The Promotional Effectiveness of Wine in SA

30 August 2012

Presented by Gareth Pearson

BMi Research

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Setting the Ambiance We are all mortal until the first kiss and the second glass of wine : Eduardo Galeano, Uruguayan author (1940-) Wine is bottled poetry : Robert Louis Stevenson, Scottish author and poet (1850-1894) Where there is no wine there is no love : Euripides, Greek playwright (480-406 BC) Wine improves with age - the older I get, the better I like it : Anonymous If a life of wine, women and song becomes too much, give up the singing : Anonymous

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More Ambiance

If a life of wine, women and song becomes too much, give up the singing : Anonymous Wine is wont to show the mind of man : Theogenis, Greek poet (6th century) Drink wine, and you will sleep well. Sleep, and you will not sin. Avoid sin, and you will be saved. Ergo, drink wine and be saved : Medieval German saying Whether wine is a nourishment, medicine or poison is a matter of dosage : Paracelsus (Phillip von Hohenheim), Swiss alchemist, physician and astrologer (1493-1541) Life is too short to drink bad wine : Anonymous

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The Size of the Glass

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The Size of the Pint

Rest of Market 73.3%

Alcohol 26.7%

Note: Reconstituted volumes

Includes powdered beverages

Includes tap water estimate – 1.4 litres p.p.p.d

Total SA Beverage Market 2012 (E)

31 689 Million Litres

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Total Beverage Trends

Still feeling effects of slowdown in economy

Consumers are spending but more aware of options and alternatives

Promotional activities still continuing

Continued influence of health and wellness

Consumers seeking value/promotions

Increased launches of functional beverages – prominent internationally

Total Beverage Trends for SA market

Wine Promotional Effectiveness

Promotions

Print Promotional

Tracking

Media Tracking

In store

Shelf Health

Shopper

Marketing

Wine Promotions

Promotion choices available to the Wine Industry

Broadsheet

Media - TV, Radio and Print

In store – POS

On consumption – POC

Wine tasting

Direct marketing

Online

Sponsorship

9

Retail Liquor Development

Rate of store expansion in the liquor market by majors

Outlets June 2005 June 2012

TOPS 156 600

Pick n Pay 16 140

Shoprite Checkers 7 90

Game - 4

Total 179 834

93

new

stores

p.a.

Promotional Effectiveness

Wine Point of Sale, Print Collateral & Graphic Design

“Winery print collateral and point of sales material is meant to be noticed, handled, read and re-read. More importantly, it's meant to cause the consumer to go out and buy a few bottles of wine. Sometimes a good accolade isn't enough. Effective wine point-of-sales and print collateral takes a brand message and incorporates a strong take-away that the consumer can relate to and use in the future.”

Source: www.intwinemarketing.com

In Store Promotion

In store promotion

Instore Performance

In store performance factors

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Major Liquor Sponsorship

Sponsor Sport Property Term

Carling Black Label Soccer Carling Black Label Cup 2011 - 2013

Carling Black Label Rugby Varsity Cup Supplier 2009 - 2012

Castle Cricket Test events : Test Team : ODI Team 2012 - 2015

Castle Rugby Springbok Supplier ; SuperRugby Supplier : Castle

Championship

2011 - 2016

Castle Soccer Bafana Bafana : PSL Supplier 2012 - 2017

Smirnoff Lifestyle Smirnoff CT Comedy Festival

Smirnoff Music The Smirnoff Experience

Amstel Music Amstel Golden Hour - Music 2010 -

Amstel Programme ClassAct – SABC1 AFP 2011 -

Bells Golf Bells Experience Golf Day

Bells Fly Fishing Bells Experience Fly Fishing

Captain Morgan Adventure Kingsley Holgate Malaria Expedition On going

Captain Morgan Angling Billfish Classic - Angling 2010 -

Heineken Lifestyle Taste of Johannesburg and Cape Town 2010 -

Heineken Music SAMA Awards Partner 2011 - 2013

J & B Horse Racing J & B Met 2010 - 2015

Johnnie Walker Motor Sport Contribution to McLaren F1 On going

Windhoek Arts KKNK

Windhoek Canoeing Berg river Canoe Marathon 2010 - 2012

Windhoek Rugby Sharks Supplier 2011 - 2013

Print Promotional Tracking

Wine print promotional tracking and analysis

Who are the top retailers promoting wines?

Which brands are being promoted ?

Which geographic regions are promotion dominant?

Total Print Advertising

Jan to June 2011 - 2012

Total broadsheet tracking and analysis

R 0

R 20

R 40

R 60

R 80

R 100

R 120

R 140

R 160

R 180

R 200

Mill

ion

s

2011

2012

R 0

R 20

R 40

R 60

R 80

R 100

R 120

R 140

R 160

R 180

Mill

ion

s

Top 10

2011 2012

Total Market

Spend

2011 – R993m

2012 – R1 109m

+11.7%

Print Advertising

Expenditure

Liquor

Market

Volume

Value

Growth

Value ± 25%

Volume ± 3%

0

10

20

30

40

50

60

70

Jan - Jun 09 Jan - Jun 10 Jan - Jun 11 Jan - Jun 12

58% increase in spend for period

Rm

Print Advertising Spend

Selected Categories

Jan - June 2011 Jan – June 2012

Product Category Print Spend Product Category Print Spend %

Beer - Malt R 7 764 263 Beer - Malt R 9 304 179 20%

Brandy R 4 540 535 Brandy R 5 799 927 28%

Cane R 378 094 Cane R 345 627 -9%

Flavoured Alcohol Beverages R 4 583 531 Flavoured Alcohol Beverages R 6 701 592 46%

Liqueur R 1 690 031 Liqueur R 1 572 406 -7%

Rum R 1 224 597 Rum R 2 232 177 82%

Sambuca R 58 764 Sambuca R 109 250 86%

Shooters - Sour R 98 939 Shooters - Sour R 120 349 22%

Vodka R 1 625 249 Vodka R 2 241 762 38%

Whisky R 12 798 776 Whisky R 15 484 766 21%

Wine R 16 034 083 Wine

R 16 624 221

4%

Total R 50 796 867 Total R 60 536 260 19%

Category Print

Advertising Expenditure

Share

0

2

4

6

8

10

12

14

16

18

Wine accounts for 27% of total spend for period (Jan to Jun 2012)

Rm

Top 10 Company Brands (% number of Ads)

Top 10 Company Brands % no of ads MAT June 2011 vs MAT June 2012

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

MAT LY

MAT TY

Top 10 Brands (% number of Ads)

Top 10 Brands % number of ads MAT June 2011 vs MAT June 2012

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

MAT LY

MAT TY

Top 10 Retailers (number of Ads)

Top 10 retailers promoting wine in print MAT June 2011 vs MAT June 2012

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

MAT LY

MAT TY

Wine Promotions

Regional Share (Number of ads Jan – June 2011 vs 2012)

Wine Print Ads Regional share by number of ads

0

5000

10000

15000

20000

25000

30000

35000

40000

2011

2012

Wine Media Tracking

So how has wine been promoted through media this year?

Which of the print, TV and radio mediums is being target ?

What brands are being promoted ?

What are the strategies being employed in media spend?

Wine Media Tracking

Wine Adspend TV, Radio and Print Jan to June 2011 vs 2012

R 0

R 2 000 000

R 4 000 000

R 6 000 000

R 8 000 000

R 10 000 000

R 12 000 000

R 14 000 000

R 16 000 000

Print TV Radio

2011

2012

Top 20 Brands All Media

(Print, TV and Radio)

Top 20 Brands Adspend for Wine all media January to June 2011 vs 2012

R 0

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

R 9 000 000

R 10 000 000

2011

2012

Wine Media Tracking Print

Print Adspend for Wine January to June 2011 vs 2012

R 0

R 200 000

R 400 000

R 600 000

R 800 000

R 1 000 000

R 1 200 000

2011

2012

Wine Media Tracking - TV

TV Adspend for Wine January to June 2011 vs 2012

R 0

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

Nederburg Drostdy Hof Namaqua DouglasGreen

Graca Two Oceans Obikwa Casillero DelDiablo

Swartlands

2011

2012

Wine Media Tracking Radio

Radio Adspend for Wine January to June 2011 vs 2012

R 0

R 500 000

R 1 000 000

R 1 500 000

R 2 000 000

R 2 500 000

2011

2012

Wine Media Tracking

Wine media trends YTD

TV remains the dominant media channel for wine by spend for this period

Spend in TV and Radio have grown marginally while Print has declined for this period

Nederburg’s TV spend dominant as a result of Master Chef SA

Nederberg combine TV and Print in this campaign

Douglas Green made significant increase from 2011 to 2012 with strong TV spend and

increased spend in radio

Drostdy Hof and Namaqua also dominant in TV and radio spend for the period reviewed

In Store

Shoppers making purchase decisions at shelf

“Shopper marketers got it wrong when they claimed 70% of

purchase decisions were made in store. It’s actually 76%,

says new US research by Point of Purchase Advertising

International (POPAI).” Jason Frichol MD Integer June 2012

Cutting through the clutter

Purchase appeal

Visual appeal - Labels, bottles, images

Brand experience – tried it before

What makes a new brand irresistible to shoppers?

What type of wine drinking experience does a bottle on shelf promise?

Does it evoke a sense of excitement, connoisseurship, celebration, dining ?

Would you buy?

BLACK BOX MERLOT

CAFE CULTURE COFFEE PINOTAGE

CLOOF - DAISY DARLING SAUVIGNON BLANC

CLOOF - HAPPY DRAGON PINOTAGE

CLOOF - POSH PINOTAGE

CLOOF - THE VERY SEXY SHIRAZ

NAUGHTY GIRL

FAT BASTARD SHIRAZ

HAPPY DRAGON PINOTAGE SHIRAZ

INKSPOT PINOTAGE

LEOPARDS LEAP MAGNUM

MAD HATTERS WINE

MAIDENS PRAYER RED WINE

MEERKAT SUN ANGEL

PORCUPINE RIDGE SYRAH

THE CHOCOLATE BLOCK 2009

WOLFTRAP WHITE

THE CRICKET PITCH

TOFFEE CHUNK

LADY IN RED

Or ODD BINS BIN

NO NAME DRY WHITE

UNNAMED SAUVIGNON BLANC

WINE LOVERS COLLECTION

Attracting Sales

Catchy Themes

Shelf Health

Shelf Health performance factors By Store

OSA vs OOS – the prize is won or lost in the final 50 meters to shelf

On shelf forward share

Retail Selling Price vs Promotion Price

On Promotion vs competitors

Planogram compliance

Merchandising – KPIs and measureable metrics

Ranging – more critical, more scientific, more geocentric

Effective communication from marketing boardroom to shelf (E2E)

Shelf Forward Share

What is the your brand’s shelf share by store?

Brand A Brand B Brand C Brand D Brand E

2011Q1 20.65% 6.35% 26.22% 14.95% 31.83%

2011Q2 18.22% 6.28% 27.55% 15.20% 32.75%

2011Q3 21.14% 6.58% 26.61% 13.77% 31.90%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

2011Q1

2011Q2

2011Q3

What is my share of type of

display in the store?

Brand 1 Brand 2 Brand 3 Brand 4 Brand 5

Dump Bin 6.38% 44.68% 4.26% 12.77% 31.91%

Free Standing unit 28.70% 18.52% 14.81% 16.67% 21.30%

Full Gondola End 26.47% 25.74% 11.03% 23.53% 13.24%

Shared Gondola End 38.75% 8.75% 1.25% 5.00% 46.25%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Promotional activity competitor check – by store

On-shelf availability Capturing the lost

sales

Driving short, medium

and long term

solutions

Retail Execution

– On Shelf Availability

Ensuring the products a customer wants to buy

are actually available when they want to buy

them

European Out Of Stock rates are typically

8.3%

OOS costs the industry €4bn in Lost Sales

EVERY YEAR

20% of all OOS remain for more than 3

days

Inventory counts are typically 65%

inaccurate

Chance of finding all 40 items on your

shopping list? 4%

When faced with an OOS shoppers will:

31% will switch stores

26% will buy another brand

19% of the time buy brand variant

15% will buy at a later time

9% will buy nothing

Source: ECR Europe

If a manufacturer can improve OSA by 3%,

it’s worth 1% increase in sales

If a retailer can improve OSA by 2%,

it’s worth 1% increase in sales

The size of the prize

Shopper Marketing

Understanding Trip Missions for effective sales

Trip targeting

Adding incremental items

Requires a much more scientific approach

Uncapping own internal data

Skilling up internally

Shopper Marketing

Shopper Marketing Shifts

BEFORE

CPG marketers operated under two separate silos:

1) Shopper Insights

Focused on the consumer‘s needs, attitudes, usage, etc.

2) Category Management

Focused on product definition and role, performance mgmt, go-to-market/sales strategies, etc.

NOW

CPG organizations are

integrating these two disciplines

to form Shopper Marketing

Shopper Marketing

Derived Value of Market Leader Characteristics

Market Leader Characteristics

Value to Retailer and Manufacturer

Understanding the Shopper Occasion as the Foundation for

Insights

Joint Planning Assures Alignment with Retailer & Manufacturer

Objectives

Execution Informed by the Trip Mission and the Store

Fostering an Environment of Continuous Learning

and Innovation

Develop Shopper Occasion Centric Merchandising and Marketing

Strategies

Elevate Relationships for Better Collaboration and Success

Improve Store Level Effectiveness

Ongoing Cycle of Improvement and Increased Relevance to Shopper

Trip Mission

Profiling the Trip mission

Profiling the trips reveals:

Which trips are most important?

Which do we want to grow?

Where do we want to win?

Metrics include:

Share: % of trips, units, sales

Trip Details: units and Rands

Discount/deal characteristics

Basket contents (e.g. top categories)

Time of Day/ Day of week

Geographic distribution

International Trends

What is happening globally?

SA is a net follower of international trends

What are beverage trends doing globally?

Beverage Consumption –

Emerging Markets

Developed vs Emerging

Source : Canadean

Drivers of Change

But a number of themes have been key in shaping the beverage industry

over recent years

Source : Canadean

Retailer Expansion –

Private Label

B Brand currently under pressure globally from PL

Source : Canadean

Global Growth Forecast

95% of the forecast contribution to growth comes from emerging markets

Source : Canadean

Global Growth Forecast

What the beverage future could look like

Source : Canadean

Growth Forecast

African dream or future?

Source : Canadean

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Thank

You

www.bmi.co.za