The IWSR has released a report about how global spirits firms are harnessing their ecommerce prowess during the coronavirus pandemic to ensure they have the right structures and strategies in place to meet demand as much of the world remains in lockdown.
Bacardi and Pernod Ricard are two multinational distillers that have been ramping up their focus on ecommerce in recent years, placing them in a good position to respond to the radical changes in the current market.
According to Stuart Heffernan, Pernod Ricard’s Global Eretail Manager, the group’s ecommerce business has seen “increased demand” and a “significant amount of impulse buying” in recent weeks as consumers prepare for long stints of home entertainment.
Likewise, Michael Birch, Bacardi’s Vice-President of Global Digital Commerce, notes that in the US, his group’s ecommerce channels have seen a fourfold increase in the weeks after social distancing measures were introduced in the wake of COVID-19.
While Pernod Ricard is still developing its global ecommerce strategy, the group has not felt the need to alter its tactics in light of the pandemic – instead, they have been enhanced and accelerated. Likewise, for Birch, Bacardi’s longstanding focus on a consumer-centric strategy is effective in the current climate as well.
IWSR spoke to Heffernan and Birch separately about the state of the ecommerce market for spirits, exploring best-practice principles for building an ecommerce strategy…
Keep it simple, with clear goals and messaging
For companies that are new to ecommerce, there is a temptation to take advantage of its many opportunities. But, according to Heffernan, it’s important to remember the basics.
“Ecommerce can be seen as a very big and sexy channel. You can do a lot of stuff – you can create chatbots, you can create digital stuff for digital’s sake – and I think some advice would be to keep it simple, keep it profitable, and build in P&L to understand what you are trying to achieve,” he says. “There’s a lot of stuff we can invest in that doesn’t give the best return, and if it’s going to be sustainable, you have to ask, are we doing the right things for the business?”
For Birch, while it is important for brands not to overcomplicate ecommerce strategies, “the other mistake is to think that ecommerce is a silver bullet and that it’s just going to be a case of turning the tap on and everything else will follow”.
He adds: “You need to be very clear across the digital ecommerce ecosystem that your consumers are looking for more information, they want to understand more about your brand, [and] they want to understand easily which platforms they can order it from. So there’s a lot of grunt and hard work that goes into a smooth ecommerce operation.
Develop a relationship with your ecommerce retail partners
Heffernan stresses that data is an imperative tool in ecommerce decision-making. It is therefore important for brands to enter into a “partnership” with ecommerce retailers, and form a relationship in which key learnings are shared and meaningful data provided.
Heffernan adds: “How can we make good decisions if we don’t understand the value of the decisions we’re making? Data is fundamental; it doesn’t have to be complicated data and we have to be very careful with what people are willing to share, and we have to make sure we are compliant in all the markets we work in, but often we just need the simple sales and shares data.”
Birch also believes a fruitful relationship with retail partners is paramount. “I think the sweet spot comes when we understand what they are trying to do with their consumers, and matching that with what we’re trying to do with our consumers… then partnering with them to give friction-free solutions,” he says. “It’s when we unlock that that we bring really good examples to life.”
A way that brands and retailers could work together for mutual benefit is by raising awareness of spirits in ecommerce, since, according to Birch, “people are not really fully aware that it is as straightforward to order spirits online as it would be to order any other retail good”. He adds: “The more people realise they can, at the click of a button, have all these solutions delivered to their doorstep, the more I think ecommerce will continue to grow.”
Build your foundations with a combined global and local approach
In today’s uncertain trading environment, it pays to have a central team dedicated to ecommerce, says Heffernan. A group of experts who are intimately familiar with the ecommerce marketplace, and the fluctuations within it, would play an essential role in helping companies react quickly to external challenges.
It is important for producers to activate the right brands, in the right markets, with the right retailers, Heffernan adds. While there are “synergies across the globe” in how people are purchasing, companies must understand the “specificities of individual markets”.
Pernod Ricard does this through its two-pronged approach of having a central unit that sets the policies for regional hubs to activate as they see fit. “There will be some guidelines and principles we set, but ultimately the markets will tell us [what’s right],” says Heffernan. “We will activate the right brand in the right market, [and] it’s about understanding which brand [fits] with the right retailer.”
In a similar vein, Bacardi’s ecommerce strategy operates with “different lenses” pertaining to specific brands, categories and occasions. In addition to considerations about which categories and products perform best in certain markets, there is a range of ecommerce “operating needs” to consider as well, says Birch.
For example, brand owners need to take the retailer platform and consumer purchasing drivers into account – whether it is an on-demand delivery platform; a pure player like Amazon, which is supplementing trips to the grocery store; or a specialist retailer, which is offering greater choice or a more premium selection. There are then further considerations about occasion, such as whether the product will be enjoyed at a barbecue at home or gifted.
For both Heffernan and Birch, a successful ecommerce approach is one that has clear goals and harnesses data to refine global & local strategy, makes it easy for the consumer to learn about the brand and purchase online, and that paves the way to develop fruitful relationships with retailer partners.
For more insights from the IWSR, visit www.theiwsr.com
