‘Minimum alcohol price will transform brand marketing’

The measures proposed by the Government under its alcohol consultation earlier today (28 November) could “completely change” the sales and marketing dynamic in the industry, ending price promotions and making loyalty and on-trade marketing more important, according to alcohol experts.

The Government’s alcohol consultation proposals could spark a brand equity war between producers and retailers.

The 10-week consultation will examine plans to implement a minimum price for alcohol of 45p per unit in England and Wales as part of the Government’s wider efforts to tackle irresponsible drinking. As part of the process the Government will also review multi-buy promotions in supermarkets and off-licences.

The proposals have polarised opinion within the drinks trade. The main trade bodies and producers oppose the plans while some smaller brands support the ideas and say they will boost competition.

BrewDog, Scotland’s largest independent brewery, welcomed the measures and says the proposed minimum pricing reflects the changing dynamic of beer purchasing in the UK with more consumers looking for a “premium beer experience at home” rather than in pubs and clubs.

James Watt, co-founder of BrewDog, says: “The proposals will mean that the multi-national corporate hammerheads are no longer allowed to discount their liquid cardboard to embarrassingly pathetic levels. It will act to level the playing field in the off trade. Craft brewers can’t, and shouldn’t, discount their beers and sustain losses. With less of a price differential now in the off trade between industrial and craft beer it will be far easier for the consumer to trade up to awesome craft brews.”

He adds that the proposed changes will not affect craft brewers pricing.

Industry observers say marketers for “promotion centric brands” will need to focus on other ways to differentiate their beverages if the proposals are introduced. Marketers will look to innovation, cross-brand promotions or added value offers when price is no longer a driver of purchase, they say.

The move is likely to affect premium brands less, which adopt more value based promotions and put more pressure on cheaper brands to do the same.

Phil Tate, chief operating officer at alcohol industry consultancy CGA Strategy, warns that there has to be a “mindswitch” for marketers in terms of how they plan their marketing strategies because it will not be easy to drive substantial volumes through the off-trade.

He adds: “Brand owners and marketers are going to have to look closer at how they engage their consumers and that’s where I think the on-trade can come into play as a key purchase driver. The way people market and engage in pubs and clubs would need to become more sophisticated and implement technology more effectively.

“I can see marketing money being used from subsiding some of the activity that is happening in the off-trade to more focused and better activity within the on-trade to try and capture some of the 3 per cent volume in growth that Government has predicted will come through.”

David Ware, director of grocery at market intelligence consultancy SymphonyIRI Group, says if the proposals are implemented then “price promotions will be a thing of the past.” He adds that brand loyalty will become a “major driving force” for cheaper alcohol brands moving forward.

Supermarkets could also be impacted by their reliance on alcohol promotions to drive cut-through in-store and retail experts say the move could lead to some brands “cranking up” meal deal promotions including alcohol or giving out branded gifts with every product purchased.

Gary Haigh, MD of SAB Miller’s UK subsidiary, Miller Brands, says people with limited budgets would be faced with less choice in supermarkets.

“Own label products are likely to disappear because they can’t compete at the same price against branded products and producers who import into the UK could pull out because it’s no longer a competitive market,” he says.

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