m not sure the consumer feels the same way themselves.

The fact is that newness sells. However, relevant newness sells a lot more and sells continually over a more extended period of time. Therefore the returns on relevant newness are significantly higher than the returns of just newness. 

However, what is relevant is subjective. Using data you can drive your ‘newness’ by a deeper understanding of the needs of shoppers and travellers. Why did they buy that? What are they looking for and is it for themselves or others?

You can therefore deliver relevance to either the product, messaging, promotions or merchandising and you’ll then see the benefits of that coming through. 

If the diversity is between the retailers’ point and your own purpose then you’ll not necessarily get as much come through as a common standpoint. However, at Pernod Ricard we understand that by sharing and understanding what the consumer wants with the retailers then it becomes so much easier. 

We have an approach to relationship building with the retailers which is to share with them our understanding of who the shopper is or what their motivations are to buy. And on that basis, what’s the best way for us collectively to target that shopper? Behind that then how do you execute that understanding? As a process it takes longer but once you’ve got it going then you have got to capitalise on it and continually take that approach. 

 

Do you think that some regions are more open-minded to innovation and newness than others?

It’s not just regions, it’s traveller typologies too. However, whether it’s a demographic, or a nationality, our understanding of shoppers is being based on which nationalities have the certain aspirations and within those nationalities it’s broken into which sub-segment etc. 

We then ask which drinks categories these sub-categories are likely to interact with and what are their wishes. What do they want to accomplish with their shopping? We’ve done a lot of work in this area and we continue to do so and invest in gathering a greater understanding of our consumers.

Then the idea is to go back to a retailer who operates in a specific location. We’ll partner with them and offer programmes, on innovation, messaging, on product, you know – we plan and work in collaboration so what you have then is an appropriate message for consumers in that region. Then you can introduce your new product into an environment that is ready for it and where you know the message will be delivered by the retailer properly and received well by consumers. 

 

What’s the main challenge and opportunity you’re addressing at Pernod Ricard GTR at the moment?

The opportunity is the different levers you have with consumers. Product innovation within a given category is one, another is premiumisation. But it’s also about making sure you’re communicating a message – how do you design merchandise? Making sure you broadcast your messaging outside of the stores and choosing which touch-points you use for different messages. The challenge could even be how you train the people on the shop floor to deliver the messages to different traveller groups. There’s a lot of things that you can work on that will hopefully deliver growth and interest. 

 

What can we expect from Pernod Ricard in GTR in the coming months?

We’ve already delivered plenty of product innovation. Across categories, if I take Absolut Vodka, we have the City Wraps which are getting a great response. We have City Wraps for different cities that are really starting to appeal to people because they want to carry home a memory of the city where they travelled. 

Ballantine’s has an edition with a Korean artist and you can expect a lot more to happen with that brand in the months to come. For Chivas there’s XV which we’ve delivered on a large global scale, offering innovation at a price point that wasn’t being fulfilled.

Price points is interesting for Irish whiskey – we now have Jameson Caskmates as a travel retail exclusive and have just launched Triple Triple. We are getting great feedback on the brand in Dublin which is the first place that we put it out. 

So there’s innovation happening right across our portfolio. Chivas also launched Secret Speyside – 15 single malts in a year. Now that’s some piece of innovation.

Then of course we come back to how we target consumers through their journey. We create adaptations. One idea is to pass the same message to a person when they are booking their flight, then a week before they are meant to fly and then on the day that they are flying. 

However, the other idea is to really strike with that message – keep its core the same but the way the message works starts to change depending on timings and location. There’s a whole host of different things that we are doing to stimulate this whole area of converting travellers to shoppers for our brands.

 

Looking at your portfolio, are there specific brands or categories which you see a real demand for? 

The size of the prize is different in different categories. It also depends on which countries you refer to. So, on gin, you are getting extremely high rates of growth. 

Do we take a value-centric approach where we see what is the potential value to captured versus looking at what is a long-term trend? Where there’s long-term value we focus from an investment standpoint and invest in both marketing but also the effort and mind-space that we put into it. 

We’ve segmented the market into how we like to look at it and then once we’ve segmented the market at a global level and a regional level we have specific battle grounds for each of those markets. 

These are the key area to focus on. For Cognac travellers are extremely important. Korea it is high value blended whiskies. For certain markets single malts are very important, so there’s a way that we marry categories and travellers.

 

Training retail staff must be crucial with those different purposes? 

The messaging that we’ve used to sell a particular expression of Secret Speyside, for example, would not be the same that we would encourage somebody to use when selling another. However, there are also some commonalities that these are rare and in some case limited stock. 

The story-telling for each of them are different, but the role of the people on the shop floor can be to tell the stories. Plus we bring the stories alive through the packaging and leverage PR in a big way to help ride the proposition through.

4 October 2019