2017 alcoholic beverage trend...
TRANSCRIPT
2017 Alcoholic Beverage Trend
Analysis
April 28, 2017
-2-
Data in this portion of the presentation can be found in the following BMC resources:
The One-Stop Destination for the Beverage Industry
-3-
2017 State of the Industry
• Total Beverage Alcohol
• Spirits
• Wine
• Beer
-4-
On a shipment basis, the beer industry grew modestly for the 3rd consecutive year. The second half of the year beer volume eroded with shipment volumes declining 0.5% and depletions declining over 2%
Beverage Alcohol Market Shipment Growth 1995 – 2016e
% C
ha
ng
e
-0.3%
1.7%
1.0%0.9%
1.0%
1.1%
0.8%
1.2%
0.0%
0.7%
0.0%
2.2%
1.2%
0.2%
-2.1%
-0.9%
-1.8%
1.3%
-1.4%
0.7%0.1%
0.3%
-1.9%
1.1%
-1.0%
1.4%
2.6%
3.1%1.1%2.0%
3.8%4.1%
2.8%
3.7%
2.8%
2.1%1.6%
1.9%
3.6%
3.5%
0.8%
1.6%2.3%
2.4%
1.1%
7.2%
3.7%
1.3%
3.1%
4.4%
1.0%
7.0%
3.4%3.9%
3.8%
3.6%
3.4%
0.5%
2.2%
2.7%
5.2%
3.3%4.0%
0.8%
3.0%
1.5%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Beer Spirits Wine
Source: BMC Strategic Associates, Wine Institute, DISCUS
Acquisition of ABI by InBev and MC by
Molson Coors
Beverage Alcohol Trends
-5-
83.3%
10.5%
6.2%
2011
Beer
Wine
Spirits
82.3%
11.0%
6.7%
2016
Beer
Wine
Spirits
• Since 2011 Beer had continually lost share of Beverage Alcohol volume to both Wine and Spirits
7.63 Billion Gallons 7.78 Billion Gallons
-6-
52.6%
16.0%
31.4%
2011
Beer
Wine
Spirits
50.7%
16.3%
33.0%
2016
Beer
Wine
Spirits
• Beers losses are more pronounced particularly to Spirits when looking at it on a servings basis. While Beer has lost 1.0 share points on a volume basis, that loss is 1.9 share points on a servings basis while Spirits share has gained
128.68 Billion Servings* 134.57 Billion Servings*
*12 oz. beer, 5 oz. wine, 1.5 oz. spirits
Beverage Alcohol Category Share by Servings
-7-
55.0%
13.7%
31.3%
2011
Beer
Wine
Spirits
54.2%
13.8%
32.1%
2016
Beer
Wine
Spirits
• However beer share lost .8 share points in the on-premise while Spirits (+.8) and Wine (+.1) share gains are both lower in bars and restaurants
30.6 Billion Servings* 30.5 Billion Servings*
*12 oz. beer, 5 oz. wine, 1.5 oz. spirits
Beverage Alcohol On –Premise Category Share by Servings
-8-
The premiumization trend continues to strengthen while the influence of the on-premise has returned, this is similar to before the great recession and; at the same time, e-commerce is begining to take hold in beverage alcohol
• While on-premise, high-end and ecommerce accelerate, other strong recent trends are moderating to include flavor growth, rate of innovation and craft
Key Beverage Alcohol Trends
Strengthening Trends
Moderating Trends
Premiumization - across all segments
On-premise Influence
Growing e-commerce / home delivery business
Flavor Introductions
Craft no longer leading growth
Slowing new product launches
Evolving Beverage Alcohol Market
Beverage Alcohol Trends
-9-
While certain trends have accelerated, others have moderated; although certain attributes remain extremely relevant
Flavor is Moderating
Craft No Longer Driving High-end
Growth
Slowing New Product Launches
• Although flavor addresses consumers seeking variety, overall volume growth from flavors is growing modestly
Slowing Alternative Beverage Alcohol (ABA) growth
Momentum back to traditional straight spirits Millennials moving more to wine with 1/3 of wine
consumers now Millennials
• Number of new product introductions has slowed as failure rate has risen
Flavored Whiskey/Vodka product introduction has slowed as failure rate has risen, 32 entries in 2016 versus 90 in 2012
Seasonal beers has slowed, e.g. Sam Adams attributes large part of its declines due to weakness in seasonal beer segment
• Craft no longer best performing segment in beer or spirits
Craft beer growth only 5% - 6% in 2016 Craft spirits grew only 13% in 2016 Craft spirits slowed although it is only a
modest 2.5 share
Beverage Alcohol Trends
-10-
Trading-up began over two decades ago and has accelerated in recent years as overall per cap consumption of beverage alcohol has been flat to down since 2009
• Not surprisingly, other trends that support trading-up are gaining momentum
On-Premise
• Drink menus showcase above premium brands
• Majority of consumers choose cocktail based on flavor profile, not brand
• Strong connection between on-premise to off-premise – 2/3 who like a brand will buy it off-premise
• Flights expanding across all categories not just beer
• Education/story key engagement attribute for brand
Growing E-commerce / Home delivery business
• Amazon increasing its offerings and setting up physical stores from which to deliver Beverage Alcohol
• Direct shipments to consumers of wine hit all time record 5.0 Million cases in 2016 (3.0 Million cases in 2013)
• Delivering to home from retailers accelerated through sites like Drizzly.com
Premiumization
• Consumers view high-end brands as unique and contemporary “cool”
• Perceived healthier products viewed more premium
• Unique aging methods differentiating product and supporting premiumization, e.g. Whiskey fermented in Pinot age casks or single malt scotch finished in ex-IPA barrels
Beverage Alcohol Trends
-11-
2017 State of the Industry
• Total Beverage Alcohol
• Spirits
• Wine
• Beer
-12-
Current Key Beverage Alcohol Market Trends in Spirits
Spirits
• American whiskey, +5%, remains the hot segment, aided by the strength of rye whiskey and small batch and single barrel offerings
• 2016 marks the 4th consecutive year whiskey has either equaled or surpassed the growth of non-whiskey, previous to this current trend non-whiskey outgained whiskey for over 20 years
• Irish whiskey, Tequila, and Cognac all experienced solid growth
• Craft continues to grow rapidly at 13% but still category represents only 2.5% of spirits
• With the growth of the craft segment, brands are highlighting their craft like qualities with authentic brand messaging
• Flavors, in the vodka segment posted a slight upturn following three consecutive years of declines with Mango, Citrus and Apple flavors all posted positive results
• Many “hot” brands last year were not premium-priced (i.e. Rum Chata, Fireball, etc.), but their growth noticeably slowed in 2016
• Trading up accelerated in spirits with high-end and super-premium growing 5.5% and 10.8% respectively as per DISCUS
Beverage Alcohol Trends
-13-
Source: Beverage Marketing Corporation
U.S. Distilled Spirits Market 2010 – 2016
192.3
199.0
205.1 207.9
210.8
214.4
218.7
175
180
185
190
195
200
205
210
215
220
225
Millions of 9-Liter Cases
2010
2011
2012
2013
2014
2015
2016
+3.5%
+3.1%
+1.4%
+1.3%
+1.7%
+2.0%
-14-
P: Preliminary Source: Beverage Marketing Corporation
U.S. Distilled Spirits Market 2011 – 2016
$61.2
$64.1
$65.8
$67.3
$69.2
$71.3
$56.0
$58.0
$60.0
$62.0
$64.0
$66.0
$68.0
$70.0
$72.0
$74.0
Billions of Dollars
2011
2012
2013
2014
2015
2016p
+3.5%
+4.8%
+2.2%
+1.3%
+3.0%
+2.6%
+2.9%
-15-
Adult beverage consumer attitudes
Bars and full-service restaurants are top locations for adult beverage occasions
• Bars are top-of-mind when consumers are sourcing beer, mixed drinks, and straight spirits away from home. Restaurants and bars share top-of-mind status when consumers are seeking wine.
Trial on-premise drives off–premise purchase, especially for younger consumers
• Roughly two-thirds of consumers who try and like a beer, wine or spirits drink in a restaurant or bar are likely to purchase the same product at retail. Younger consumers express a higher likelihood of doing so than their older counterparts.
Knowledge is key, bartenders are key gatekeepers
• The majority (80%) of cocktail drinkers believe it is important for servers to be knowledgeable about the spirits offering, and three-quarters (73%) prioritize a variety of spirits selections.
Flavor is driver of cocktail consumption
• The majority of consumers (60%) choose a cocktail based on its flavor profile than by its base spirit; younger consumers are more likely to do so, indicating the importance of flavor.
Key insights
Source: Beverage Marketing Corp., Technomic Inc.
-16-
Flavor feud: Vodka vs. Whiskey
*includes flavored whiskey and whiskey specialty cordials/liqueurs
23.3%
11.4%
-0.3% -1.4% -0.3% 0.3%
56.3%
37.9%
54.5%
39.4% 34.2%
24.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2011 2012 2013 2014 2015 2016
Flavored Vodka Flavored Whiskey*
Volume growth
Source: Beverage Marketing Corporation
+2.3 Mil cases
+150K Cases
-17-
Flavor feud: Vodka vs. Whiskey
*includes flavored whiskey and whiskey specialty cordials/liqueurs
Source: Beverage Marketing Corporation
71
78
63
32 26
20
3
12 21
25
15 12
0
10
20
30
40
50
60
70
80
90
2011 2012 2013 2014 2015 2016P
Flavored Vodka Flavored Whiskey*
Product introductions
-18-
Source: Beverage Marketing Corporation
Spirits Category Volume by Type 2010 – 2016P
Vo
lum
e in
Th
ou
sa
nd
s o
f C
ase
s
Non-Whiskey +2.1%
Whiskey +2.3%
2010-2016P CAGR
Since 2013 growth of Whiskey has either equaled or surpassed that of Non-Whiskey, a trend not seen in decades
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
2010 2011 2012 2013 2014 2015 2016
-19-
Source: Beverage Marketing Corporation
Whiskey Category Volume by Type 2010- 2016P
Vo
lum
e in
Th
ou
sa
nd
s o
f C
ase
s
Straight American Whiskey +5.4%
Canadian Whisky -0.3%
Scotch Whisky -0.4%
Blended American -1.7%
Irish Whiskey +15.6%
2010-2016P CAGR
While Whiskey is helping drive the overall industry, within it Straight American Whiskey and Irish Whiskey are the drivers
0
5,000
10,000
15,000
20,000
25,000
2010 2011 2012 2013 2014 2015 2016P
-20-
Innovation in the industry spurred by consumers desire to try new thing • Trend started with flavored vodka now flavored whiskey • Similar pushing the envelope trend that’s currently occurring in craft beer is occurring in
craft spirits
Some examples of these flavored products include new flavor launches such as: • Strawberry & Cream flavored gins • Pumpkin flavored rum • Bacon infused Bourbon • Pistachio Liqueur
There has also been an influx of different aging methods utilizing wine and beer barrels to produce unique flavor profiles, including: • Rye whiskey finished in Sherry casks • Whisky finished in Pinotage casks • Sherry matured Anejo Tequila • Cabernet finished Extra Anejo Tequila • Single Malt Scotch finished in ex-IPA barrels
Ways Suppliers Are Staying Ahead of Todays Consumers
-21-
Number of Craft Spirits vs. Beer Producers Comparative Time Periods
*Craft is defined as a producer that have no more than 750K proof gallons removed from bond and not openly controlled by a larger supplier.
Source: TTB, ACSA
204 280 455
656 906
1,163 1,315
3,422
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Craft Spirits
199 247 284 312 359 446
601
1,564
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Craft Beer
• Craft spirits suppliers are growing at a faster rate than craft breweries at comparative time periods
• If craft spirits grows at a similar rate 5 years out as craft breweries then the number of suppliers would exceed 3,400 by 2021.
+36.4% CAGR +20.2% CAGR
-22-
Craft Spirits Share of Overall Distilled Spirits Industry
*Craft is defined as a producer that have no more than 750K proof gallons removed from bond and not openly controlled by a larger supplier.
Source: TTB, ACSA
0.8% 1.0%
1.2%
1.5%
1.8%
2.3% 2.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2010 2011 2012 2013 2014 2015 2016P
Craft Share*
Craft Share
-23-
Craft Spirits Retail Sales by Value
*Craft is defined as a producer that have no more than 750K proof gallons removed from bond and not openly controlled by a larger supplier.
Source: TTB, ACSA
$0.7 $0.8 $1.0
$1.3
$1.8
$2.4
$3.0
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
2010 2011 2012 2013 2014 2015 2016P
Billions of Dollars*
Craft Sales
-24-
With the growth of craft spirits over the last few years can we draw a comparison to craft beer and its long term sustainability
• Since the Millennial generation is always seeking innovative flavorful products with a true brand story, craft spirits inherent characteristics play right into that trend.
• Consumers are embracing smaller, craft and locally produced. Authenticity is the key word, messaging conveying authentic brand story
Craft Beer versus Craft Spirits
2016
Source: Beverage Marketing Corporation, Brewers Association; DISCUS; ASCA
• 5,301breweries , up nearly 800 from 2015
• 12% of total beer
• +7% production increase, down from low 20’s in 2015
• Culture that has embraced locally brewed craft beers has enticed more entrants into the marketplace
• 1,315 craft distilleries (+152 or 13.1% from ‘15)
• Estimated at 2.5% of spirits
• About $300,000 to build facility
• Concentrated market with 2% of producers responsible for 60% of the cases
• Wholesale channel could pose a barrier to growth
• Some of the early successful distilleries have been acquired by larger producers , this is unlike the early days of craft beer segment
Craft Beer Craft Spirits
Spirits Market Brief
Q: How often do you consume the following types of alcohol beverages away from home (e.g., at a restaurant, bar or other foodservice location such as a hotel, concession stand, etc.)? Base: 1,500; 192 (21–24), 266 (25–34), 248 (35–44), 266 (45–54), 528 (55+)
How often do you consume the following types of alcohol beverages away from
home? Monthly+
84%
69%
81%
85%
76%
85%
74%
71%
78%
70%
54%
66%
55%
52%
49%
Beer
Spirits
Wine
21–24 25–34 35–44 45–54 55 +
% Overall
70%
62%
67%
2016 2014
71%
63%
66%
Beverage Alcohol Volume On Premise 2012-2016
1800
1810
1820
1830
1840
1850
1860
1870
1880
Millions of Gallons
2012
2013
2014
2015
2016
Source: Technomic, Inc; Beverage Marketing Corporation
• Adult beverage volume decline continues and consumer on-premise drink occasions plateau
-26-
Source: Beverage Marketing Corporation
On Premise Beverage Alcohol Dollars 2012 – 2016P
• Dollar sales has grown due to premiumization and higher drink prices • Carefully crafted drink menus, product selections and promotions that showcase premium
and above-premium offerings to prompt higher spend while still delivering on perceived value can result in greater sales and profits.
92,000
94,000
96,000
98,000
100,000
102,000
104,000
106,000
2012 2013 2014 2015 2016P
Millions of Dollars
-27-
Source: Beverage Marketing Corporation
On Premise Spirits Category Volume by Type 2010 – 2016P
Vo
lum
e in
Th
ou
sa
nd
s o
f C
ase
s
Non-Whiskey +0.2%
Whiskey +1.0%
2011-2016P CAGR
Since 2011 growth of Whiskey in the On Premise is outpacing both non-whiskey and the overall spirits market
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2011 2012 2013 2014 2015 2016
-28-
46%
43%
57%
48%
50%
32%
28%
47%
4%
5%
1%
4%
4%
2%
4%
3%
Fine-dining
Casual-dining
Bars/nightclubs
Lodging
Casinos
Concessions
Other recreation
Total
% Expecting growth % Expecting decline
Net: 2016 2015 2012
+42 +22 +14
+38 +41 +33
+56 +50 +28
+44 +42 +28
+46 +48 +18
+30 +32 +6
+24 +26 +16
+44 +42 +25
Spirits growth expectations by segment
Base: 650 on-premise operators
• On Premise Spirits volume grew 0.3% in ‘15 and 0.7% in ‘16 • Operators expectation for spirits growth has increased every year since 2012
Source: Technomic Inc., Beverage Marketing Corp.
-29-
2017 State of the Industry
• Total Beverage Alcohol
• Spirits
• Wine
• Beer
• Implications
-30-
Current Key Beverage Alcohol Market Trends in Wine
Wine
• Domestic shipments were led by Prosecco as sparkling continued to outpace table wine
• Prosecco sales volume was up approximately 15%. This helped lift the entire sparkling wine category to 6.8% growth.
• Millennials have become a driving force in wine sales and now are largest consumer segment at around 1/3 of total consumers
• This age group is now the largest in the industry surpassing Baby Boomers. In addition, these consumers are more adventurous and seek more variety. This age group looks more outside the U.S. for wine, including varietals from Portugal, South Africa, Greece and Austria.
• Direct to Consumer sales hit a new high in 2016, +17.1% to 5 Million cases, the highest rate of growth since 2011
• In addition, Direct to Consumer shipments have shown steady growth during the past six years, growing from less than 3 million cases in 2011 to that 5 million cases mark last year.
• Red Blends continue to outperform, advancing 20%; fits variety trend with Millennials
• Wine growth also spurred by strong growth of Rose and Sauvignon Blanc
• Rose enjoyed 20% growth in 2016 and the varietal has doubled in volume since 2012.
• Sauvignon Blanc grew 6.0%.
Beverage Alcohol Trends
-31-
P: Preliminary Source: Beverage Marketing Corporation
U.S. Wine Market 2010 – 2016P
321.2
338.2
345.6
350.3 354.1
356.4 359.0
300
310
320
330
340
350
360
370
Millions of 9-Liter Cases
2010
2011
2012
2013
2014
2015
2016p
+5.3%
+3.1%
+1.1%
+1.4%
+0.7% +0.7%
+2.2%
-32-
P: Preliminary Source: Beverage Marketing Corporation
U.S. Wine Market 2011 – 2016P
$42.5
$43.8
$44.8
$45.5
$46.1
$46.8
$40.0
$41.0
$42.0
$43.0
$44.0
$45.0
$46.0
$47.0
$48.0
Millions of Dollars
2011
2012
2013
2014
2015
2016p
+3.5%
+2.9%
+1.7%
+1.3%
+1.5%
+2.3%
+1.3%
-33-
11.3%
13.6% 14.2%
19.1% 18.3% 18.0%
15.3%
17.7% 18.2%
27.1%
33.9% 33.6%
27.2%
16.5% 16.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
2011 2015 2016p
Super-Premium ($15.00 and above) Premium ($12.00-$14.99) Popular Premium ($9.00-$11.99)
Fighting Varietal ($6.00-$8.99) Value ($5.99 and below)
Table Wine Volume Sales by Price Tier 2011, 2015 & 2016p
Sweet spot for Millennial consumers
-34-
23.7% 22.5%
11.9% 13.4%
11.1%
9.1%
4.6%
7.5%
6.0%
7.2%
9.8%
6.2% 5.1% 5.3%
1.4%
4.3%
26.4%
24.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2010 2016p
Chardonnay Cabernet Sauvignon Merlot Pinot Grigio Pinot Noir
White Zinfandel Blush/Rose' Red Blend Other
Table Wine Volume Sales by Varietal 2010 and 2016p
• Despite a lower share of Table Wine volume, Chardonnay has experienced an uptick in volume over the last three years. It has ceded its share to faster growing varietals
• Red Blends share of Table Wine has increased to 4.3% in 2016 from 1.4% in 2010.
-35-
Net: 2016 2015 2012
+60 +44 +30
+30 +25 +20
+18 +14 +9
+41 +30 +38
+26 +22 +12
+22 +22 +22
+16 +28 +16
+28 +23 +19
64%
33%
23%
45%
30%
26%
20%
32%
4%
3%
5%
4%
4%
4%
4%
4%
Fine-dining
Casual-dining
Bars/nightclubs
Lodging
Casinos
Concessions
Other recreation
Total
% Expecting growth % Expecting decline
Wine growth expectations by segment
Base: 650 on-premise operators
Source: Technomic Inc., Beverage Marketing Corp.
-36-
2017 State of the Industry
• Total Beverage Alcohol
• Spirits
• Wine
• Beer
-37-
Current Key Beverage Alcohol Market Trends in Beer
Beer
• Imports have become the growth leader within beer driven by Constellation Brands. Craft and FMB’s have slowed, impacting overall high-end growth
• ABI and MillerCoors continue to see declines in their domestic premium and below brands. This weakness drove domestic beer depletions declines to over 4% in 2H 2016.
• As with wine and spirits, the high-end is driving growth within beer
• The beer industry faces headwinds both inside and outside the category. The influx of craft beers to the marketplace has made competition for cooler space at retail fierce.
• Craft
• Consumers continue to thirst for the newest brand or flavor, this segment of the market is characterized by increased consumer experimentation and without true brand loyalty.
• IPA’s and barrel aged beers remain hot segments within craft. Aging your beer in different types of barrels from wine to whiskey barrels produces unique flavor profiles. Moreover gose’s or sour beers have gained traction.
• Locally focused craft brands have found success, making connections in their home marketplace and engaging those consumers at the expense of large national craft brands
• Imports
• The pullback in craft beer growth has aided in imported beers sustained growth. Heritage and lifestyle marketing has also provided a boost to imported beer, particularly those from Mexico.
• Alternative Beverage Alcohol continue to evolve as hard seltzers are newest in the segment
Beverage Alcohol Trends
-38-
P: Preliminary Source: Beverage Marketing Corporation
U.S. Beer Market 2010 – 2016P
2,859.0
2,822.0
2,856.3
2,829.8
2,839.9
2,849.3
2,843.6
2,800.0
2,810.0
2,820.0
2,830.0
2,840.0
2,850.0
2,860.0
2,870.0
Millions of 2.25 Gallons Cases
2010
2011
2012
2013
2014
2015
2016p
-1.3%
+1.2%
+0.4%
+1.4% +0.3%
-0.2%
-0.9%
-39-
P: Preliminary Source: Beverage Marketing Corporation
U.S. Beer Market 2011 – 2016P
$90,245
$92,949 $93,363
$95,094
$96,726
$98,586
$86,000.0
$88,000.0
$90,000.0
$92,000.0
$94,000.0
$96,000.0
$98,000.0
$100,000.0
Billions of Dollars
2011
2012
2013
2014
2015
2016p
+3.5% +3.0%
+1.9%
+1.3%
+1.6%
+0.4%
+1.7%
-40-
Net: 2016 2015 2012
+66 +44 +34
+58 +62 +51
+52 +43 +27
+63 +44 +42
+62 +60 +34
+56 +52 +36
+38 +61 +38
+56 +51 +38
Beer growth expectations by segment
70%
62%
56%
63%
66%
60%
38%
59%
4%
4%
4%
0%
4%
4%
0%
3%
Fine-dining
Casual-dining
Bars/nightclubs
Lodging
Casinos
Concessions
Other recreation
Total
% Expecting growth % Expecting decline
Base: 650 on-premise operators
Source: Technomic Inc., Beverage Marketing Corp.
-41-
Note: High-End segment includes International Brands and Malt Alternatives
Mainstream and value segments continue to decline and lose share. While high end continues to grow. • Michelob Ultra and craft beer lead high-end growth.
Source: BMC Strategic Associates
Segment Vol % Chg
Value Brands -3.7%
Mainstream -3.4%
Super-Premium +6.4%
High-End +6.6%
Beer Market Share by Segment 2015 vs. 2016
Beer Market Vol Change by Segment
2015 vs. 2016
1
Ryan Barker: Managing Partner [email protected] www.Berafindlove.com
2
3
Case 1
HERE lies the gap between marketing & finance
PROMOTION
Case 2 EMOTION
4
emotion not promotion
5
The relationship consumers have with a brand drives its
economic value
Growth in economic value starts by knowing the current quality (and direction) of that relationship
5
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200 categories
up to 1M participants per country
cloud- based
census- matched (no weighting)
real- time
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BERA Brand Management |
Brand Management
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6
• Brand is meaningful and unique to consumers despite lagging familiarity and regard
• With smart tactics and strategy, brand’s growth and earnings prospects are strong (high multiple)
• Brand has high familiarity and regard, but consumers are fatigued – they no longer see brand’s meaningfulness and uniqueness
• Absent break-out innovation of some kind, brand’s growth and earnings prospects are in jeopardy (low multiple) Tomorrow > Today Today > Tomorrow
Brand Equity Relationship Strength
• Five relationship stages describe: ...the degree of connection between a brand and the population it seeks to inspire; ...the degree to which that brand has positive or negative momentum; ... the distance between its current position and available opportunity
begins and ends @ the 75th percentile
7
75% of brands are not loved
REALITY
8
50% of loved brands
LOVE BITES
9
“If it can’t be measured, it can’t be managed”
Management Tension
SOURCE: CMOsurvey.org, Duke University Fuqua School of Business, AMA
Allocation of corporate resource is among the most hotly-contested issues at both executive and operating levels. And, in light of enormous spend and ambiguous metrics, the marketing function is always under tremendous pressure to demonstrate effectiveness and efficiency.
The crucial challenge lies in ensuring the cultural influence of brand output –both managed and unmanaged– is valued as concrete and justifiable. The unfortunate alternative is budget reduction, bruised equity and, ultimately, declining share value.
10
PROBLEM so where is the
11
quantifying in a credible way the economic impact of brand building
(which often biases investment to promotion)
11
12
THIS is the kiss of death
13
CFOs need our help
so let’s focus the conversation
14
is the largest provider of brand intelligence in the market today, delivering assessments on a real-time basis of 4,000 brands in 200 categories with up to 1 million participants per country.
assesses the strength of your brand relative to in AND out-of category brands, based on what’s important today vs. tomorrow. also sizes unique engagement audiences and informs marketing mix optimization to reach brand love
The Linchpin You can’t get to actionable finance without scale – local market investment requires local market measurement and an adaptive market-level view.
15
The Economics of Brand Love In pursuing sustainable, profitable differentiation, our ultimate goal is to reduce price sensitivity. We do this through all of our actions; actions that have an associated cost BUT also a character.
Scenario 1 overhaul product, expand distribution
Scenario 2 modify communications, improve customer service, minor product refresh
16
So what does it mean in the real world when you achieve a higher –or lower– score?
NEW DATING BOREDOM DIVORCE
0
50
100
LOVE
Observations of Monobrands across 80 Sectors
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
ACQUIRE RETAIN REVITALIZE
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
ACQUIRE RETAIN REVITALIZE
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
ACQUIRE RETAIN REVITALIZE
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
ACQUIRE RETAIN REVITALIZE
62 51
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
62 51
“Relationships take work!”
My Emotional DNA
“Relationships take work!”
[aka In what stage of relationship development is my brand?]
“Relationships take work!”
NOW THEN
2016
2017 (up until this week)
score
“Relationships take work!”
“Relationships take work!”
My Emotional DNA
“Relationships take work!”
28
Ryan Barker: Managing Partner [email protected] www.Berafindlove.com
BERA Brand Management |
Brand Management
May-2-17 29
Tomorrow > Today Today > Tomorrow
Some of the Most Loved Brands among
LDA Millennials
ACQUIRE RETAIN REVITALIZE
BERA Brand Management |
Brand Management
May-2-17 30
Tomorrow > Today Today > Tomorrow
AUTOMOBILES
SUPERMARKETS & WAREHOUSE
CLUBS
INDOOR & OUTDOOR FURNITURES
QUICK SERVICE RESTAURANTS
CABLE NETWORKS & PROGRAM
DISTRIBUTION
HOTELS
TAXI & LIMO SERVICES
It is instructive when brands break
the ceiling of their category
Brands from dozens of different categories have earned their way beyond traditional boundaries and into the hearts of LDA Millennials
ACQUIRE RETAIN REVITALIZE
BERA Brand Management |
Brand Management
ACQUIRE RETAIN REVITALIZE
May-2-17 31
Tomorrow > Today Today > Tomorrow
It is equally instructive when brands
return from the brink of irrelevance
It is very possible for brands to defy gravity and rekindle lost love
BERA Brand Management |
Brand Management
May-2-17 32
THEN
Once-Powerful American Brands that Changed Their Futures
Irrespective of their operating reality or category, this fraternity of brands is united in their productive reaction to a declining Tomorrow. Their chosen routes overcome the difficult crawl out of Boredom (and in some cases Divorce), and manifest in either a strong reset of consumer perceptions or a reminder of what made them special in the first place.
exciting
real
hardworking
family-oriented
successful
successful
cool daring
leader
charming
ACQUIRE RETAIN REVITALIZE
Sample: USA BERA Brand Management Survey,, Total Population
BERA Brand Management |
Brand Management
May-2-17 33
Tomorrow > Today Today > Tomorrow
Sample: USA BERA Brand Management Survey, Q1-2016, Millennials, Ages 21-34
Can an alcohol brand be Loved?
0
100
50
ACQUIRE REVITALIZE SUSTAIN