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Related tags: New product development, Brand, Brand management, Want

How important is new product development (NPD) for the market?Stuart Davis: I think to keep the category stimulated a degree of NPD is necessary...

How important is new product development (NPD) for the market?

Stuart Davis:​ I think to keep the category stimulated a degree of NPD is necessary although I think there will be less than before due to the number of casualties. But there is a big difference between NPD per se and genuine innovation. Other RTDs that launch without much of a point of difference will struggle. So the importance of NPD is lessening, true, but the importance of innovation is increasing.

Richard Clark:​ It is a cycle. The big issue is convincing the retailer to introduce more flexible competition. NPD is important but it's allied to the communication with the retailer ensuring the consumer gets what it wants. The fact is the consumer has created the category - it has not been created by brand owners.

Andrew Bond:​ Because the fantastic growth in the sector has been so prolonged there has been a bit of a gung ho attitude in trying new ideas. You don't have the opportunity to do that as much now because shelf space is more critical.

Stuart Whitwell:​ It's definitely cyclical. The trends are towards healthier lifestyles, more mature and sophisticated products. Innovation is absolutely critical to the future of the market. New categories and brands always mature at some point but they have to continue to connect with consumers or they will fail.

RC:​ To succeed you need to have a mixture of innovation, the right range for the consumer and the balance needs to be looked at. For example, in Tesco I see three brand new pre-mixed drinks brands available - Sabai, Quinn's and Café Kiss. And I doubt you will find many on-trade outlets that will carry those three brands at the same time.

What works to increase sales of RTDs?

Mark Hopper:​ I think sampling can work. I think what's important for me here is where you combine above the line and below the line. And then the consumer is living and breathing your brand.

SD:​ Price is key for brands. If you get the right price then you are going to get some distribution. The right product for the right customer.

RC:​ Adding value is more important than price in the long term - particularly with new products. The more you can delay price promotions the better. It's about adding value first and foremost, because if you drop the price you're knocking value off your brand.

MH:​ I think with different products at different price points there will always be room to interest the buyers.

AB: ​The irony is that our kind of product can be the highest priced product in the fridge on a main session night. It can be as much as £3 a bottle on those nights or on student nights, where you want to keep the customers in, it can be sold at £1.50. Now I don't think there is any shame in that. As an operator you want to maximise the margins but consumers don't want to pay over the odds - so we as brand owners have to play along with that.

MH: ​Retailers have to play a part in this as well as brand owners. It is quite easy to discount - anyone can give stuff away. You have to invest in a brand and give it brand equity.

RC:​ We do have to look beyond ourselves and ask how we are going to grow the category. We need to have a good range of brands and then look hard at ourselves in terms of packaging and proposition. Cider has done that, and its success has not been about price.

What can be done to create a better experience for drinks?

AB:​ Within our target market there is a huge percentage of people who have never drunk RTDs. They focus on beers and it will take us getting them to see some kind of promotional mechanic to get that drink in their hands instead.

SW:​ The trends at the moment are away from multi-coloured, luminous coloured drinks and more towards healthy, fruit-based natural colours. And in terms of innovation that's where we see Quinns. I believe that is the way things are moving in this market

SD:​ I'm not sure I agree. I think, for a nightclub or student night, it is not the time of the week drinkers are thinking, "is this doing me any good?" They are thinking, "Great, luminous, blue, fantastic!"

SW:​ Growing value is not going to come from that. That category is already on the wane and you are going to have to be a bit more innovative than that. I realise that is the core market, but we are talking about growing value.

Does the sector need to look at premiumisation?

RC:​ The sector has to premiumise to survive. I think we all know that drinks volume has been, at best, static over the last few years, but has grown four per cent in value. The drinks sector is a cyclical thing and there will always be winners and losers. Champagne, instead of being drunk once or twice a year, has become a once a month purchase. We have to premiumise the RTD offer - through merchandising, how it's served in the glass, how it's consumed.

SD​: Diageo is obviously going for the higher end, more premium audience with Quinn's. But I think categorising it as an RTD is fundamentally flawed. Because why isn't someone just going to have some freshly squeezed orange juice with vodka instead?

AB:​ The truth of this sector is that it is about fun - it's about an element of having a great time. People have always wanted to do that. We've got to move on. In this impasse period, companies like ourselves have to keep up with the consumer.

SD:​ I think the reason why something like Magners is successful is that it has been offering consumers something that bit different. The brands we're referring to have now been in the fridges in bars and pubs as a constant for the last seven or eight years.

MH:​ The Australian RTD market is far ahead of where we are. That has been in decline twice and is now back in growth. So there is a cycle with these things and they do evolve.

What is the future for RTDs?

MH:​ RTDs is a massive category - bigger than snacks and crisps, so I think it will stick around. The people that invest in their brands will be the winners. I do think it will evolve from where we are now - it has to be occasion-based.

SW​: I think it is going to develop and evolve and we will see more sophisticated and varietal forms of RTD and I think that's where the big brands will thrive. But there will be opportunities for smaller brands and there are not many other opportunities elsewhere in the spirits business.

SD​: I believe as brand owners we need to sharpen up and listen to retail demands slightly more than our own beliefs as to where the market is going. I don't think the market research we can do as brand owners is as effective as listening to large retailers who know what is going on behind the bar. The retailer should be telling us what they want a little bit more.

RTD Forum: who was there?

  • Richard Clark, head of marketing, Halewood International
  • Andrew Bond, creative manager, Global Brands
  • Stuart Whitwell, managing director, Intangible Business
  • Stuart Davis, director, Anglo Drinks
  • Mark Hopper, commercial controller, SHS

Related topics: Events & Occasions, Ready to Drink

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