Absolut's Marketing Strategy in the U.S. Market

To support its business strategy, Pernod Ricard has decided to refresh the brand Absolut Vodka. Indeed Grey Goose, Bacardi group, won the heart of consumers compared to the Swedish brand. Often placed with celebrities and Hip Hop music videos , Grey Goose has become the most famous Vodka in consumers mind.

 

To become more "trendy", Absolut looked in the past. Andy Warhol and Helmut Newton had signed some of its old commercials, nowadays more famous than before, the brand decided returned to the arts. The target? New York City, where everything "DOPE" come from. The Swedish Vodka  has also partner a huge charity concert held by rapper Jay-Z at Madison Square Garden, to benefit families of firefighters and police officers disappeared in Sept. 11, 2001.

Another notable initiative: the inauguration last year, of "Thirty Days New York", a gallery open to the public where ephemeral thirty artists - painters, musicians, videographers ... - presented their work online. Nearly 70,000 New Yorkers have been visited this gallery and 15 million "followers" have followed the various performances on Twitter.

 

This repositioning in terms of image has been matched by a commercial shift to 180 degrees. To adapt to new behaviors,  more Home consumer-oriented  than going out, Pernod Ricard has launched a massive publicity campaign called "Cocktails Perfected" combining display, print campaign and television commercials.

 

A free application for iPhone and iPad, Drinkspiration, offering 500 recipes for cocktails, has also emerged. A success : it totals more than 500,000 downloads since 2009.

Absolut gondolas were even installed in the middle of the Fruit section of some supermarkets where hostesses were serving fresh cocktails. The Sales Representative did not have great difficulty in imposing these animations to sign because they had regular new flavors to offer. Brazilian açai berry, black tea, elderflower, coffee almond: the brand, which usually release only one novelty per year, has significantly expanded its range in only few months. Besides limited editions as Absolut Brooklyn (taste apple and ginger), designed by director Spike Lee, or Absolut San Francisco (papaya, dragon fruit, grape), concocted, among others, by Kevin Rose, founder of social network Digg.

Recently, the brand also tested Absolut Elyx, a luxury vodka of 35 dollars, distilled in a copper still and presented in a square bottle. Sold actually in Canada, Mexico, Greece and Turkey, it is not yet available in the United States. But it will be release soon, to compete with the queen of the segment: Grey Goose.

 

Absolut Vodka Strategy to increase its sales in the United States

I begin this series of strategic articles by the brand Absolut Vodka, which after some difficult years, decide to react in the U.S. with an aggressive commercial strategy:

To revive a brand for which it has invested $ 8.3 billion, the French group Pernod Ricard has decided to lower its prices while pursuing a policy of premium brand.

To maintain the premium image, Pernod-Ricard has recruited a team of sales representatives who have the distinction of being young, handsome and blond. Their mission: travel to all major U.S. cities (Chicago, Miami, New York and San Francisco) and promote the famous vodka in trendy places, ie bars, nightclubs and hotels.

Their strategy: They offer a free-trip of one week in Sweden, where barmen’s and owners will discover the secrets of the famous grain alcohol. In exchange the VRP requires a good exposure of the brand in their establishments. As you might see the last time you have been clubbing or partying, you can see more and more, Absolut shelves behind the bar.

Finally, to support this new business strategy, the parent company to decide to reduce by 10% the price of his vodka, to become competitive with its direct competitors such as Skyy or Sobieski.

Result: Increased sales by 3% in 2011 after falling by 10% between 2008 and 2010. 

Next Article: The new marketing strategy

Source: Capital.fr

The Selection Criteria of the Consumer.

The first criteria for the purchase of an American wine is the grape variety, it must appear clearly on the label and be highlighted. Then it is the price, the brand, the esthetics of the bottle or label and origin. Since the publication of articles on the "French Paradox", the wine is considered as healthy and beneficial to human if it is consumed moderately. 

The image of French wine is good, France stay in Americans spirits as the "wine country". However, French wines suffer from an offer that still remains inadequate to the market and American taste. French wine to Americans is often an intimidating wine (when it is time to choose): they have a very little knowledge of the segmentation of wines, their labels and are often difficult to correctly pronounce the names of wines. The value of mid-range French wine is generally considered as "disappointing" compared to wines from other European countries or those of the New World. Regarding communication, wine’s industry professionals criticize the French actions which is qualify as “too scattered and brief”. They advise to better target field operations and reach out to more consumers (exposition, promotion, demonstration or degustation).

In summary, French wines retain a potential image that could be better exploited. However, U.S. consumers believe that France is the country that offers the best wines. These wines are synonymous with special occasions, friendliness and holidays.

That was my ultimate presentation of the U.S. Wine market, starting today I will focus on Marketing actions, release of new products and development of new Brands.

The U.S. Wine Market: Consumer Preferences

The consumption of wines according to grape variety and color is relatively balanced, Americans consume almost as many whites wines (44%) than red (45%). Women generally prefer white wine and rosé (11% of the total consumption of wine), while the choice of men is on red wine. On grape varieties, consumers prefer the Chardonnay (60% of consumption), Merlot (15%) and Cabernet Sauvignon (13%). But those recent years, American consumers are looking for new tastes, Australian wines; Chilean and Argentinian are becoming increasingly popular. The reasons for this success are varied: a label more attractive, easy drinking wines, the agreements signed between local producers and American distributors...

In terms of packaging, 96% of Americans prefer glass bottles. Nevertheless, the country is open to intense competition; new formats have emerged as the Bag-in-box 3 and 5 liters. In recent years, sales of bag-in-box 3-liter increased significantly. This is due to the fact that the bag-in-box is cheaper to produce than the bottles and can have an area of information on the packaging ten times larger than a conventional bottle. Once opened, the packaging keeps the wine fresh for several weeks. This advantage makes it possible to attract new consumers. Tetra-Pack packaging also offers brick, other than the bag-in-box. Cans of wine are also available, but sales of these two types of packaging are marginal.

Wine in the U.S: The time and place of consumption

United States, wine is mostly consumed without food. Indeed, a recent study among American consumers of wine contradicts the claims of the U.S. wine industry, which argues that the wine is mostly consumed with food. The survey conducted by Wine Opinions from regular consumers of wine indicates that only 41% of wine is consumed with meals, 59% are without food, at least among the biggest consumers of wine. The interviewees say that a quarter of the wines they consume is drunk without association with food, 14% is consumed in the preparation of a meal and 19% as an aperitif with snacks and appetizers. The proportions are different in the Club, Hotels or Restaurants where 58% of wine consumed during the meal, 19% before starting the meal, and 12% in anticipation of the meal in the bar or lounge and 11% after the meal. The wine represents 51% of alcoholic beverages consumed at the bar or lounge, beer and spirits count for 20% each. The survey is based on 800 responses to a panel of 5,500 people, representing the segment of consumers who purchase and consume wine most often.

Another study conducted in 2010 by the Wine Market Council, 9% of U.S. wine consumers drink wine every day and 29% use it several times a week. This study confirms the decline in consumption of the most expensive wines. A substantial number of consumers of wine continue to reduce its purchases of wine over $ 30, including classic wines such as Cabernet Sauvignon from the Napa Valley and Bordeaux. 
Some consumers come back, but there is a clear growth and thrust of the wines from Oregon, Washington of South America, like Zinfandel, Sauvignon Blanc and Pinot Noir.

The last good news from this survey is that wine is supplanting more and more other alcoholic beverages, especially as an aperitif.

Source: Credit Agricole of Acquitaine

Wine and Spirits: U.S. Consumer Profile

In the United States, 9% of American wine consumers drink wine daily and 29% consume it several times a week. 

Women's consumption represents 57% of the total consumption of wine. Proponents of wine rely mainly in the generation of 50 years and older which represent 50% of wine consumers in the United States. However, a new consumer trend appears in the new generations age drinking, which will continue to support wine consumption in the coming years.

Over 80% of the wines are still consumed by White-American, the remainder divided roughly equally between the Hispanic consumer, and the Afro-American. Americans do not know the designations of origin and focus more attention on the varieties.

Concern for the well-being are increasingly important in American society, so the marketing team emphasizes more on the "good" virtues of wine for health.

Because of the crisis, the home (Houses or Apartments) returns gradually to be the center of wine consumption: in uncertain economic times, the moments of conviviality with family or friends are more at home, a less expensive solution than hanging out. The younger generations are more open to tasting wines and in particular French wines in informal circumstances.

The wine is removed from its  "niche" product positioning- although it is always in competition with other beverages (especially beer) - to attract less than 45 years. This new generation of fans, who discovered the wine at a younger age than their parents, is also more mobile, more informed and curious, due  to the globalization.

Another factor to consider is the growing diversity of the population of the United States, particularly the growing number of citizens of Hispanic origin (16% of U.S. adults). There is greater demand, for example, for sweeter wines  and less alcoholic such as Moscato. Currently, 46% of regular consumers (around 37 million) drink wine more than once a week. Wine Intelligence predicts that by 2020 this figure will reach 50%. Casual fans, who drink wine once a month, up 36% of the market, will also see their numbers increase during the next decade, bringing the total to 100 million regular consumers of wine in 2020.

Consumers looking for a weekly varied range of products in terms of variety, style, and country of origin, especially in a price range between 15 USD (10 EUR) and 20 USD (14 EUR). Occasional users tend to focus on brands with a reliably value . The products with a strong reputation and which project an image of "great value", sold between 10 USD (7 EUR) and 12 USD (8 EUR) per bottle, should attract this group, whose surging consumption becomes also more common.

source: Credit Agricole of Aquitaine

Consumption of Wine in the U.S.

The wine market in the United States is a market of 206 million potential consumers among the population aged over 21 years.

This is a still below from the annual consumption of country such as Italy which are close to 50L/cap. The U.S. has overtaken France in 2010 to become the biggest market for wine consumption from all sources, accounting for 330 million boxes, up 2% compared to 2009 and a market value estimated at 30 billion USD.

Annual wine consumption per capita in 2007 according to FAO (Food and Agriculture Organization): 
- More than 30 liters: France, Andorra, Luxemburg, Italy, Portugal, Slovenia, Croatia, Switzerland, Spain, Argentina, Austria, Uruguay.
- 15 to 30 liters: Australia, Chile, Germany, Hungary, Denmark, Romania.
- From 7 to 15 liters: USA, Canada, South Africa, Norway, Suezia.
- From 1 to 7 liters: Russia, Brazil
- Less than 1 liter: Other Countries

The market for wines and spirits in the United States is booming. Indeed, not only wine consumption per capita increases, but in addition, with a population growth of 2 million people a year, the number of consumers is also increasing.The market does not suffer from a lack of confidence, but because of the crisis, consumers change their consumption habits because it is difficult for them to maintain the same level of expenditure. Wine sales in the segment located 20 USD and more, have registered a fall of 20% to 30% in 2009, while sales of wine costing less than 6 USD a bottle rose of 5% over the same period. However, this decline has been halted and prices started to increase in 2011. The crisis has also had positive effects on domestic consumption, since the weak dollar boosted the prices of imported wines and encouraged consumers to buy American wines and they become more competitive. 

Even if its increasing, the share of wine in total consumption of alcoholic beverages remains marginal, representing less than 10% of the total volume consumed. Beer still dominates the market for alcoholic beverages with more than 82 liters of beer consumed per capita. However, beer consumption tends to decline and, over the years, the wine is gradually gaining market share. The American wines are dominating the domestic market. It accounted for 72% of the total wine consumption in the country in 2010.

Wine sales exceeded of the French market (330 million cases against 320.6 million). The introduction of less known varieties such as Muscat, a sweet white wine whose popularity has exploded in the U.S. is a factor in this rapid increase in consumption. Similarly, champagne and other sparkling wines have experienced an increase of 10%.

Americans tasted more and more wine and the recent economic crisis has not changed their habits. In 2009 U.S. consumption of wine has increased by 0.8%, representing a total volume of 297 million cases of 12 bottles. While most Americans prefer domestic wines, some foreign countries come to take their game such as Chile, New Zealand or Portugal. According to some experts, U.S. consumption of wine should reach a volume of 310 million cases of wine in 2014. 


Source: Crédit Agricole of Aquitaine