Beverages: Beer, Wine and Spirits – Alcoholic Beverage Event Was Focused on the Consumer

Source: CITI

Wendy Nicholson

March 8, 2019

Impact Marketing Seminar Offered Insights into Evolving Alcoholic Beverage Industry Trends – Yesterday, we attended the 43rd Annual Impact Marketing Seminar in New York. At the event, we heard from leaders throughout the three-tier system and other relevant industry players, including (i) STZ’s President and CEO, Bill Newlands; (ii) Canopy Growth’s founder, Chairman, and co-CEO, Bruce Linton; and (iii) Pernod Ricard’s Chairman and CEO, Alexandre Ricard.

Change Is More Than a Buzzword; It Is the New State of Play – Perhaps the most striking message of the day was the importance of being responsive and flexible in the face of fairly dramatic changes in the consumer marketplace. Indeed, across the board, we heard about the need to rapidly innovate in response to consumer trends and need states (yet, the industry players also highlighted the necessity of maintaining the strength of a legacy portfolio). We heard about evolving consumer behavior, particularly relative to the shift in public opinion of cannabis (e.g., consumers increasingly favor legalization, particularly the younger generation) and the willingness to drink across all three categories (e.g., consumers that drink across all three categories spend six times as much as one-category drinkers). Interestingly, we were also told about the need to carefully manage organizational change within a leadership transition, and we were reminded of the importance of balancing both consistency and transformation when crafting a strategic vision.

Digitize or Die Trying – Consumers are increasingly looking for immersive brand experiences, such that we heard how enhancements to the online shopping experience allow consumers the opportunity to go deeper and get more attached to brands. Further, given the growing momentum of e-commerce, we were told that transparency is increasingly critical, as the reduction of information asymmetry means that consumers are able to easily validate product claims and price shop. Meanwhile, for those consumers who are looking for deep experiences in person, many of the industry players commented on the opportunity to glean consumer insights from tasting rooms, facility tours, and brick-and-mortar retail. That said, given the increasingly digitized world, the speakers cautioned about cyber security in an age of growing interconnectivity (particularly as the number of devices continues to outpace the population, with ~50 bn devices expected by 2020).

Luxury and Premiumization Are Here to Stay – We heard that wealth creation is accelerating, and luxury as a marketing message will remain in vogue (given its appeal to consumers’ emotions). However, while luxury may represent an “everlasting opportunity,” the concept itself is incredibly subjective. This means that “luxury” price points differ by consumer, and some of the speakers suggested that the value play might have merit for those companies that want to serve all consumers. All in, while the desire for luxury and premiumization may drive certain purchasing decisions, we were reminded that a broad spectrum of need states exists.