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Amatil's Shane Richardson: how on-trade is driving spirits growth

Amatil’s Shane Richardson: how on-trade is driving spirits growth

Coca-Cola Amatil Alcohol & Coffee MD Shane Richardson has revealed why Maker’s Mark, Roku Gin and Canadian Club RTDs were the standout performers for the division in its 2018 results.

Richardson is celebrating another year of double-digit EBIT growth for Alcohol & Coffee and said he expects the strong results to continue in 2019.

Revenue for Alcohol & Coffee was up 8% to $609.8million in 2018, with underlying EBIT at $55.7million, up 12.1%.

Richardson attributed Maker’s Mark’s success to it being a “well-loved bartenders’ bourbon”.

“It’s easy drinking with strong credentials in the on-trade,” he noted.

“We’ve been very active in the on-trade, which has led to customer conversion in off-trade as consumers become familiar with the brand in bars and pubs.”

The spirit has also benefited from a renewed enthusiasm for classic cocktails among consumers. It’s currently the third biggest selling cocktail in the US and that popularity has been reflected in Australian venues. 

Meanwhile, the launch of Roku Gin has played well into the continued premiumisation of the spirits category and the Aussie gin boom. 

The product combines Japanese botanicals including Sakura flower, sakura leaf, yuzu peel, sencha tea, gyokuro tea and sansho pepper with traditional gin botanicals including juniper berry, coriander seeds and orange peel.

Canadian Club knocks it out of the park

Canadian Club has celebrated another year of accelerated results – it is currently the largest contributor to spirits category growth and Richardson is confident that it will soon be the top RTD brand in the country.

“It’s the only RTD to have successfully transitioned to the draught market,” he said. “Traditionally, RTDs have never played out well in that space.”

There’s been huge growth in distribution of Canadian Club Dry on tap, which Richardson expects to continue in the coming year. 

Key to Canadian Club’s marketing and advertising strategy in Australia has been its “Over Beer?” campaign, which continues to see success as it enters its eighth year. 

In fact, the campaign has been so successful in converting local beer drinkers that it is now being used to sell Canadian Club and dry to Canadians and Americans. 

The Canadian screening of the ad came about via a global sharing of best in class creative, underpinned by results being delivered in Australia.

More Canadian Club is sold in Australia now than any other country including the US.

Rob Tucker, Beam Suntory Senior Brand Manager North America Marketing, noted in December: “As we planned for growth on Canadian Club we couldn’t help but notice the tremendous results in Australia. ‘Over Beer’ clearly transformed the brand and business. Not only did Australia’s RTD business grow to three million cases, but also their full spirit business grew and their draught business grew.

“Since in North America, the United States is the world’s largest beer market in retail dollar sales, and Canada is third largest per capita, the opportunity to recruit from beer is a big one.

“We also fell in love with the ‘Over Beer’ creative, particularly the TVC ‘The Big Question’. So we tested it in Canada and while results were strong on breakthrough, brand linkage and ad appeal, the following results really interested us: 45% of beer drinkers think beer is boring, 74% think Canadian Club is refreshing and are willing to switch from their refreshing drink to our refreshing Canadian Club serve. We then ran a full market test in a large North American city, Vancouver, population of 2.5 million.

“We activated ‘Over Beer’ at retail and on premise, driving strong brand visibility and sampling, and we ran the TV ad province wide over six weeks. Results were very strong: Canadian Club 1858 grew +14.8% province wide in the test and in each of the aforementioned channels sales doubled during the test period.

“As for US, recently the TV ad was tested in the state of Wisconsin and it showed a solid mid-single digit consumption lift on 1858.

And for those not over beer …

Richardson said craft beer brands Yenda and Feral continue to deliver strong results.

He believes Yenda’s rugby sponsorship of the Wallabies will continue to embed the brand with consumers in 2019.

And he hopes the three-year deal, signed 12 months ago, will be super-charged by the upcoming Rugby World Cup. 

“Rugby is a quintessential Australian sport, so this remains a very big deal for us as an Australian brewery,” he said. “We’re hoping to continue leveraging the partnership to build brand awareness as once consumers try the beer they’re converts.”

Richardson noted that the Fijian brand Vonu also continues to make inroads as it is embraced by the surf club community on the east coast of Australia.

Meanwhile, Amatil’s Fijian rum portfolio continues to grow its international market. Richardson said its launch in the West Coast of the United States had been successful and that the brand was “slowly penetrating that market”. 

Paradise Beverages – purchased by Coca-Cola Amatil in 2012 – has formed a partnership with Young’s Market Company to distribute its Ratu and Bati rums on the west coast of California.

Richardson explained that in the same way the Caribbean is seen as exotic to Australians and mainstream to Americans; the US has a similar attitude to Fiji.

“They look at Fiji and think island paradise, whereas it’s almost become a domestic destination for us,” he said.

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