Pernod Ricard and Bacardi show you can reach the same goal with opposing strategies

Bacardi announced this week that it is switching its focus to brands rather than categories as part of a number of changes to its marketing structure, including the launch of its marketing Center of Excellence (CoE) in Europe to be headed by CMO Shane Hoyne.

The company claims the move is part of a strategy to bring the company’s brands “closer to its markets and make them more relevant to consumers”.

CEO Mike Dolan said: “With these changes, we will be able to adapt our focus to our brands, not categories, and position ourselves to fully leverage the benefits of having world class global agency and media partners.”

The news follows a move by rival Pernod Ricard earlier this month to take the opposite approach, focusing on “consumption moments” rather than brands.

Speaking at the company’s Capital Markets Day in Paris, CEO Alexandre Ricard said: “We’re no longer specifically loyal to one single brand, but to a repertoire of brands linked to a range of drinking occasions.”

Getting closer to consumers

While the strategies greatly differ, both companies claim their structure shakeups are part of an effort to get closer to consumers.

Scott McLean, COO at the Intelligent Marketing Institute, said both brands are “testing and trying to understand the best ways to engage with consumers today”, adding that there’s no “benchmark” way to do it.

“There’s no doubt these decisions have been made in isolation, but it’s always interesting when two large brands in the same market take two completely different approaches,” McLean said.

“The common thread here is that both want to get closer to the consumer – they’ve just approached it in entirely different ways.”

Pernod Ricard’s structure more ‘contextually relevant’

Pernod Ricard claims its new structure reflects how consumers see its brands.

McLean agreed that Pernod Ricard might be “more in tune with the current thinking in their approach about consumer engagement and how you can be more contextually relevant with consumers”.

He added that Pernod Ricard is right in thinking that consumers want to talk about “their lives and experiences in a way that is relevant”.

Jeremy Cunnington, senior alcoholic drinks analyst at Euromonitor International, said: “For international spirits companies it is all about having the right brands for the right occasion….All Pernod seems to be doing is openly acknowledge this with its announcement.”

According to McLean, taking a brand approach is ignoring the “important change that has happened in the way you have to engage with consumers today”.

“Bacardi run that risk if they’re going to continue pushing their brands,” he added.

However, Cunnington said: “Bacardi will undoubtedly be doing the same sort of work on their brands just in a slightly different way.”

Bacardi’s approach ‘commercially minded’

Bacardi’s approach appears to be more commercially minded and could be more successful in delivering commercial return, according to McLean.

Speaking on its new structure, Bacardi’s CEO Mike Dolan said: “Our goal is to be the envy of our industry – to be the company that attracts and retains the best of the best. The ultimate test of that is selling more cases, growing share and driving the bottom line so we can re-invest more in our iconic brands and industry leading innovation.”

“Brand awareness and perceptions are merely the first step to commercial return,” McLean said, adding that the risk Pernod Ricard faces is one being tackled by many other brands.

“It’s one thing to engage with consumers but are you understanding how you’re going to take it from that engagement to a commercial result?”

It remains to be seen whether Pernod Ricard will be more successful in engaging with consumers than Bacardi, but McLean said: “Engagement for engagement’s sake can lead to a lot of noise without ROI.”

Meanwhile, Dolan concluded: “It has become increasingly clear that we have to change in order to win, and believe me we are in this to win.”