Liquid Assets

Malternatives are getting plenty of headlines these days. These flavored malt-based beverages bear the names of leading spirits brands but are marketed as alternatives to beer. The neophyte category grew 50% in 2001 and now accounts for 2.5% of the U.S. beer market. New York City market research firm Beverage Marketing Corp. anticipates ongoing growth, driven by a rush of new entries vying to satisfy consumers in their never-ending search for the "Next Great Drink."While they may be only a drop in the proverbial bucket of beverage alcohol volume, malternatives reflect what's going on in the beer and liquor industry's point-of-purchase market. Malternative marketers face the formidable challenges associated with promoting beer, spirits and wine at retail: competing with hundreds of brands for consumer and retailer attention, vying for limited -- and some say decreasing -- in-store display space, satisfying the needs of retailers in multiple distribution channels and navigating the myriad state regulations dictating what is and isn't permitted in-store.What's more, alcohol advertising is heavily restricted. Television advertising of spirits is voluntarily prohibited by spirits marketers, and marketing practices for all alcohol products are closely regulated and scrutinized by various government agencies. One lucky break for malternatives is that they're being brought to market via joint ventures between the industry's leading spirits and beer companies, and will inevitably benefit from their combined expertise in point-of-purchase promotion."We're firing on all cylinders," says Marlene Coulis, director of new products at Anheuser-Busch, who is overseeing Bacardi Silver, a clear malt beverage launched in February via a trademark licensing agreement between St. Louis-based A-B and Miami-based Bacardi USA. "We have a great brand name, the experience of two major beverage companies and the power of the A-B distribution system." Additionally, A-B is putting $60 million in marketing dollars behind the brand, Coulis says.Bacardi Silver is supported by a counter card, a 10-case bin, a high-end metal rack on casters and a selection of cooler stickers, shelf wobblers and other small materials, all bearing the Bacardi bat graphic and the clear bottle image."We've created fewer display items than we typically do, and they're better, more expensive pieces," says Coulis. "That approach is necessary to support the super premium position and price point."Bacardi Silver takes on Smirnoff Ice, which energized the category when it was launched in January 2001 by beverage giant Diageo PLC, owner of the Smirnoff Vodka brand. The citrus-flavored malt beverage is a Smirnoff brand extension marketed and distributed by Guinness Bass Import Co., a Diageo company based in Stamford, Conn.Both brands are courting the legal-drinking-age to 27-year-old crowd and, at 5% alcohol by volume, are positioned as an alternative to traditional beers. Bacardi Silver comes in $1 or so over Smirnoff Ice's retail price of $6.99 per six-pack in New York.Having educated consumers about malternatives, Smirnoff Ice will launch a new marketing platform titled "Inside Track" in May. "It involves opportunities for our consumers to have access to experiences they wouldn't otherwise have," explains Susanna Germani, brand initiatives manager at Guinness.Off-premise display materials heralding the "Inside Track" program will include a take-one mail-in brochure containing three questions for consumers to answer and win a number of "experiential" prizes, such as working as a stat person for an ESPN event. Mass displays will feature a case card with the "Inside Edge" graphic and partner logos, where legal, along with base wrap, case stackers and cooler door stickers. Seven thousand mass display pieces have been produced. "Demand is very high," explains Germani.Meanwhile, Miller Brewing Co. is relying heavily on its signature cobalt blue bottle for in-store promotion of Skyy Blue, which launched in March. Produced and marketed via a joint venture between Miller and San Francisco-based Skyy Spirits, the super-premium malt beverage is a citrus-flavored extension of Skyy Vodka. Miller has also inked a deal with spirits giant Allied Domecq PLC to develop several malt beverages.For now, the Skyy Blue bottle will be "front and center," according to Ann Strickland, director of strategy and new business development at Milwaukee-based Miller Brewing. "All merchandising materials for on- and off-premise will highlight the blue bottle."Illuminated back-bar bottle glorifiers, table tents and novelty items like glow necklaces and plastic ice cubes with a glowing Skyy Blue logo will raise awareness and support for on-premise sampling programs. Case cards, display cards, bins and cooler stickers featuring the cobalt blue color and words like "bold," "outrageous" and "unique" tie into the tagline of "Unlike Any Other.""There's continuity across the on- and off-premise," says Strickland, adding that Miller has not created channel-specific off-premise displays. "We've created a range of materials so retailers from each channel can select what will work for them. There's no 'one size fits all' anymore."Retailers in ControlAlcohol marketers in all categories agree that the hard and fast rules of large display pieces for supermarket and chain stores and smaller materials for convenience and independent outlets don't always apply anymore. Mass stackings complete with spectaculars can be found in convenience as well as supermarkets, while some large chain outlets allow only shelf strips for wine. Retailers with strict 'clean store' policies are much more selective about which supplier display materials, if any, make it to the sales floor."The big trend is toward in-store control by the retailers," observes Ronnie Tucker, director of promotions and marketing services at Labatt USA in Norwalk, Conn. "Retailers in all channels really want to create their own displays and control the shopping environment."For wine marketers, that creates even more challenges as the number of labels, sizes and varietals seems to increase almost daily, just as display space is shrinking."There are fewer and fewer displays. Where you once had a few 20-case champagne displays, now there's one 10-case display," says Gary Heck, president of Korbel Champagne Cellars, Guerneville, Calif. "In grocery -- a big channel for us -- alcohol space is now going to other categories. So there's less space with fewer displays"Nonetheless, retailers want to see a lot done in that space. "They want motion or something to draw the consumer. If they're going to give you the space, you've got to perform," Heck says. This May, Korbel will promote its 120th anniversary with a rotating champagne bucket and cake round. Where legal, tear pads and neck hangers will offer mail-in or instant rebates for $1.20 ($1 in California).Independents vs. ChainsWhile it's hard to generalize about materials for specific channels, independent and chain retailers are seeking different levels of in-store support. Independent retailers are interested in supplier displays, especially larger materials, while chain stores tend to look for smaller, less obtrusive pieces, according to Christopher Cohen, marketing director, value portfolio and Alice White at Canandaigua Wine Co., headquartered in Canandaigua, New York."That said, if you can demonstrate to a chain retailer that your brand will move and your display will turn product, you stand a good chance of getting space" he says.This spring, Canandaigua is promoting the Australian origins of its Alice White wine label with a sweepstakes program offering a trip to the 2003 Australian Open tennis tournament. "Australian wines are growing rapidly -- up 24% for the year ending January 2002 -- and are receiving good reviews," explains Cohen. "Our brand is priced at $6.99 for a 750 ml bottle, depending on the state, so it's at the price point most chain store shoppers are seeking. We've got a good story and good promotion, so our materials are being well received in both chain and independent wine stores."Designed for endcap placement, the "Advantage Alice White" spectacular display features a sneakered kangaroo holding two tennis balls in one hand and an actual racket in the other. The sweepstakes offer for the Australian Open trip is conveyed along with review information from The Wall Street Journal. Case cards are also available. The sweepstakes is not allowed in California and South Carolina, and use of the racket is prohibited in several states as well."We work within the legal restrictions to convey a cohesive national program," says Cohen. "This is a funky, fun approach that you usually don't see in a wine store, so we're giving the retailer something totally different."Given that most wine and spirits shops can offer as many as 40 different chardonnays, developing in-store promotion programs is particularly challenging, says Don Enos, brand manager for Talus Cellars, another Canandaigua label."The key is to give the retailer what they want in terms of size and type of materials," says Enos. "A cookie cutter approach won't work. In order to move wine, you've got to get off the shelf and away from the 30 or 40 other brands you're competing with. To do that, you've got to give the retailer something that works for them in their stores."In April, Talus will roll out display materials touting its partnership with TBS Superstation's "Dinner & A Movie" program. Spectaculars and case cards with the tagline, "Got Plans Monday Night?" promote Talus as the wine appropriate for at-home relaxing. Consumer offers include mail-in purchase of the "Dinner & A Movie" cookbook, oven mitts and aprons. In May, a series of three metal display racks with Talus graphics will debut.Rocking the RetailerFor spirits marketers, the secret to gaining customer attention is maintaining retailer attention. "P-O-P is the last voice the consumer hears when they're just about to make that final purchase decision," says Joe Karcz, director of promotional marketing and public relations at Jim Beam Brands in Deerfield, Ill. "In-store displays play a critical role in bringing the brand message to consumers at a key moment."For the privilege of getting display space, spirits suppliers have to convince retailers of their product's quality, which will drive trial, loyalty and sales, and also of their brand's relevance. "We have to keep them excited about the brand through constant product innovation and creativity in our display materials," Karcz says.Beam's approach for Jim Beam Bourbon is a national campaign with local elements. Beam's long-standing association with emerging music groups continues this year with its "Rock the Rackhouse" tour, which launched last month. The 20-market tour is headlined by Nickelback and features local opening acts."The program comes to life in-store," says Karcz. Display materials feature the lead band's name and image, along with a tour T-shirt offer and a sweepstakes offer for a trip to Louisville for the final performance and a distillery tour, where legal. Case cards and supplemental materials will promote the "Rock the Rackhouse" tour, and tour stop markets will receive Jim Beam music-themed banners and posters.Jim Beam is also creating new excitement around its power-house liqueur line as it launches its first new DeKuyper flavor since 1995. The Latin craze that prompted the introduction of DeKuyper Tropical Pineapple earlier this year shows up in the case cards and display materials for the brand. Colorful case cards, shelf talkers and recipe cards feature tropical drinks."DeKuyper is usually mixed with other beverages, so we had to convey its use and its profile very quickly, very visually," Karcz explains.Creating displays that are contemporary and will be kept up in-store is crucial, says Bud Fenzel, director of marketing for Sidney Frank Importing Co. of New Rochelle, N.Y. "It's one thing to get the retailer to put displays up, but you've got to make it so exciting that they'll keep it up," he explains. "They're hit with so many programs every day. You've got to create one that has staying power."Sidney Frank's Jägermeister Musictour 2002 paired the popular shot brand with Clear Channel Entertainment for a 30-city tour featuring such bands as Drowning Pool and Coal Chamber. A sweepstakes program offered a trip to Las Vegas for a performance at the House of Blues. The program kicked off in February and ran through April."Jägermeister has a strong presence both on- and off-premise. On-premise, we'll promote it, but off-premise is a primary driver, both in liquor and music stores," Fenzel notes. Sidney Frank is distributing case cards featuring Drowning Pool and the Jägermeister Musictour 2002 logo to spirits stores. Warner Brothers and Wind-up Records are distributing counter cards and flags for use on CD bins to music stores. Postcards announcing the tour dates were produced for use at check-out stations in both venues.The timeliness of the Jägermeister Musictour should prompt retailers to display the materials for the duration of the tour, says Fenzel. To keep its brands front-and-center at non-event times, however, Sidney Frank is turning to some permanent and semipermanent pieces.A cosmetic company is now designing a display rack for Grey Goose Vodka and its flavored line extensions, L'Orange and the newest addition, Le Citron, set to debut this month. "For a $30 bottle of vodka, you want it on the floor, merchandised in a stylish, eye-catching rack," Fenzel adds.Bringing It HomeBeer marketers compete for retailer and consumer attention at a very different price point, but face similar challenges. Powerhouse brands like Budweiser, Miller and Coors instantly gain retailer interest with compelling product turn, volume and profit data. The Big Three brands are also promoted with comprehensive, well-supported in-store promotions that tie the brands to major events like the Super Bowl or professional sporting leagues and tours. By the sheer power of their marketing and distribution, these brands earn considerable display space in almost every channel.That's not to say other brands don't have a chance. They just have to strategize to outmaneuver the Big Three. One way to do that is with local programming, as Labatt USA knows well. The company now takes an "umbrella approach that involves national brand programs that can be customized on a local basis," says Ronnie Tucker, director of promotions and marketing services."You In?" is the tagline for the national Rolling Rock promotion this spring. Speaking to its core consumers' interest in a social, active lifestyle, the program is supported by what Tucker calls "generic" materials. "The local distributor can then drive it toward whatever is popular in their area. 'You In' for basketball, snowboarding, skiing, whatever," she says.The program proved successful. For example, mass case displays linking Rolling Rock with college basketball and including mini pop-a-shot hoops and other props, as well as sweepstakes for tickets to games, were constructed in NCAA Northeast Division markets.A similar approach has earned Labatt Blue considerable display space in the brand's key markets. Under the "Labatt Blue Zone" national hockey promotion, wholesalers in Buffalo, N.Y., created displays linking the brand to the Buffalo Sabres hockey team. In convenience, grocery and independent retail channels, mass displays featured catalogs offering Sabre merchandise as well as sweepstakes to win game tickets. The display was anchored by the Labatt Blue hockey 'scoreboard.'"Price promotion may get you display space, but it doesn't necessarily motivate the consumer," says Tucker. "You've got to show your brand relating to their consumption occasions, and link it to something they're involved with, like hockey in Buffalo."This means the brand representatives have to work very closely with the local retailers to understand the shopper," she adds. "The pay-off is worthwhile: floor space and sales."

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