Despite the global economic difficulties caused by Covid-19, distillers continue to invest heavily in innovation and new product development (NPD).
While innovation is often seeded in global travel retail (GTR) and on-trade accounts, the decline of these channels during the pandemic means brands are strategically placing their NPD elsewhere – namely, in brick-and-mortar (B&M) off-trade and ecommerce.
“Just as on our core portfolio, the pandemic has also had an impact on our luxury and GTR focused innovations,” says a spokesperson for Pernod Ricard. “However, overall, our innovation portfolio has shown resilience in the Covid context, actually slowing down the group’s performance decline.
“This performance was mainly driven by innovations on our strategic international brands which had an off-trade focus. In a time of crisis, consumers are still sensitive to new value propositions which bring novelty to brands they already trust and meet their needs.”
In recent months, Pernod Ricard has augmented its innovation portfolio with new line extensions for its Irish whiskey and rum portfolios, among others. Diageo has also been active in the NPD space, launching new high-end Scotch expressions, seasonal liqueurs, and flavoured gins and rums. Moët Hennessy has undertaken some high-profile launches such as the new Glenmorangie Tale of Cake and Belvedere Heritage 176.
Meanwhile, UK-based Halewood Artisanal Spirits has launched a wealth of flavour innovation since the start of the pandemic for its rum, gin and vodka brands. James Stocker, the group’s marketing director, notes that while “the way people are shopping has evolved”, with off-trade and ecommerce sales outweighing those in the on-trade and GTR, “innovation within [Halewood’s] brands is a key part of [its] business”.
“Brands are changing, lifecycles are short and we appreciate that you have to stay on top of it by spotting the latest flavour trends, so we’re very much continuing to do that,” he adds. “Therefore, despite the rapidly changing dynamics of the market due to Covid-19 and increased focus on our ecommerce offering, we have still continued to innovate at pace.”
Sophia Angelis, SVP managing director, Jack Daniel’s Brands, claims that the Tennessee whiskey has not radically altered its innovation plans in the medium to long term; rather, its focus on trend-led categories such as RTDs has been accelerated.
“We’re still aiming to deliver super-premium innovation on Jack Daniel’s in time for next Christmas and that’s unaffected, beyond the fact that we will naturally seek those channels that make more sense at the time,” she says.
While innovation remains a key focus for drinks brands, a different set of criteria is driving this part of their business today. “As we design innovations to address specific consumer needs… we’ve decided to prioritise our efforts on innovations based on what we know of current consumer behaviours,” says Pernod Ricard’s spokesperson.
As such, the French firm is aiming to enhance its “strong brands” through innovation, and is “anchoring the design process in new consumer needs”, addressing occasions such as Zoom parties. The group is also “focusing on markets that show resilience, with strong off trade footprint” and is specifically designing concepts for ecommerce.
In switching channel focus to B&M and ecommerce, brands will need to seed and promote innovation in different ways. B&M will need to rely heavily on merchandising expenditure, including special displays, prominent shelf placing, launch adverts, launch promotions, and innovative digital in-store ad content. Meanwhile, ecommerce will benefit from additional content and special launch offers. Both channels need PR support through the trade press, consumer press, and social media.
IWSR director Thorsten Hartmann notes that new innovation should be supported by innovative launch strategies if the product is to remain relevant in a much-changed market. For instance, new products will benefit from creative merchandising practices in B&M, which may compensate for the lack of tasting events.
“Launch tools have shifted and are trickier to deploy, but this will force innovative thinking, not just with regards to the new liquid/brand/SKU, but also with regards to new ways of bringing the message to the changed trade and the changed consumer,” he says.
“Innovation, now more than ever, must not only encompass the liquid and its packaging, but the communication tools used for their launch.”
Hartmann adds that it is also important for brands to recognise that while the same drinks trend may suit different environments, the drivers behind this trend will be different depending on the channel and changeable macro market conditions. Different factors spur trends in the on-trade versus the off-trade, while another set of factors is spurring trends in the off-trade during the pandemic versus the off-trade during ‘normal times’. Brand owners will need to understand which drivers have long-term resilience.
You may also be interested in reading:
Why will beer prove resilient in the aftermath of Covid-19?
Will current shifts in consumer behaviour permanently disrupt the beverage alcohol industry?
How is alcohol legislation changing in the wake of the ecommerce boom?
- Irish Whiskey
- Mixed Drinks
- US Whiskey