A NIELSEN REPORT
KT Drinks, a UK based spirits manufacturer, is planning to launch a premium golden rum in the UK market in the last quarter of 2016. To promote the product and before the launch, KT drinks wants to partner with a soft drink manufacturer for its campaign. A prospective partner is Roundhouse Ginger Beer. The benefits envisioned for a partnership campaign are as follows:
Campaign will receive joint funding from the soft drink manufacturer
A joint campaign would help differentiate this golden rum from competitor products and therefore catch attention of the consumer; they will be willing to try the product
Rum and ginger beer is a well known and well-loved combination. This will create positive synergies in a joint campaign and make the campaign more impactful than individual campaigns
A well-known flavour combination, and a known mixer of drinks (Roundhouse) will create a connection with the consumers; they will drink the rum in the way it was intended for the best flavour combination, are repeat purchases are more likely.
The product:
Goode’s Gold Rum.
Product description (provided by client):
Premium golden rum made from the finest Jamaican sugar cane, and aged in bourbon casks for the perfect depth of flavour and silky caramel colour.
Available in 70cl. bottles in all major supermarkets.
RRP: £20.00
ABV: 35%
The proposed partner:
Roundhouse Ginger Beer
About the company:
Roundhouse is a well-known drinks mixer that has a vast collection of premium products including its signature ginger beer.
Key points about Roundhouse:
Fair-Trade: A Fair Trade accredited company, Roundhouse sources its ingredients ethically and through fair trade practices.
Focus on flavour: Roundhouse sources ingredients from different parts of the world to ensure the best flavour combinations.
Award-winning taste: Their signature Ginger Beer has won the coveted Gold Star at the Best Taste Awards for the last three years running.
Premium partner: Roundhouse travels the world for new and unusual ingredients, making sure its mixers are as good as the spirits they are being paired with.
Purpose of this report
The aim of this report is to present to the client the market data that is available for trends in the spirits and beverages consumption in the United Kingdom. From this data recommendations shall be made for the next steps in product launch.
This report will provide the following recommendations:
Should KT Drinks launch the product
Recommendation for Product Concept and Marketing Plan
Recommendation for joint campaign
Strengths, Weakness, Threats and Opportunities
Strengths – KT Drinks is leading spirits manufacturer and well entrenched in the alcoholic beverages market. The current market is in favor of spirits manufacturers with sale volumes in the last three years close to 200 million liters. While rum may account for a fraction of the sales, people are willing to spend money on quality products. Rum also has a higher market penetration than imported whisky, gin and brandy (Appendix 3). Golden rum sales in 2015 were close to £20 million, clearly indicating a strong market for the beverage.
Weakness – Golden rum combined with other flavors is a relatively new concept. Most pubs and mixers choose dark rums for cocktails. This means that flavor has to be enjoyed by the consumer. Market penetration for golden rum is only 1.2% of the total rum penetration and its repeat buy is less than that of other varieties. Rum is also a drink preferred by the older demographic, 55 years and above.
Opportunities – By opting to combine its golden rum with ginger beer, KT Drinks has the opportunity to appeal to the younger, continuously online and mobile generation. Major retailers have continuously seen increase in sales of golden rum, a trend which may continue if the appeal to the younger demographic can be established. Ginger beer is the second most preferred mixer with rum (Appendix 6) which means KT Drinks’ campaign is tapping into a market with potential.
Threats – Healthy eating trends now observed world over means that more people choose not to include excessive sugar or alcohol into their drinks (Appendix 2). Recent media reports that many ginger beer brands contain more sugar than Coca Cola which may put off the consumer if product is marketed along with ginger beer. While the older demographic enjoys its rum, it is unclear if the 20-50 age group will adopt this spirit as they grow older.
Launching the product
There are several indicators that the launch of the product is favorable:
Consumer Confidence is at its highest since 2005 (Nielsen Consumer Confidence Survey Q3 2015).
Unemployment is down; wage inflation is rising faster than general inflation.
Within food and drinks, consumers are spending more on beverages (Appendix 1).
Spirits sales have steadily increased over the last three years (Appendix 3).
Rum sales have also steadily increased and are on par with Scotch whisky (Appendix 4)
People are also spending on average £16 per visit on rum (Nielsen Homescan – data to W/E 03/01/16)
The market is favorable for launching the new brand.
Should the campaign focus on mixing?
The campaign should take advantage of rum’s traditional image as a cocktail spirit. Mojitos, Daiquiris, Pina Colada, and Dark and Stormy are some favorite rum based cocktails . It generally mixes well with soft drinks. Rum and Coke is a well-known combination. In the UK, rum and ginger beer or ginger ale is a favorite combination.
Therefore it is recommended that the campaign highlight this aspect of the product.
The flavor combinations that are normally associated with rum are lime juice, lemon juice, bitters, liqueurs and ginger .
Ginger beer is the national favorite among non-alcoholic beverages. To showcase the combination of Ginger beer and rum will help the campaign showcase two favorite drinks and flavor profiles in one combination.
Product Concept
While most of the ingredients with which rum is mixed are generally fruit based or sweetened beverages, ginger brings a spicy flavor to the equation. The choice of ginger beer is apt because it is combining two well-known drinks and producing a unique flavor profile. Ginger beer is the second highest mixer in terms of sales (Appendix 6). This choice makes the campaign distinct from competitors. However the product should not be marketed as flavored rum. The market for flavored rum is considerably smaller than that for rum that provides a great base for cocktails.
Pre-Use customer reaction
About 75% of customers who were surveyed pre-use feel that the golden rum could be a premium rum. They also feel that it will combine well with ginger beer (Appendix 7 and 8). This shows that people are willing to try the new flavor. They also believe it will combine well with the ginger beer.
Post-Use customer reaction
At post-use, the flavor and the flavor combination both were liked by a majority of the population (Appendix 9). 68% liked the taste of the rum and 53% liked the combination with the ginger beer.
Therefore it is recommended that the campaign can focus on selling the product as a combination with ginger beer.
Joint Campaign
A joint marketing partnership will impact KT Drinks directly in terms of the influence, reputation and product recognition . One of the primary benefits of a marketing partnership is that it helps to mitigate competition from rivals and extend sales opportunities . Roundhouse is a well-known brand of ginger beer and its sales are over a million liters per year for the last 3 years. However it is unclear whether Roundhouse has as much brand recognition as DGA Ghana Ginger Beer which sells close to 10 million liters a year (Appendix 11). Also no consumer test was conducted with a different brand of ginger beer and Goode’s Gold Rum. Therefore, the product has been liked in combination with ginger beer, but there is no conclusive evidence that Roundhouse is the apt marketing partnership.
Marketing campaign strategy
The following techniques shall be applied:
Word-of-mouth marketing generated through limited pre-launch and in-store promotions.
Cross selling with recognized ginger beer brand.
Web marketing through product website. Target audience will be on social media, blogs and paid ranking on search engine results for keywords like “Rum cocktail”, “rum combinations”, “rum and ginger beer”.
Print and TV advertising prior to launch
Post launch promotional material
Recommendations for Launch
It is recommended that the product be launched in the premium segment of alcoholic beverages, since the public is not averse to spending money to get good quality products as is evident in the sales of Discovery and Cuba Special brands (Appendix 5). To retain the sense of premium brand, launch should be done in multiple stages and through different outlets.
Limited pre-launch: To enter the market slowly. A preview launch could be held through MW Retail and Worthington’s which record large sales for golden rum (Source – Scantrack data to W/E 05.12.15).
Limited in-store promotions: To introduce the product to all range of shoppers. Buyers can get pre-launch offers of up to 20% off which is greater than the average promotion discounts at these stores. (Appendix 10).
Promotion through top 10 pubs in London including The Southampton Arms, The Leather Bottle, The Dove and The White Horse : To introduce the product to serious consumers and to retain its premium status.
Cross-selling: Promotion of product tied to a recognized product like Ginger Beer. Teaser launch with Ginger Beer at all outlets. When customers purchase Ginger Beer, they shall receive a voucher for Goode’s Gold Rum.
Web marketing through social media, blogs and paid ranking on search engine results for keywords like “Rum cocktail”, “rum combinations”, “rum and ginger beer”. In the UK, Facebook has 31 million users, Instagram has 14 million monthly users, and other social media sites are growing steadily .
Print and TV advertising prior to final launch.
Final launch at RumFest 2016 which will held on 22nd and 23rd of October 2016 at the ILEC Conference Centre .
Post- launch promotions from late November 2016 through January 2017 to capture the Christmas and New Year season.
Summary of the findings
It is clear from the research that consumers like the product and the product in combination with ginger beer. There is also evidence that consumers are not averse to repeat buying. The market is favorable, consumers are spending money on premium beverages more and more. With employment on the rise and inflation steady, it is possible that spending will increase with time.
Summary of the recommendations
The product can be launched in the current market.
Product can be paired with a ginger beer in a joint campaign. The flavor combination was accepted by over 60% of consumers tested.
It is not recommended to market the product as flavored rum. This is premium rum that can be effectively paired with ginger beer.
It is recommended that a staggered launch approach be used. There shall be stages to the launch in order to generate more interest in the product.
TV and online media shall be utilized from pre-launch stage onwards. Social media shall be utilized to promote the brand.
Further recommendations
In view of the lack of definitive data on brand recognition of Roundhouse ginger beer, it is not possible to recommend the joint campaign of Goode’s Gold and Roundhouse ginger beer. This report recommends that more research be conducted on the brand recognition of potential ginger beer partners and choose one that has more recognition. Further research needs to be done on which brand of ginger beer combined with Goode’s Gold is liked by consumers before definitively concluding that Roundhouse Ginger Beer is the only combination possible.
Bibliography
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McCord, P., n.d. Secrets of a Successful Marketing Partnership. [Online] Available at: http://www.businessknowhow.com/marketing/marketing-partnership.htm[Accessed 29 April 2016].
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Plunkett-Hogge, K., 2015. 10 classic rum cocktails to make you feel like you're on holiday. [Online] Available at: http://www.telegraph.co.uk/food-and-drink/cocktails/10-classic-rum-cocktails-to-make-you-feel-like-youre-on-holiday/[Accessed 29 April 2016].
rumfest.co.uk, 2016. rumfest.co.uk. [Online] Available at: http://rumfest.co.uk/the-show/location/[Accessed 29 April 2016].
VisitLondon.com, 2014. Top 13 Cosy Pubs in London. [Online] Available at: http://www.visitlondon.com/things-to-do/food-and-drink/pub-and-bar/top-cosy-pubs[Accessed 29 April 2016].
Appendices
Appendix 1
Figure 1: FMCG % Spend on offer by super-category. Source: Nielsen Homescan Total FMCG Grocery Multiples 52 w/e 3rd January 2015 vs 52 w/e 4th January 2014. Value Sales bought on offer as % Total Value Sales by category.
Appendix 2
Figure 2: Nielsen Global Healthy Eating Report, 2015 – We are What We Eat Healthy Eating Trends around the World
Appendix 3
Volume sales (Litres)
Figure 3: Source – Scantrack data to W/E 05.12.15
Appendix 4
Total Coverage – Unit Price £
Source – Scantrack data to W/E 05.12.15
Market penetration %
Avg. Spend per Visit (£)
Appendix 5
Source – Scantrack data to W/E 05.12.15
Appendix 6
Source – Scantrack data to W/E 05.12.15
Appendix 7
% of consumers responding to what they may like about this product
Favourable Consumers = Consumers who said definitely would buy or probably would buy
Not Favourable Consumers = Consumers who said might or might not buy, probably would not buy or definitely would not buy
Appendix 8
At Pre-Use: How do you feel about the believability of the statements made about this product? (%)
Appendix 9
Appendix 10
Grocery Multiples - Average Price Discount when on Promotion
Source – Scantrack data to W/E 05.12.15
Appendix 11
Total Coverage – Volume Sales (Litres)
Source – Scantrack data to W/E 05.12.15
