Marketing Week (MW): What are the branding challenges of getting consumers to spend more on alcohol in markets where they are increasingly turning to cheaper alternatives?
Thierry Billot (TB): I think that in a recession the brands that do well, particularly in the premium and super premium categories, are the ones that have the substance to back up their high prices. When you go through a recession consumers want to make sure that the money that they spend is worth what they get. We are in a market at the moment where substance becomes more important for the consumer. We’ve always made sure that the prices for our top-end brands are a consequence of their heritage. It’s because they have that history and substance that we can charge the prices we do.
MW: Pernod Ricard saw UK sales drop by 4 per cent year-on-year for the year to July. Despite the drop, what categories do you see the potential for growth in?
TB: I think the whisky category is definitely one, because there is traditionally a lot of substance behind those brands. That heritage and strong branding helps protect them in markets where consumers are not spending as much. Gin for us is another category where we are starting to see some momentum. Especially in the super premium end. Vodka continues to be a dynamic category for us because we know the cost to access the market is very limited. With Absolut Vodka we feel that we can build a value proposition for the long term by building on the strategy we’ve currently got.
MW: How are you building on your Responsibility Deal pledge in the UK.
TB: Our pledge is a long term trend for our brands and we’re planning to introduce further lighter variants under our Jacob’s Creek and Brancroft Estate ranges. We see lighter variants as a way to attract more females to our brands.
MW: Pernod Ricard has seen strong growth in Asia over the last 12 months, however some analysts argue the business is not doing enough in developing markets such as Africa. What is your reaction to such criticism?
TB: It’s fair to say that we are a little bit late to emerging markets compared to some of our competitors who have been investing in regions from as early as 2000. We want to close the gaps and have specific plans to invest in countries like Mexico and Brazil to close the gap with our main competitors. We know it will take time because the position of the competition is very strong but we’ve got the brands to achieve our long-term targets. Africa is another key market for us and maybe it will be the next El Dorado for our industry. It could take time build our presence there because the purchasing point in Africa is limited but having a strategy that uses our local brands in the region initially will pave the way for us to introduce our international brands in the years to come.
MW: What was the aim of cutting marketing spend for Western Europe when sales are in decline?
TB: The tough economy means that everyone is reducing their investment in advertising at the moment. This can damage your share of voice if not done properly. We optimise our campaigns in a cost-effective way because we want to protect our share of voice while giving our brands that strong communications platform to work from. We’ve been able to do this in Spain where we successfully launched a campaign for the Beefeater brand earlier this year on a smaller budget to previous ones. It led to a 5 per cent growth in the brand in the region. We’re trying to balance having a quality platform for our brands with the money for our marketers to be creative.