Pernod Ricard has heralded the launch of its new Beefeater pink gin as a major innovation in the market. However, with Diageo, Marks & Spencer and even Aldi all producing their own variations it raises the question: how long do companies have before innovation feels more evolutionary than revolutionary.
Pink gin has been an exciting addition to the market. Sales of the brightly coloured spirit have grown over 800% in the last year to £7.8m according to figures by research consultancy CGA. With ‘millennial pink’ dubbed the colour of 2017 and gin sales continuing to boom, this Instagrammable offering is bound to capture the imagination of young consumers, but for how long?
Diageo released Gordon’s Pink Gin exclusively with Tesco last July before launching it nationwide in September. This means Pernod’s Beefeater London Gin, retailing at £20, is seven months behind its biggest competitor and makes the strawberry flavoured spirit a bit late to the game. Pernod argues that it spent the last year and a half perfecting its sweet-tasting version, but with drinks trends moving so quickly brands need to move fast.
Pernod argues its new pink gin will do well among the coveted 18- to 35-year-old consumers and is promoting it through digital channels. However, do millennials follow a trend simply because it’s Instagrammable? I don’t think so.
As a millennial myself the drive to Instagram an aesthetically pleasing product is ingrained deep in me, however there are other equally important factors: price, health and uniqueness are all up there. We want to feel that we stumbled across something unknown; Pernod Ricard might have been better off focusing on this desire instead. The company may have overestimated our love of Instagram over the need to be original.
In the crowded gin market, the need to be first and different is important. And although Pernod Ricard is right not to compromise on quality, it needs to balance that with speed. This is a fast-moving market where trends can sink without a trace as quickly as they appear and brands that don’t keep up risk losing millennials no longer loyal to just one brand.
The company’s CEO Alexandre Ricard recognises this, saying: “Globally we always go to one generation from another. The biggest difference between new consumers and previous generations is previously it was only about one brand, anytime anywhere, but now millennials are loyal to five or six brands.”
To deal with this need for speed, last month Pernod Ricard created a new role dedicated to innovation. Christian Porta has been made managing director of global business development, putting him in charge of “coordinating strategies and initiatives… including innovation and digital” and helping the company become a truly “consumer-centric” organisation.
This addition to the company structure suggests that the drinks giant recognises the need for faster product innovation to keep up with competitors. Alexandre Ricard said at the roundtable where the new gin was launched: “We want to be leading drinks trends but we also want to be creating them.”
He’s not alone. As drinks companies try to secure the loyalty of health conscious and indecisive millennials, all are focused on how to create the newest and best trends. Interestingly, while Pernod Ricard has chosen a more holistic approach, hiring Porta to oversee all brands, both Bacardi and Coca-Cola have opted for more decentralised accountability when it comes to innovation.
Coke’s new CEO James Quincey explained: “We are moving quickly to structure our organisation for faster growth and to ensure we can respond to the fast-changing needs of our consumers.” He elaborated that this structure means not waiting for a yes from the CEO and not being afraid to fail.
Bacardi too has chosen to focus less on an overarching corporate structure and more on innovation led at the individual brand level. “We’ve reorganised our teams into dedicated brand teams and removed the portfolio clusters and category approach,” Barcadi’s CMO, John Burke, told Marketing Week. This is to allow the brand owner to “drive accountability as low as we can go” in the organisation’s hierarchy, in order to foster responsive work from front-line marketers.
Drinks brands rightly recognise that innovation is key to stimulating sales, but in order to stay relevant to consumers they need to be not just following trends but creating new ones. In all likelihood Pernod Ricard’s pink gin will prove a sales success in a fast-growing market, but Pernod Ricard will need to take the lead on new products if it wants to keep its drinkers loyal.